On 19 March 2014, the Social Services Minister Kevin Andrews took a step towards abolishing the Australian Charities and Not-for-profits Commission (ACNC) by introducing the Australian Charities and Not-for-profits Commission (Repeal) (No. 1) Bill 2014 (the Repeal Bill). This is the first of two bills that would implement the Government’s election commitment to abolish the ACNC.

The Repeal Bill would repeal the Australian Charities and Not-for-profits Commission Act 2012 (Cth) (the ACNC Act), thereby abolishing the ACNC. However, the Repeal Bill would not take effect until a second bill, the Australian Charities and Not-for-profits Commission (Repeal) (No. 2) Bill 2014 (the Second Bill) is also enacted. The Second Bill will detail the replacement arrangements for the ACNC, and is expected to be introduced in the Winter 2014 sittings of Parliament.

The Repeal Bill includes provisions that would:

1. Abolish the ACNC by repealing the ACNC Act.

2. Allow the Minister for Social Services to appoint (by legislative instrument) a successor agency for the ACNC. The successor agency must be an “agency” under the Financial Management and Accountability Act 1997 (Cth).

The Government has previously indicated that it would return the responsibility for determining an organisation’s charitable status to the Australian Tax Office (ATO). The ATO is a prescribed agency under that legislation.

3. Transfer the records held by the ACNC, and any investigations by the Ombudsman into the decisions of the ACNC, to the successor agency.

Minister Andrews has previously indicated that the Government would replace the ACNC with a National Centre for Excellence (NCE), which could be based on the United States’ Charity Navigator. He has said that the NCE would promote collaborative education, training and development, and that it would ultimately be owned by the NFP sector itself.

4. Protect the information that has been disclosed to the ACNC by registered charities and other not-for-profit organisations.

5. Require the chief executive of the successor agency to prepare and submit a final report about the ACNC’s operations during its final reporting period (which is anticipated to be the 2013-14 financial year).

The Explanatory Memorandum to the Repeal Bill indicates that the Government will, before introducing the Second Bill, undertake consultation about the replacement arrangements for the ACNC, consider the potential impacts of those arrangements on the NFP sector, and provide strategies for addressing the impacts identified during the consultation.

What does this mean for your organisation?

For today, no change.

In the future:

  • The responsibility for determining an organisation’s charitable status will likely return to the ATO. The ATO will continue to determine whether an organisation is entitled to access Commonwealth tax concessions and continues to comply with the applicable qualifying conditions.
  • For charities that are companies limited by guarantee, the governance and reporting obligations previously undertaken by the ACNC will be returned to the Australian Securities and Investments Commission (ASIC).
  • The ACNC’s governance standards, disclosure and compliance requirements are unlikely to continue to be mandatory, but could become best practice under the NCE.

We will keep you updated on developments in relation to the abolition of the ACNC and impacts to the not-for-profit sector. You can also follow the progress of the Repeal Bill via the parliamentary bills page.

If you would like further information on how these changes could impact on your organisation, please contact Dr Joanne Redburn or Steven Hunwicks.

Please note that the Repeal Bill (and the Government’s broader 2014 Autumn Repeal Day announcements) does not impact on the Charities Act 2013 (Cth) which commenced on 1 January 2014 and prescribes a statutory definition for “charity” and “charitable purpose”.

UPDATE: On 27 March 2014 the Repeal Bill was referred to the Senate Economics Legislation Committee. The Committee’s report is due to the House on 16 June 2014.