Moderator Matt Crichton:
Hello,and welcome to our webinar: Who regulates Australian charities.
I’m Matt Crichton, a Communications Officer at the ACNC and I’ll be presenting today’s session with my colleague Anne Duffy, an Advice Services manager. Hi Anne and thank you for joining me today.
Hi Matt and hello everyone.
With us today we also have:
- Nicole Rowan, a senior red tape reduction policy officer at the ACNC
- Suhanya Mendes, Legal Counsel at the ACNC
- Caitlin Patterson, Advice Services officer at the ACNC
- Madison Lovell, a communications officer at the ACNC
Nicole, Suhanya and Caitlin will be helping to answer any questions you may have live throughout the webinar. If you would like to ask a question, you can type it at any time in the GoToWebinar panel, which should appear on the right-hand side of your screen. Use the chat or question box to ask a question.
We will answer your questions directly and privately but if we think the answers would be useful for everyone, we will respond to everyone – this will show the question and our reply. So, let us know if you want your question to be private. We suggest you keep your questions general, rather than very specific and in a way that identifies your charity.
If there are any questions we can’t answer during the webinar today - which may happen if we get a lot of questions, or very complex questions – we will provide answers at a later stage, by email. Just a few more tips before we get started.If you have any difficulties with the sound on your computer, try calling the phone number listed in the GoToWebinar panel. You will also have been given an access code in the email you were sent by GoToWebinar when you registered.
This webinar will be uploaded on our website after the session at acnc.gov.au/webinars. We’ll also send out a follow-up email with useful links and other information.Finally, we value any suggestions you have to improve our webinars in the future. So please pass on your suggestions in the survey at the end of this session.
Today we are going to take a look at the regulation of charities in Australia – who does what, and the various responsibilities charities have, depending on their structure, where they operate, and the activities they undertake. We’ll be relying on content from the ACNC Red Tape Report, commissioned by the ACNC and prepared by Deloitte Access Economics, which was released on 23 February 2016 and is available on our website.
We’ll have a look at some case studies of different charities, and who they have to interact with.We won’t go into detail about each regulator – we will provide links and contact details for each – but will just paint a picture of the type of regulation charities are subject to, and the role the ACNC plays in trying to reduce this. For specific information about obligations to other regulators, we recommend that you contact that regulator directly.
At the end, after the formal presentation, we’ll keep the webinar going to allow you time to ask questions online, through the GoToWebinar control panel.The ACNC only regulates ‘charities’. These are a subset of a much larger group of not-for-profits. Charities must have only charitable purposes that are for the public benefit.
The ACNC was established on 3 December 2012, as Australia’s first independent and national regulator of charities. The ACNC is a purpose-built regulator with a stated emphasis on providing education and advice to support charities to meet their regulatory obligations. The ACNC aims to provide a best practice reference point.
The ACNC was formed in response to a number of formal parliamentary inquiries and research reports detailing the deficiencies in the current regulatory environment and the need for a central body to address red tape and increase the accountability and transparency of the sector.
The Productivity Commission report, Contribution of the not- for-profit sector, found that a major issue for the sector was inconsistencies between similar legal forms and the cost of complying with differing legislation. Furthermore, the Regulatory Impact Assessment of Potential Duplication of Governance and Reporting Standards for Charities, released by COAG in 2013, noted that NFPs face multiple (and often conflicting) informational requirements, diverting scarce resources away from the core purpose of the charity towards administration and compliance costs.
Let’s look at the role of the ACNC. The ACNC is Australia’s national independent regulator of charities.
We register charities, who can then say that they have:
- met our requirements for registration, and
- agreed to be accountable and meet our governance standards.
With registration, they are also able to apply for Commonwealth charity tax concessions and other benefits. We maintain an online database of every registered charity in Australia. We regulate charities by reviewing their compliance with their obligations to us, including meeting the governance standards. We look into concerns about charities raised by the public and other government agencies.We provide advice, guidance and education to charities on their obligations to the ACNC, and on good governance practice. And finally, we have a responsibility in all of our work to try to reduce red tape for charities.
The ACNC was established to regulate charities but also work towards reducing red tape for the sector. So what is red tape? Red tape describes excess or unnecessary bureaucracy and regulation. Regulation is needed (think safety, transparency, accountability) but must be weighed against the cost to those being regulated of understanding and complying with their obligations.
Charities, because of the nature of their work, their fundraising and where they operate, are subject to a wide range of rules and regulations, many of them complex. Compliance with all of their obligations can take resources (including time) away from a charity’s core purpose work.
Charities have more reporting obligations the larger they become, and the more they rely on government grants. The 2016 Deloitte report estimates that the regulatory cost burden just from meeting state and territory fundraising, state taxation and incorporated associations requirements is $34.85 million. It suggests that this could be reduced by the implementation of measures to align and harmonise reporting between states and the ACNC.
For reporting alone, total duplication costs the sector at least $99.5 million per year, and this may be much higher. A charity that operates in Melbourne’s CBD (and is registered undertook local fundraising activities
However, it used a direct debit arrangement, and when donors moved interstate or overseas this made it in breach of fundraising rules as the donation was automatic, the charity was not notified of a change of address and had no way of knowing which state or territory’s fundraising rules might apply.Even if it did know, it would have taken significant resources to identify which rules were applicable and to ensure these were followed. For example, as a small organisation it would be very difficult for it to meet the state law requirement that it have a local presence – in NSW, Victoria and Queensland.
The charity has to choose:
- identify and meet requirements in every relevant state or territory
- remain non-compliant, or
- stop certain types of fundraising
When the ACNC was established, it effectively took over a range of responsibilities on behalf of Commonwealth agencies, including the Australian Taxation Office (ATO) and the Australian Securities and Investment Commission (ASIC).
For example, the ACNC now undertakes the registration of charities, in place of the ATO, determining an organisation’s charitable status and its entitlement to be registered as a Public Benevolent Institution (PBI) or a Health Promotion Charity (HPC). While eligibility for Deductible Gift Recipient (DGR) status continues to be determined by the ATO, there are a number of DGR categories that require initial registration by the ACNC.A number of reporting responsibilities were transferred from ASIC to the ACNC, by law, affecting those charities that are registered with ASIC, such as charitable companies limited by guarantee.
We’ll look more closely at ASIC, ORIC and other regulators later in the webinar. Since its establishment, the ACNC has worked with Commonwealth agencies to try to reduce the burden of regulation for charities.
For example, the ACNC has entered into a Memorandum of Understanding (MoU) with ASIC to formalise the working relationship and to reduce regulatory overlap. It also has a Memorandum of Understanding with the ATO and the Office of the Registrar of Indigenous Corporations (ORIC). In addition to its work at the national level, the ACNC has engaged with state and territory governments to progress its mandate of reducing regulation through increasing the harmonisation across jurisdictions in reporting requirements, as well as with other regulators. Now that the ACNC has certainty, this will likely help the process.
One of the Australian Charities and Not-for-profits Commission's (ACNC's) objects is to 'promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector'.
The ACNC works within the Commonwealth Government’s Regulator Performance Framework to reduce the cost of unnecessary or inefficient regulation.
The ACNC’s ‘red tape reduction’ work includes:
- sharing charity information with other government agencies to build a ‘report once, use often’ framework for charities using the ACNC Charity Passport
- streamlining reporting arrangements for charities with other Commonwealth regulators
- harmonising ACNC and state and territory regulatory requirements for charities registered under state and territory laws
- commissioning research on red tape reduction in the not-for-profit sector to inform red tape reduction initiatives, and
- providing guidance and advice to charities to assist them to meet their regulatory obligations.
The ACNC has introduced the principle of a ‘report once, use often’ framework as recommended by the Productivity Commission, where the ACNC acts as a single repository that provides information to other authorised governmental agencies as required.
This concept has been used to underpin the ACNC’s ‘Charity Passport’, which allows information collected by the ACNC to be accessed by other agencies, using a secure online process, reducing the need for charities to report the same information to multiple agencies.
The ACNC’s Charity Passport enables authorised government agencies to access ACNC charity data via a file transfer protocol (FTP) process for the purpose of reducing red tape for charities.
By allowing agencies to access charity data directly from the ACNC, the Charity Passport reduces the amount of information that charities have to provide to different government agencies, in line with a 'report once, use often' reporting framework. Government grants guidelines also require that:
- Commonwealth officials must have regard to information collected and made available by regulators (such as the ACNC) and should not seek this information from grant applicants/recipients, and
- if an organisation has provided a regulator with an audited financial statement, an audited financial acquittal should not be required, unless the grant is higher risk (under the CGRG Resource Management Guidance).
Currently, only information that is publicly available on the ACNC Register is available through the Charity Passport. It does not include information that has been withheld from the Register.
When government agencies request information, charities may direct them to the ACNC to obtain any information, governing documents or financial reports you have already provided to us. However, processes across government agencies, including the degree to which they use information from other regulators, varies.
Now we’ll look at some of those other government agencies.
Main Commonwealth agencies relevant for charities:
- ATO (charitable tax concessions)
- ASIC (for ‘registrable bodies’ and companies limited by guarantee)
- ORIC (Office of the Registrar of Indigenous Corporations)
Other agencies depending on activity (for example, education or health)
The Australian Taxation Office (ATO) is responsible for deciding eligibility for Commonwealth charity tax benefits. Charities may be able to apply to the ATO for a different tax benefits including:
- income tax exemption and a refund of franking credits
- goods and services tax (GST) concessions
- fringe benefits tax (FBT) rebates and exemptions, and
- deductible gift recipient (DGR) status.
There are some reporting requirements associated with endorsement.Visit www.ato.gov.au/non-profit
If your company limited by guarantee is registered as a charity with the ACNC, you have ongoing obligations to the ACNC. You do not have to report annually to ASIC or notify ASIC of certain changes. Generally, you should contact ASIC for anything relating to the company's corporate status (such as change of company name) and the ACNC for anything relating to your charitable status. Other changes relate to holding members’ meetings, meeting civil statutory directors’ duties and keeping records. These are replaced by ACNC requirements.
If your company stops being registered with the ACNC, you must comply with all ASIC requirements again. For more information visit www.acnc.gov.au/CLG For current information about your charity, refer people to the ACNC Charity Register NOT the ASIC Register.
Some Aboriginal and Torres Strait Islander organisations are registered as corporations under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act). These corporations are regulated by the Office of the Registrar of Indigenous Corporations (ORIC). If your organisation is registered under the CATSI Act as a corporation, as well as with the ACNC as a charity, ORIC continues to be your corporate regulator. Continue to meet your ORIC obligations, including reporting.
ORIC and the ACNC are working together under a Memorandum of Agreement and Indigenous corporations can continue to operate and report to ORIC as they have always done. For more information visit www.acnc.gov.au/Indigenouscorporations and www.governance.reconciliation.org.au
Obligations because of the charity sub-sector Non-government schools .Non-government schools currently submit a financial questionnaire to the Department of Education and Training (DET). To help reduce duplication in reporting, for the 2014 and 2015 reporting periods, non-government schools do not have to provide financial information to the ACNC directly.
We will accept the financial questionnaire as meeting our requirements under the ACNC Act to complete the financial information in the Annual Information Statement (and to lodge a financial report for medium and large charities). More information: www.acnc.gov.au/nongovschools .Hospitals and other health sector agencies. Charities will have other obligations to Commonwealth agencies, such as for quality assurance, reporting and funding requirements. Refer to those agencies for more information.
There are a range of other Commonwealth agencies that your charity may have to report to. This will depend on your charity’s activities, structure and how it operates and will differ for many charities. Commonwealth agencies that your charity may need to report to include:
- Attorney-General’s Department
- Australian Bureau of Statistics
- Australian Competition and Consumer Commission
- Australian Prudential Regulation Authority
- Australian Skills Quality Authority
- Department of Agriculture
- Department of Communications
- Department of Defence
- Department of Employment
- Department of Finance
- Department of Foreign Affairs and Trade
- Department of Human Services
- Department of Immigration and Border Protection
- Department of Industry and Science
- Department of Infrastructure and Regional Development
- Department of Social Services
- Department of the Environment
- Department of the Prime Minister and Cabinet
- Department of the Treasury>
- Department of Veterans' Affairs
- Fair Work Commission
- Tertiary Education Quality and Standards Agency
We’ll get to state and territory obligations in the next part, but at this point we just wanted to note that there are a number of other laws that affect the operation of charities covering areas such as:
- Occupational health and safety
- Workers' compensation
For example, charities are required to meet obligations under work health and safety legislation and workers' compensation legislation in every state and territory that they operate in. It is important to note that your obligations may vary between states and territories, if your charity works in more than one. Some charities may have responsibilities that are specific to their area of work.
For example, charities that provide aged care services may need to meet other obligations or hold accreditation as part of working in this field, and charities that work with young people may require their staff and volunteers to undertake a working with children check or police check. Failing to comply with relevant laws in your state or territory can have serious consequences for your charity. Please refer to your relevant regulatory authority for more information.
Charities are also subject to regulation under state and territory laws, as well as being eligible for state and territory and local government concessions. The largest areas of duplication in terms of reporting and compliance relate to fundraising and incorporated associations.
- Charities that undertake activities to raise money (fundraising) may be required to meet obligations (such as applying for a permit or license to fundraise) to a fundraising regulator in the state or territory in which they operate.
- Charities that conduct fundraising through gaming activities (such as lotteries or raffles) may have obligations to the gaming regulator in the state or territory they are conducting the activity in.
State/territory and local government taxes and concessions
- Charities may also be eligible to receive exemptions from taxes collected by state and territory governments such as payroll tax, land tax and stamp duty.
- Some local government authorities may offer concessions to charities. For more information, contact the local government authority in the areas where your charity operates.
Incorporated associations laws
Most charities have the legal structure of 'incorporated association' and are regulated by state and territory governments. These charities have 'Inc.’ or ‘Incorporated’ at the end of their name. Incorporated associations may have obligations to state or territory government regulators, such as providing annual reports or keeping financial records. Charities must still meet these obligations,
Now we’ll look at some of the main ways charities are regulated, starting with fundraising. Fundraising is an activity that many charitable organisations undertake to finance their work. In almost all states and territories, organisations must apply for an authority, registration or licence to conduct fundraising appeals within that particular jurisdiction, unless a relevant exemption applies. For charities that fundraise in more than one state, they need to comply with the rules in each of those states.
- Aside from the Northern Territory, which has no fundraising regulator, fundraising regulations differ in each Australian state and territory. This places a significant regulatory burden on charities that operate across numerous jurisdictions. These differences primarily exist across three key areas:
- applying for fundraising registration or a license, and retaining eligibility to fundraise
- maintaining ongoing compliance
- Members of the public sometimes raise concerns about fundraising by charities, whether because they get too many phone calls or they dislike being asked to donate on the street. These concerns are referred to state and territory fundraising regulators.
You can see from the table on the slide how there are different pieces of fundraising legislation and regulations for each state, and the ACT. Often these have different requirements, which can generate red tape for charities working in more than one state or territory, and staying compliant can take a lot of time and effort. There are many in the sector advocating for central regulation of fundraising, or at least more streamlined processes.
The activity of fundraising is not an area the ACNC regulates, but it does require charities to keep records, report annually (including financial information) and meet governance standards. These standards and other requirements do require the boards of charities to be acting in the charity’s best interests and for the charity’s purpose at all times, including when making decisions about how to raise funds.
If you are a charity that fundraises in South Australia, if proposed legislation goes through you will soon not have to register or report to the South Australian regulator as long as you are registered and compliant with the ACNC. We’ll know more about this as the Bill passes through the South Australian Parliament, and can provide updates.
Charitable organisations are eligible for a number of state and territory taxation concessions depending on where they operate, and their eligibility based on the jurisdiction’s legislation. Specific exemptions or concessions are available for:
- Stamp duty (tax on written documents and certain transactions which may include motor vehicle registrations and transfers, insurance policies, leases, mortgages, hire purchase agreements, and transfers of property) – depending on the nature of the transaction and the eligibility criteria, some concessions and exemptions apply to charitable organisations
- Payroll tax (tax on the wages paid by employers) – an exemption is provided to charitable organisations in some jurisdictions for those who meet the eligibility criteria
- Land tax (tax levied on owners of taxable land, which is imposed in all states and territories except the Northern Territory) – if a charity becomes a landowner, it may be exempt from land tax, subject to certain qualifying criteria.
While charities may seek concessions, eligibility criteria and the concessions themselves vary between states and territories, creating a further administrative burden. You can see from the next slide the number of laws and regulations involved.
Even if an organisation has been registered as a charity and endorsed to receive Commonwealth charity tax concessions, it must re-establish its charitable status to the satisfaction of each state and territory revenue office to access exemptions from state and territory taxes such as pay-roll tax, land tax and stamp duty.
The relevant state or territory revenue office provides application forms and/or other guidance. The revenue office may require the charity to provide evidence to establish it meets the requirements of that office.
In the past state revenue offices would ask a charity for its information directly, like governing documents, financial statements and so on. Increasingly these offices are now getting this information from the ACNC Register, which reduces the work required to apply.
You can see from the slide the number of pieces of legislation and the regulations involved.
A charity can choose to incorporate under the associations’ incorporation legislation of its particular state or territory. By incorporating, it becomes a ‘legal person’. This means that it becomes a legal entity that is separate and distinct from its members. This means that it will continue to exist even if its members change. Incorporation also protects members from some individual liabilities.
Incorporated associations are regulated by the states and territories. Each incorporated associations regulator has requirements that each of these associations must meet, including keeping of records, holding elections and submitting returns, to continue to be able to operate as an incorporated association.
This slide looks at the different requirements for incorporated associations in a couple of different states and a territory, compared with the ACNC.
incorporated association requirements
A charity was incorporated in the ACT. However, as it grew and developed, the decision was made to move to a federated model, with incorporated associations in different states and territories, with the head office (and an overarching entity) in Victoria.
The result is that each local incorporated association must report to and notify the regulator in its state or territory, as well as the larger entity (as a registered charity) having obligations to the ACNC.
The other challenge for the charity is that the ACT law required its public officer to live in the ACT, but no board members live in the ACT. This creates a logistical issue for the charity.
As charitable incorporated associations are regulated at both the state and commonwealth level, this can result in duplicative reporting, notification and application requirements.
For example, in applying for incorporation, an association must prove it is not-for-profit (which it must also establish for charity registration), but the requirements vary between different state and territory regulators. There are also differences and duplications in reporting and notifying the regulator of changes, such as to directors or board members.
If a charity operates in a federated structure, with incorporated associations in various states and territories, it will need to report to and notify of changes in each of those states and territories, as well as to the ACNC. The ACNC has put transitional arrangements in place to accept a number of state and territory reports as satisfying its requirements.
If a charitable incorporated association grows to operate in more than one state, it must then choose whether to:
- incorporate in each state and territory where it operates
- remain incorporated in one state or territory, and apply to ASIC to operate as an Australian Registered Body under the Corporations Act 2001 (Registrable Australian Bodies
- change its structure to a federal structure, such as a company limited by guarantee.
The ACNC has been actively working with agencies in each state and territory, as well as Commonwealth agencies, to improve the alignment of regulation on charities across the states and territories so that there is more consistency and less red tape in general.
We have made agreements with a number of agencies to work together, and agencies are adopting the Charity Passport. In the meantime, we have made transitional arrangements to accept reports made to a number of agencies as meeting our requirements.
While there is still much work to do, and the process takes time, the ACNC is glad to see some positive changes occurring, particularly in South Australia and Tasmania.
In both these states, legislation has been tabled to their respective parliament that will mean, if passed, all incorporated associations who are registered with the ACNC will be exempt from reporting annually to the state regulator. In addition, the South Australian Bill would no longer require these charities to hold a fundraising license to collect donations in the state.
The ACNC remains committed to its object of reducing red tape in the sector and is actively working with other Australian government agencies and regulators to harmonise obligations for charities.
So, today we’ve covered the role of the ACNC, some of the challenges of regulatory burden for charities, in a national context, some of the relevant Commonwealth and state and territory regulators, and what we are doing to achieve a reduction in red tape, and some signs for the future.This brings us to the end of our formal presentation.
While we go through other sources of information on our website in the next slide, this is an opportunity for you to ask any questions you have via the question box on your dashboard, and we’ll allow time for answering them at the end of our presentation, and keep the webinar running.We’ll provide a list of useful links and contact details in the following slides, but just to confirm that we’ll continue to keep the webinar running after this formal presentation is finished.
If you have a question, please ask it in the question box in your GoToWebinar panel. We will answer it if we can, and if not we can reply later, to you directly via email. We do get many questions at the ACNC about the duties of charities that are companies limited by guarantee – we recommend you take a look at our guidance, which you can find at www.acnc.gov.au/clg. We’ve covered a lot today and suggested a number of pages on our website.
I’ve included the main pages on this slide, and the next is a list from our factsheet of who regulates Australian charities – downloadable from the regulator list page.
You can contact us through our Advice line on 13 ACNC between 9am and 6pm Australian Eastern Standard Time, Monday to Friday or by email at email@example.com. Email is useful if you have a more complicated question. Our Advice services team is great and we will do our best to help you. We are also very active on social media , including Facebook, Twitter and have a range of videos on our Youtube channel
We’ll finish there.Thank you for joining us today and for your questions. Nicole and Emma, Caitlin, Suhanya and Madison will stay online for the next 10 minutes to continue to answer your questions. Please wait and they’ll get back to you or ask you for your contact details to respond a bit later on. The ACNC runs webinars for charities on a broad range of topics. You can visit our webinar page to watch previous webinars at acnc.gov.au/webinars. Our next webinar will be on 7 June and its topic is ‘Reporting to the ACNC’
We’d appreciate any feedback you have, so that we can make any improvements to future webinars. Please let us know in the survey at the end of this webinar.You can also get in touch with the ACNC Education team directly at firstname.lastname@example.org.
Thanks everyone for all your help today in presenting this webinar. And thanks to everyone for attending. Goodbye and see you next time.