2024 Year end tax planning and financial reporting guide - unlocking tax and reporting insights for year end success > Download the full guide
NFP ACNC Activities | May
1 May 2020 | Minutes to read: 3

NFP ACNC Activities | May

By William Buck

Annual information statement extensions 

The ACNC commissioner has granted a blanket extension to charities with a 2019 annual information statement (AIS) due between 12 March and 30 August.   

They will now need to submit their AIS’s by 31 August.  The extension will be monitored as the COVID-19 crisis progresses.  

The Federal Government is continuing to support philanthropic work by announcing a further extension of ACNC transitional-reporting arrangements. 

The arrangements aim to reduce the burden on charities required to report to several regulators.  

The ACNC may use its discretion to accept documents that were originally prepared for another regulator. 

‘The extension will reduce red tape for over 7000 charities and allow them to focus on philanthropy and giving,’ said Assistant Minister for Finance, Charities and Electoral Matters Zed Seselja. 

It will be in place for five financial years from 2019-20.  The previous extension of the arrangements applied until the 2018-19 financial year. 

Since 2012, the ACNC has streamlined reporting requirements for incorporated associations with several states and territories, including the Australian Capital Territory, New South Wales, Northern Territory, South Australia, Tasmania, and Victoria. 

It has streamlined requirements for charitable fundraisers with the ACT and South Australia, and is continuing to work with the remaining states and territories on similar moves. 

ACNC urges PBIs to check their details 

The ACNC is urging charities with deductible-gift-recipient endorsement to check their registration details. 

In July, the commission will begin reviewing DGR reforms announced by the federal government in 2017. 

The DGR review is designed to strengthen governance arrangements and bolster confidence in the NFP sector by ensuring that tax concessions are held only by eligible charities, that the integrity of the ACNC register is protected, and donors are confident that donations are used for a charitable purpose. 

The commission will review about 500 charities a year to assess whether they are still eligible to be registered as a charity, charity subtype, and for DGR status.  An initial focus will be on public benevolent institutions. 

PBIs are the biggest demographic in the DGR population (about 11,000), they can access the highest rate of tax concessions, and, because they service such a diverse section of the community, have a substantial impact on trust and confidence in the sector. 

They will be reviewed according to a risk profile, which will include that they were registered as a charity and PBI before 3 December 2012, that they are not regulated by the Office of the Registrar of Indigenous Corporations, and have no, or only one responsible person listed or no governing document. 

‘[There] should be no impact on charities under review unless an issue is identified,’ ACNC commissioner Gary Johns said.

The importance of good governance 

The bushfire crisis has seen an unprecedented number of donations to a range of not-for-profit organisations.  As a result, the need for good governance and record-keeping are as important as ever, the ATO has stressed. 

You need to make sure that your NFP is operating for purpose.  If your organisation is a DGR, you can use tax-deductible gifts only for the purpose of the DGR category in which you are endorsed. 

You must also keep records relevant to your organisation’s status as a DGR.  Records must show that gifts and deductible contributions are being used for your principal DGR purpose. 

Good records help you to manage your obligations and make it easier to report and pay on time.  Some of the basic records you may need to keep include: 

  • Governing documents 
  • Financial reports and operational records 
  • Tax invoices and income tax records 
  • Copies of reviews of entitlement to tax concessions, and 
  • Records to help prepare tax statements and returns. 

Your records must be kept for five years and be in English or easily converted to English.  You should review regularly your circumstances and entitlement to DGR. 

The ACNC has several useful resources for charities, including:

ACNC legislation review 

The federal-government commissioned Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislative Review 2018 made 30 recommendations, which centred on the ACNC’s objects, functions, and powers, the overall regulatory framework, and red-tape reduction for charities.  

In its response, the government has agreed with 18 of them. 

Key recommendations supported by the government are: 

Topic  Recommendation 
Supporting ACNC as an effective regulator  
  • Enabling swifter decision-making through expanded delegation powers  
  • Enhancing ACNC powers to detect breaches of governance standards and deal with misconduct  
  • Allowing ACNC to continue its strong focus on education and research  
Reducing red tape 
  • Adjusting the reporting thresholds for registered charities  
  • Streamlining and harmonising the regulatory requirements across all jurisdictions  
  • Simplifying reporting requirements for small entities  
  • Sharing data on charities among commonwealth agencies  
Strengthening trust  
  • Mandating the disclosure of related-party transactions and, for large charities, aggregated remuneration paid to responsible persons  
  • Sharing information on ACNC investigations when in the public interest  
  • Disqualifying responsible persons who have certain criminal convictions  
Related Insights