In June this year, the Panel charged with reviewing the ACNC Act presented its report to the Government. After much anticipation, this report has now been tabled in Parliament. It makes thirty recommendations, including the following:
- Basing financial reporting thresholds on a rolling three-year average of revenue, increasing the thresholds to a minimum of $1 million revenue for medium entities, and $5 million revenue for large entities from 1 July 2019.
- Requiring related party transactions to be disclosed by all charities.
- Requiring large charities to disclose remuneration paid to senior executives and responsible persons.
- Removing the Governance requirement to comply with Australian laws.
- Developing a mandatory Code of Conduct for fundraising and amending the Australian Consumer Law to clarify its application to the charity sector.
- Amending the ACNC Act to require self-assessing income tax exempt Not-for-profits (such as sporting clubs) to be registered with the ACNC when their annual revenue exceeds $5 million, as a condition to gaining access to tax concessions.
During the consultation period, there were many calls for the current financial and governance exemptions for Basic Religious Charities to be removed. This creates complexities because it potentially interferes with provisions in the Constitution addressing religious freedom. As a result, the report recommends that the financial reporting exemption be reviewed only if the changes to reporting thresholds are made, and reviewing the governance exemption only if the following recommendations are also adopted:
- The ACNC’s power to replace a responsible person is removed.
- A registered entity be presumed to comply with the ACNC governance standards if it already complies with other comparable governance requirements.
The Government has not yet indicated how it will respond to the recommendations.
The full report is available here.