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Three changes affecting charity governance

2 July 2020 at 7:00 am
Daryl Jones
Over the last few months, a number of significant issues have been happening in the NFP sector. Daryl Jones from HLB Mann Judd Brisbane outlines some of the things you should be aware of.

Daryl Jones | 2 July 2020 at 7:00 am


Three changes affecting charity governance
2 July 2020 at 7:00 am

Over the last few months, a number of significant issues have been happening in the NFP sector. Daryl Jones from HLB Mann Judd Brisbane outlines some of the things you should be aware of.

1. JobKeeper Payment for NFPs

The government introduced a number of changes and confirmed existing arrangements already announced. In summary:

  • The decline in turnover test is applied at the employer entity level which includes turnover of branches and sub-entities.
  • Charities registered with the ACNC (not universities or schools) can apply the 15 per cent decline in turnover threshold for the first JobKeeper fortnight beginning 30 March 2020.
  • In working out turnover, charities include gifts, whether or not tax deductible.
  • ACNC registered charities must include in turnover payments received for providing NGIS services.
  • Government grants received by an ACNC-registered charity are included in the turnover calculation unless the charity makes an election to exclude such grants.
  • Charities who elect to exclude government grants from their turnover, do not need to notify the fully government funded employees as they are not relevant employees and therefore are not required to be notified of the charity’s election to participate in the JobKeeper scheme.

2. Deductible gift recipient (DGR) reforms delayed

On 13 May 2020, Senator Zed Seselja, assistant minister for finance, charities and electoral matters, announced that the government remains committed to reforming the administration and oversight of DGRs. However, given legislative delays brought on by the COVID-19 pandemic, three reforms that were scheduled to be implemented from 1 July 2020 have been delayed.  

These relate to:

  • requiring non-government organisations wishing to hold DGR status to be registered as a charity with the ACNC;
  • the removal of public fund requirements for DGRs; and
  • transferring the administration of the four DGR Registers to the Australian Taxation Office (ATO) and the ACNC.

3. Australian Charities and Not-for-profits Commission Legislation Review 2018

On 31 May 2018, a panel chaired by Patrick McClure AO handed the assistant minister to the treasurer its report “Strengthening for Purpose: The Australian Charities and Not-For-Profits Commission Legislation Review”.  

The report makes 30 recommendations to strengthen the ACNC’s legislative framework that focus on issues including the ACNCs objects, functions and powers, the overall regulatory framework, and red tape reduction for charities.

The government response to the report was released on 6 March 2020, its key responses being:

Supporting an effective regulator

  • Enabling swifter decision making through expanded delegation powers.
  • Enhancing ACNC powers to detect breaches of governance standards and deal with misconduct.
  • Prioritising education and research.

Reducing red tape

  • Adjusting the reporting thresholds for registered charities.
  • Streamlining and harmonising the regulatory requirements across all jurisdictions.
  • Simplifying reporting requirements for small entities.
  • Sharing data on charities between Commonwealth agencies.

Strengthening trust

  • Mandating the disclosure of related party transactions and, for large charities, aggregated remuneration paid to responsible persons.
  • Sharing information on ACNC investigations, when in the public interest.
  • Disqualifying responsible persons who have certain criminal convictions.

Daryl Jones  |  @ProBonoNews

Daryl Jones is director of tax consulting at HLB Mann Judd Brisbane.

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