On 20 December 2017, the Government announced a review of the Australian Charities and Not-for-profits Commission Act 2012 (Cth). A panel was appointed to carry out this review.

The purpose of the review was to require the Panel to:

  1. examine the extent to which the objects of the ACNC Acts continue to be relevant;
  2. assess the effectiveness  of  the  provisions  and  the  regulatory  framework  established  by  the ACNC Acts to achieve the objects;
  3. consider whether the powers and the functions of the Commissioner of the Australian Charities and Not-for-profits Commission (Commissioner) are sufficient to enable these objects to be met; and
  4. consider whether any amendments to the ACNC Acts are required to enable the achievement of the objects and to equip the Commissioner to respond to both known and emerging issues.

In August 2018, the Government tabled the Panel’s report in Parliament which set out 30 proposed recommendations.

After extensive consultation with various stakeholders relating to the charity sector, on 6 March 2020, the Australian Government provided its response to the Panel’s review and the set out the Government’s position on each of the 30 recommendations.

Some important responses to note:

  1. No change to the functions or current objects of the ACNC.
  2. The ACNC can still remove a responsible person; however, the Government will mandate additional criteria that the Commissioner will be required to consider when making a decision to remove or replace a responsible person.
  3. The ACNC advisory board can proactively review issues and advise the Government of its own initiative.
  4. Governance standard 3 is to remain which requires that a charity not commit an offence under Australian Laws. Governance Standard 5 is to also remain unchanged, with ‘perceived’ conflicts to be disclosed.
  5. Self‑assessment is sufficient by a charity that it has complied with comparable governance requirements and makes a declaration to that effect in the Annual Information Statement.
  6. The Government will further consult on whether to “turn on” the director’s duties under the Corporations Act 2001 for charities that are companies.
  7. Simplified disclosure for small charities.
  8. Related party transactions to be disclosed as part of financial disclosures.
  9. Increased disclosure of board and executive remuneration for large charities.
  10. No changes to financial reporting exemptions for basic religious charities.
  11. Enhanced resources relating to criminal intelligence databases.
  12. No changes to the Australian Consumer Law to clarify the application to charities.

A copy of the Government’s response can be accessed using the following link: https://treasury.gov.au/sites/default/files/2020-03/p2020-61958-govt-response.pdf

Where to from here?

At some point in time, the accepted recommendations can be expected to form part of tabled draft legislation.

We can comment further on the reforms once this occurs.

In the meantime, you can contact Birchgrove Legal regarding any questions that you may have regarding the above or charity in general.

Birchgrove Legal is a boutique Sydney law firm that specialises in the not-for-practice sector. Its market-leading practice is at the cutting edge of innovative approaches to serving NFP sector organisations across the spectrum of entity types. Get in touch with one of our authors to discuss your needs further.

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