Arts Law releases Australian Charities and Not-for-profits Commission (ACNC) information sheet

Annual reporting for charities

Happy New (Financial) Year! Just a reminder to all charities that unless you are registered for calendar year reporting, all ACNC Annual Information Statement reports, as well as financial reports if you are a medium or large charity, should have been submitted by 30 June. The ACNC has the right to deregister charities that fail to report for 2 consecutive years, and a large number of charities have already been deregistered. If you are unsure whether your organisation has reported for the last 2 years, please check if your organisation status has been affected. We also recommend that all charities quickly inform the ACNC of any change of address so they are able to send reminder notices to the correct place.

For Aboriginal and Torres Strait Islander corporations, such as Indigenous Art Centres, you just have to submit your regular reports to the Office of the Registrar of Indigenous Corporations as per usual. This includes the general report and for some corporations, the financial, audit and directors reports. There is no need to also report to the ACNC.

On that note, Arts Law has just released a new information sheet all about the ACNC and its regulation of charities! The ACNC Information Sheet can be found here.

What it’s about

The new ACNC Info Sheet addresses the role and purpose of the ACNC as the independent regulatory body for charities, the definition of a charity as opposed to a not-for-profit organisation (NFP) as outlined in the Charities Act 2013 (Cth), registering as a charity and the related requirements, benefits, rights, obligations and consequences of being a charity. The Info Sheet also discusses the recent governmental developments that mean the ACNC is likely to remain the charity regulator, as well as the effects and implications of the new 2015 Taxation Ruling, which introduces two conditions required to keep a charity’s or NFP’s income tax exempt status.

The ACNC Info Sheet could be relevant to organisations such as public libraries, public museums, public art galleries, Indigenous Art Centres and NFPs that satisfy the legal test of having a charitable purpose that is for the public benefit.

New conditions for charities and not-for-profits to retain income tax exempt status

On 25 February 2015 the ATO released the new Taxation Ruling (TR 2015/1) which creates two conditions to retaining income tax exempt status that must be complied with by both charities and NFPs with that status. The first condition (the ‘governing rules condition’) requires the charity or NFP to comply with all the substantive requirements (e.g. activities the charity is required and permitted to do) set out in its governing rules or constitution. The second (the ‘income and assets condition’) requires the charity or NFP to apply all their income and assets solely for the purpose(s) for which it was established. Breach of these conditions could result in the organisation losing its income tax exempt status. Therefore, it is important that managers and directors of such organisations have a good understanding of the scope of these two conditions, and continually review the organisation’s operations accordingly. A summary of these changes and more information can be found on page 4 of the ACNC Info Sheet.

We hope you find this new resource useful, and for more legal information, head over to our Info Hub. As always, Arts Law will keep you informed of any updates in this area.

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