Charities to be again regulated by ASIC and the ATO


The federal government has released an options paper detailing its regulatory and compliance plans once the charity regulator, the Australian Charities and Not-for-profits Commission (ACNC) is disbanded.

In the paper, the government confirms that the regulatory functions performed by the ACNC will be returned to the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC).

It is proposed that ASIC, ATO and state and territory governments will rely on their current powers to provide an appropriate compliance framework. Those director duties, obligations on charities and compliance measures which existed under the Corporations Act 2001 that were turned off by the ACNC legislation will be reinstated.

The ATO will again become responsible for determining eligibility for charitable status. In the options paper, the government acknowledges concerns raised over the possible conflicts of interests that could result from the ATO determining charitable status and related tax concessions while also being responsible for raising revenue. It proposes two options to safeguard against this:

  1. Establish an independent panel made up of external experts who would provide advice on objections raised by charities that disagree with the initial ATO assessment on the determination of charitable status. This panel would operate in a similar way to others that are maintained by the ATO, such as the General Anti-Avoidance Rules Panel.
  2. Form a separate area within the ATO that would be responsible for determining outcomes for applicants who object to the findings on eligibility for charitable status and related tax concessions. Officers would not have a dual role of assessing charities and providing a right of review, mitigating the potential bias.

Should an organisation continue to dispute the decision, it would have a legislated right to appeal to the Administrative Appeals Tribunal.

Rather than reporting to a separate entity, the government proposes that charities be required to maintain a publicly accessible website which contains the following information: the names of responsible persons, details of all funding received from government (Commonwealth, state and local) and financial reports. They can provide more information to the public if they so choose to.

To ensure that reporting requirements are consistent with other organisations operating as companies limited by guarantee or Australian registered bodies, charities registered under the Corporations Act would have those ASIC reporting obligations reinstated which were “switched off” when the ACNC was established.

In keeping with the principle of reduced reporting, the government will consider giving those organisations that already make information publically available through another Commonwealth regulator an exemption from separate reporting requirements.

Written submissions in response to the options paper can be submitted by 20 August 2014 using the template available at the Department of Social Services website.

Meanwhile, separate consultation has been carried out by the Centre for Social Impact (CSI) into the creation of the Civil Society National Centre of Excellence (NCE).

Operating independently of government, the NCE will help build the capacity of civil society organisations by, for example, supporting collaboration, education and training and advocacy, and working to reduce reporting requirements and red tape.

CSI’s interim report is expected to be received by the government this month.


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