Amendments to the Australian Charities and Not-for-Profits Commission Regulation 2013 came into effect on 13 November 2021.
Notably, the amendments:
- Facilitate increased publishing of charity program updates on the ACNC public Charity Register;
- Substantially change the reporting threshold requirements, starting from the 2022 Annual Information Statement reporting period;
- Effectively require all medium and large registered entities (other than most Basic Religious Charities) to report related party transactions, starting from the 2023 Annual Information Statement reporting period; and
- Require large charities to report executive remuneration, starting from the 2022 Annual Information Statement reporting period.
We discuss 2 of the 4 amendments below.
Change in Reporting Thresholds
The changes in the reporting threshold for the 2022 Annual Information Reporting period are:
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The Government expects that this change in reporting thresholds will result in around 2,500 registered entities no longer being required to make annual financial reports. This is expected to result in a significant saving for small registered entities which often have very limited resources.
We recommend that borderline small and medium registered entities seek financial advice about which reporting criteria apply.
Related Party Transactions
The regulations now also provide that from the 2023 Annual Information Statement reporting period, all medium and large registered entities (other than most Basic Religious Charities) will have to disclose certain related party transactions. The regulation achieves this by now requiring the disclosure of related party transactions for all entities that are required to make special purpose financial reports (rather than general purpose financial reports).
It is expected that these changes will lead to greater costs for medium and large registered entities, but that the trade-off will be greater transparency and trust in the sector.
We take this opportunity to remind all of our not-for-profit (‘NFP’) clients that related party transactions are (rightly) more and more coming under the scrutiny of the ACNC and other regulators. It is therefore important that all NFP Board’s (even small registered entities), as a matter of good governance, take time to understand what related party transactions are and how they should be managed in the day-to-day running of an NFP.
We recommend that all NFPs familiarise themselves the public guidance published by the ACNC. We also recommend that NFPs consider revising their conflicts of interest policies to expressly consider the effect of related party transactions and how they are to be dealt with under their existing policy.
Have a question about ACNC revenue thresholds?
If your Board would like training on identifying and managing related party transactions, or if you require advice on updating your conflict of interests policy to deal with related party transactions, Vocare Law is well equipped to assist you with a wealth of collective knowledge and over decades experience providing insight and advice in this area. Contact our office on 1300-VOC-LAW / 1300-862-529 or email: enquiry@vocarelaw.com.au
This article was written by Paul Neville.
**The information contained herein does not, and is not intended to, constitute legal advice and is for general informational purposes only.
