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Not-for-profits Law News June 2013

The new Australian Charities and Not-for-Profits Commission

A raft of changes to the law surrounding charitable and not-for-profit organisations stand particularly to impact directors  

The newly created Australian Charities and Not-for-Profits Commission [“ACNC”] commenced operations in December 2012. The ACNC registers and regulates charitable organisations. There are currently around 600,000 not-for-profit organisations in Australia of which around 160,000 are incorporated (companies, incorporated associations and similar). Of these, around 56,000 organisations have been endorsed by the ATO to receive charity tax concessions. Many charities will be registered with and regulated by both ASIC and the ACNC. Most not-for-profit organisations registered with ASIC are “public companies limited by guarantee”, although some are proprietary companies limited by shares (“Pty Ltd companies”). Also registered with ASIC are organisations such as “incorporated associations” (commonly clubs, benevolent societies and similar) and foreign companies registered to conduct business in Australia. A detailed summary of the kinds of not-for-profit organisation registered by ASIC may be found at
http://www.asic.gov.au/asic/asic.nsf/byheadline/Registering+not-for-profit+or+charitable+organisations

Broadly, while an organisation must be not-for-profit in order to be recognised as a charity, not all not-for-profits qualify as charities pursuant to the laws administered by the ACNC. Organisations operating on a not-for-profit basis are still required to register with ASIC as the corporate regulator, but must now also register with ACNC if they qualify for charity status and the taxation and other benefits that go with it. A number of charities recognised as such before the commencement of the ACNC have been automatically registered with the new Commission. Other bodies seeking charitable status will need to register formally with ACNC.

For bodies formerly registered only with ASIC but now registered as charities with ACNC as well, certain reporting obligations that formerly applied to not-for-profit bodies registered with ASIC no longer apply. However, the ACNC will now impose and enforce its own reporting and other obligations on charitable organisations. The obligations of charities that will be monitored and regulated by ACNC include obligations relating to record keeping, financial and reporting, notifying the regulator of certain changes to the organisation and, as of a date to be fixed later this year, complying with ACNC’s governance and “external conduct” standards. It should be noted that, for the current financial year, companies that are registered with both ASIC and ACNC will need to lodge their usual financial and other reports with ASIC as in years past.

Directors and persons in charge of not-for-profit organisations registered with ACNC are strongly advised to ensure that they are fully aware of their reporting and disclosure obligations, and to implement any necessary changes to ensure that their organisations are compliant with both ASIC and ACNC obligations and requirements.

For more information on the role and functions of ACNC, interested parties may visit www.acnc.gov.au or contact the Commission as follows:

Phone: 13 ACNC (13 22 62)
Email: advice@acnc.gov.au
Mail: Advice Services, Australian Charities and Not-for-profits Commission
         GPO Box 5108, Melbourne VIC 3001
Fax: 1300 232 569

Directors and others responsible for charitable organisations are strongly advised to consult with their accountants and financial advisors to confirm their organisation’s financial reporting and other responsibilities under the new ACNC schema.

If you are considering forming a not for profit or charitable organisation, please contact Annette at Forum Law to arrange a consultation today. Forum Law can assist you at every stage of the process, from registering the company, preparing a company constitution, liasing with the Office of State Revenue and ATO on your behalf and applying to the ACNC for registration as a charity.

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