Charity Regulator Moves on Senate Evidence

The charity regulator, the ACNC, has moved to correct what it says are key factual errors made by some of its opponents at the Senate inquiry hearing into the Coalition Government’s Repeal Bill.

The Australian Charities and Not-for-profits Commission has made a further submission to the Senate inquiry into the Repeal Bill (Submission 95.1) to correct what is says are some of the key factual errors in the statements made as well as answering questions raised during the hearing.

The ACNC said it was apparent during the course of the hearing that there were several matters that were answered incorrectly by witnesses and this may have caused confusion for the Senators.

“There are also some important factual errors or misunderstandings in some of the submissions,” it said.

The additional submission address some of the statements made in an individual submission by Peter Hersh in his capacity as a director of Logicca Chartered Accounts as well as statements from the Australian Catholic Bishops Conference, the Financial Services Council, Catholic Health Australia, the Housing Industry Association and the Association of Australian Medical Research Institutes.

Peter Hersh’s submission (Number 22) points to changes to regulatory obligations and auditors powers.

“My strongly held view is that the ACNC since its inception has failed in 1, has done a number of useful things in 2 and has dramatically increased unnecessary regulatory obligations on the sector particularly the small charities,” he said.

“Mr Hersh was concerned that a number of important controls in the Corporations Act had been ‘switched off’, and that this has diluted the authority of the auditor and their ability to do their work (a potentially important matter given the role of an auditor as a crucial ‘check and balance’),” the ACNC said in its additional submission.

“While some provisions of the Corporations Act have been ‘switched off’, there are provisions that are ‘turned on’ in the ACNC Act to replace them,” the ACNC said.

Hersh also told the Senate inquiry that large charities structured as companies limited by guarantee were equivalent to public companies and should be subject to oversight by ASIC.

“A charity that feels it does not require ASIC regulation is free to structure itself differently. The ACNC has failed to reduce red tape and has practically increased red tape for small charities,” he said.

The ACNC said its role was to determine charitable status.

“The ACNC Act provides that this includes determining Public Benevolent Institution (PBI) status, Health Promotion status, and Harm Prevention status. The ATO determines DGR and other charitable taxation concessions and benefits,” it said.

The ACNC additional submission also addressed reporting obligations including the Annual Information Statement and Financial Reporting Requirements.

“The 2013 AIS provides core, up-to-date information that helps provide a credible register of charities, essential given that many details contained in the data migrated from the ATO have been found to be incorrect (more than 5,600 paper ‘change of details’ forms have been received up to 28 May 2014 and over 5,500 pieces of mail have been returned unopened),” the ACNC said.

“Basic Religious Charities do not have to answer any financial questions or provide any financial reports. Commencing 2014 medium and large charities are required to attach financial reports to their 2014 Annual Information Statements. It is voluntary for small charities

“The revenue limits for determining charity size were based on the revenue limits in the Corporations Act relating to size of companies limited by guarantee.”

More than 154 submissions have been been uploaded to the Senate Inquiry site with more than 80 per cent supporting the retention of the ACNC.  

Thirteen organisations and individuals gave evidence at Friday’s Senate inquiry public hearing. Seven of those supported the repeal of the ACNC Act.

The Australian Charities and Not-for-profit Commission (Repeal) (No 1) Bill 2014 was introduced into the House of Representatives on March 19 and referred to the Senate Economics Legislation Committee on March 27 for inquiry and report.

The Inquiry hearing was chaired by Liberal Senator David Bushby. Submissions to the Committee closed on May 2 and a report is expected on June 16.