There are new questions in the recently launched 2023 Annual Information Statement (AIS), requiring charities to disclose their dealings with related parties.
For reporting purposes, a related party transaction (RPT) is defined as a transfer of resources, services, or obligations between related parties. It does not have to include financial payment.
The RPT reporting is designed to ensure that charities have good governance and their interests and funds are protected. Related parties, including key management personnel, should not receive significant private benefits from charity operations.
Charities can manage the risk by recording related party transactions and having clear conflict of interest policies and procedures. A register of related party transactions will also help charities when it comes time to report in their AIS.
A reportable related party transaction in the AIS can include:
- fees paid to a related party for providing goods or services to the charity
- loans from/to a related party
- salary/wages paid to a related party’s relative(s)
- transfer of charity property or assets to a related party
- charity goods or services provided at a discount to a related party
- significant use of charity property by a related party
- investment in a related party.
The 2023 AIS Hub has guidance on the information that should be provided based on a charity's size.