Alert | ACNC Implementation Taskforce releases its progress report

The Australian Charities and Not-for-Profit Commission (ACNC) commences on 1 October 2012.

The ACNC Implementation Taskforce has released a progress report (Report) summarising key points arising from the community consultations and public submissions about the proposed functions of the ACNC.

The Report considers the following proposed functions of the ACNC:

• registration of charities and sub-types of charities
• implementing a 'report-once use-often' reporting framework to reduce the need for registered entities to report to numerous government agencies
• establishing an online information portal
• providing education and support for the not-for-profit sector
• engaging with stakeholders and
• promoting governance through a compliance framework for not-for-profit entities.

Read the Implementation Taskforce Report here.

On 1 October 2012 the ACNC will assume responsibility for determining charitable status from the Australian Taxation Office (ATO).

Existing charities endorsed by the ATO at 1 October 2012 will be deemed registered as a charity with the ACNC. The ATO will continue to assess the eligibility of charities registered with the ACNC for the purposes of accessing Commonwealth tax concessions.

Registration as a charity with the ACNC is voluntary but entities will not be able to access Commonwealth tax concessions without being registered. The ACNC's role is expected to extend to regulation over other non-charitable not-for-profit entities (such as sporting clubs) from 2014.

Registration with the ACNC will require registered charities to comply with the ACNC's reporting framework, which is yet to be finalised. However, the Report confirms that under the proposed reporting framework, charities will be required to provide certain information to the ACNC upon registration, and then lodge the following information annually online:

• All charities will be required to provide an annual information statement in respect of their charitable activities and beneficiaries for the 2013 income year (ie. from 1 July 2012 with reports expected to be due for lodgement after 1 July 2013).
• Medium charities (all deductible gift recipients and those with income of more than $250,000 and less than $1 million) and large charities (those with income of $1 million or more) will also be required to provide annual financial reports from the 2014 income year (ie. for income years starting on or after 1 July 2013 with financial reports due for lodgement after 1 July 2014).
• Charities may voluntarily lodge financial reports with the ACNC for the 2013 income year.

The Report discusses the alignment of financial reporting obligations with the Standard Chart of Accounts and the Standard Business Reporting taxonomies which were initially developed for reporting to government and provide standardised definitions of financial information.

However, the legislation to establish the ACNC is still being drafted and the above points taken from the Report may be refined.

The proposed legislative definition of charity, expected to apply from 1 July 2013, is also yet to be drafted and until then the ACNC will continue to apply the common law definition of charity in assessing an entity's entitlement to register as a charity.