Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2010-2011-2012
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
AUSTRALIAN CHARITIES AND NOT-FOR-PROFITS COMMISSION BILL 2012
AUSTRALIAN CHARITIES AND NOT-FOR-PROFITS COMMISSION
(CONSEQUENTIAL AND TRANSITIONAL) BILL 2012
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by the authority of the
Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Amendments to the Australian Charities and
Not-for-profits Commission Bill 2012 ............................ 5
Chapter 2 Amendments to the Australian Charities and
Not-for-profits Commission (Consequential and
Transitional) Bill 2012 ................................................. 13
Glossary
The following abbreviations and acronyms are used throughout this
supplementary explanatory memorandum.
Abbreviation Definition
ABN Australian Business Number
ACNC Australian Charities and Not-for-profits
Commission
ACNC Bill Australian Charities and Not-for-profits
Commission Bill 2012
ACNC Commissioner Australian Charities and Not-for-profits
Commission Commissioner
Consequential and Transitional Australian Charities and Not-for-profits
Bill Commission (Consequential and
Transitional) Bill 2012
DGR deductible gift recipient
NFP not-for-profit
RIS Regulation Impact Statement
SES Senior Executive Service
1
General outline and financial impact
Amendments
The amendments to the Australian Charities and Not-for-profits
Commission Bill 2012 (the ACNC Bill) seek to:
· protect the independence of registered entities by ensuring
that the governance standards cannot prevent or constrain a
registered charity from undertaking important advocacy
functions;
· make the Government's commitment to consultation on the
governance standards an express requirement in the ACNC
Bill;
· allow basic religious charities to operate deductible gift
recipient funds, authorities or institutions that generate
annual revenue of less than $250,000, without the need to
obtain a separate Australian Business Number;
· streamline the process for providing notifications about
changes to governance standards for multiple registered
entities using the approved form; and
· make other technical corrections.
The amendments to the Australian Charities and Not-for-profits
Commission (Consequential and Transitional) Bill 2012 seek to:
· ensure the ACNC Commissioner must accept specified
reports lodged under the Schools Assistance Act 2008 as
meeting the annual financial reporting obligations under the
ACNC Bill during the transitional period;
· make a number of minor consequential amendments to tables
in the Taxation Administration Act 1953, which ensure that
the Commissioner of Taxation will be able collect
administrative penalties on behalf of the ACNC
Commissioner; and
· make other technical corrections.
Date of effect: The ACNC will commence operations on 1 October 2012.
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Australian Charities and Not-for-profits Commission Bill 2012 and Australian Charities and
Not-for-profits Commission (Consequential and Transitional) Bill 2012
Proposal announced: These amendments have not previously been
announced.
Financial impact: Nil.
Human rights implications: Nil.
Compliance cost impact: Nil.
4
Chapter 1
Amendments to the Australian Charities
and Not-for-profits Commission Bill 2012
Outline of chapter
1.1 This chapter explains the amendments to the Australian
Charities and Not-for-profits Commission Bill 2012 (ACNC Bill).
1.2 These amendments are explained by way of modification to the
explanatory memorandum to the Bill.
Amendments 1 to 4
1.3 To ensure the ongoing independence of the sector in any future
governance standards, amendments 1 and 2 make a minor change to the
objects clause of the Division on governance standards to ensure that the
standards are to be developed in accordance with the objects of this
ACNC Bill, which include, amongst other things, to support and sustain a
robust, vibrant, independent and innovative Australian not-for-profit
sector.
1.4 Amendment 3 adds a sub-heading to the ACNC Bill to make it
easier to read.
1.5 Amendment 4 ensures that the governance standards cannot
prevent or constrain a registered charity from engaging in political
advocacy for its charitable purpose, except where such advocacy is illegal
(from an Australian perspective).
1.6 This will protect the independence of registered entities from
inappropriate Government interference, and ensure them sufficient
autonomy in carrying out their operations by ensuring the governance
standards cannot limit a registered entity's ability to make its own
decisions on how to best meet its mission without undue influence and
control from the Commonwealth Government and its agencies.
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Australian Charities and Not-for-profits Commission Bill 2012
1.7 Replace paragraphs 5.40 and 5.41 of the Explanatory
Memorandum with the following:
5.40 The governance standards cannot prevent a registered charity
from undertaking an activity where that activity furthers, or is in aid
of, its purpose, and that activity is advocating or attempting to change
the law or government policy except where that activity is in breach of
an Australian law [Subsection 45-10(6)]. This will protect the
independence of registered entities from inappropriate Government
interference, and ensure them sufficient autonomy in carrying out their
operations by ensuring the governance standards cannot limit a
registered entity's ability to make its own decisions on how to best
meet its mission without undue influence and control from the
Commonwealth Government and its agencies.
5.41 The governance standards will ensure a minimum level of
accountability across the sector. If an entity is meeting the governance
and external conduct requirements as established in the regulations, it
does not mean that they are meeting best practice governance
outcomes (although they may be).
Amendments 5 and 6
1.8 On 17 May 2012, the Government announced that it would
progress the detailed contents of the governance standards and reporting
requirements by regulation, to enable further public consultation on these
issues to occur.
1.9 To make this commitment to consultation explicit, a provision
has been added to the ACNC Bill.
1.10 This amendment reaffirms the Government's prior commitments
to publicly consult on the governance and external conduct standards.
The consultation process will inform the development and content of these
standards.
1.11 Replace paragraph 5.10 of the explanatory memorandum with
the following:
5.10 The ACNC Bill sets up the framework for:
· a set of governance standards which apply to most registered
entities; and
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Amendments to the Australian Charities and Not-for-profits Commission Bill 2012
· a set of external conduct standards which apply to all
registered entities, regardless of entity type; and
allows the Governor-General to make regulations relating to
governance standards and external conduct standards. The
Government must publicly consult on any governance standards (or
any material changes to the governance standards) prior to them being
registered on the Federal Register of Legislative Instruments.
1.12 Replace paragraphs 5.31 and 5.32 of the explanatory
memorandum with the following:
5.31 The Governor-General may make regulations establishing
governance standards [Subsection 45-10(1)]. These standards must be
prospective see subsection 12(2) of the Legislative Instruments
Act 2003.
5.32 The Government must publicly consult on any governance
standards (or any material changes to the governance standards) prior
to them being registered on the Federal Register of Legislative
Instruments. Before the Governor-General considers making a
regulation relating to the governance standards, the Minister must be
satisfied that:
· appropriate consultation has been undertaken with:
- the not-for-profit sector (including through entities that
represent parts of the sector); and
- entities that have expertise in fields relevant to the
proposed regulation; and
- entities that are likely to be affected by the proposed
regulation; and
· relevant input received as part of that consultation has been
considered and adequately taken into account.
The Government's consultation process could involve providing
relevant entities with notifications inviting them to make submissions
by a specified date, or to participate in public hearings. The fact that
consultation does not occur, or that input is not taken into account,
does not affect the validity or enforceability of the regulation. These
changes replace the more general consultation requirements within
Part 3 of the Legislative Instruments Act 2003. [Subsection 45-15]
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Australian Charities and Not-for-profits Commission Bill 2012
1.13 Replace paragraph 5.54 of the explanatory memorandum with
the following:
5.54 The Governor-General may make regulations establishing
external conduct standards [Subsection 50-10(1)]. Before the
Governor-General considers making a regulation relating to the
external conduct standards, the Minister must be satisfied that:
· appropriate consultation has been undertaken with:
- the not-for-profit sector (including through entities that
represent parts of the sector); and
- entities that have expertise in fields relevant to the
proposed regulation; and
- entities that are likely to be affected by the proposed
regulation; and
· relevant input received as part of that consultation has been
considered and adequately taken into account.
The Government's consultation process could involve providing
relevant entities with notifications inviting them to make submissions
by a specified date, or to participate in public hearings. The fact that
consultation does not occur, or that input is not taken into account,
does not affect the validity or enforceability of the regulation. These
changes replace the more general consultation requirements within
Part 3 of the Legislative Instruments Act 2003. [Subsection 50-15]
Amendment 7
1.14 Replace paragraph 10.36 of the explanatory memorandum with
the following:
10.36 The ACNC Commissioner is able to delegate his or her
powers or functions in accordance with the Bill. The delegation must
be in writing to an SES employee, or an acting SES employee, that are
engaged under the Public Service Act 1999 and made available to
ACNC Commissioner by the Commissioner of Taxation.
[Subsection 115-55(1)]
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Amendments to the Australian Charities and Not-for-profits Commission Bill 2012
1.15 Replace paragraph 10.43 and 10.44 of the explanatory
memorandum with the following:
10.43 This Bill does not displace the existing common law duty of
employees to comply with lawful and reasonable directions by the
employer (the Commissioner of Taxation in relation to APS staff
provided to the ACNC Commissioner), or the existing duty of APS
employees to comply with a lawful and reasonable direction under the
APS Code of Conduct as set out in section 13 of the Public Service
Act 1999.
10.44 In the rare event that a conflict should arise between a
direction from the Commissioner of Taxation and the ACNC
Commissioner, staff must comply with the directions of the ACNC
Commissioner in relation to the ACNC Commissioner carrying out
functions under the ACNC Bill.
Amendment 8
1.16 Replace paragraphs 13.19 to 13.24 of the explanatory
memorandum with the following:
13.19 The entity must give the declaration to the agent
The entity must retain the declaration or a copy of
[Subsection 190-25(2)].
the declaration for:
· seven years after it is made; or
· a shorter period determined by the ACNC Commissioner in
writing for the entity; or
· a shorter period determined by the ACNC Commissioner by
legislative instrument for a class of entities that include the
entity.
[Subsection 190-25(3)]
13.20 A determination made by the ACNC Commissioner may
specify different periods for different classes of entities.
[Subsection 190-25(4)]
13.21 An entity must produce the declaration or copy if requested to
do so within that period by the ACNC Commissioner.
[Subsection 190-25(5)]
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Australian Charities and Not-for-profits Commission Bill 2012
13.22 The agent must not give the document to the ACNC
Commissioner before the entity makes the declaration
[Subsection 190-25(6)]. The entity must sign the declaration.
[Subsection 190-25(7)]
13.23 The declaration requirements in Sections 190-25 and 190-30
of the ACNC Bill do not apply where:
· a registered entity (or the lodging entity) functions as an
agent for another registered entity;
· the lodging entity has the authority to amend the governing
rules of the other registered entity; and
· the return, notice, statement, application or other document
submitted by the lodging entity relates to that amendments
which the lodging entity has the authority to make.
[Sections 190-40]
13.24 Providing an exemption from the declaration requirements in
certain circumstances addresses concerns raised by stakeholders with
unique governance structures, and will minimise compliance costs
associated with the regulatory obligations in the ACNC Bill.
1.17 Replace paragraph 13.25 with:
13.25 If an agent gives a document to the ACNC Commissioner in
the approved form on behalf of another entity, and the agent is not
exempt from complying with the requirements in section 190-30 (see
paragraphs 13.23 and 13.24 of this explanatory memorandum), the
agent must, if the document so requires, make a declaration in the
approved form stating that:
· the document has been prepared in accordance with the
information supplied by the other entity; and
· the agent has received a declaration from the other entity
stating that the information provided to the agent is true and
correct; and
· the agent is authorised by the other entity to give the
document to the ACNC Commissioner.
[Section 190-30]
10
Amendments to the Australian Charities and Not-for-profits Commission Bill 2012
Amendment 9
1.18 Amendment 9 allows a basic religious charity to operate
deductible gift recipient funds, authorities or institutions that generate
annual revenue of less than $250,000, without the need to obtain a
separate Australian Business Number (ABN).
1.19 Replace paragraphs 13.83 and 13.84 with the paragraphs below.
13.83 In the case where a basic religious charity operates one or
more DGR funds, authorities or institutions, and the total revenue
generated by the DGR funds, authorities or institutions is less than
$250,000, the entity would be considered a basic religious charity.
13.84 A basic religious charity which operates one or more DGR
funds, authorities or institutions that generate more than $250,000 in
revenue would be required to separate the DGR funds, authorities or
institutions into a separate entity if the charity wishes to be considered
a basic religious charity.
11
Chapter 2
Amendments to the Australian Charities
and Not-for-profits Commission
(Consequential and Transitional) Bill 2012
Outline of chapter
2.1 This chapter explains the amendments to the Australian
Charities and Not-for-Profits Commission (Consequential and
Transitional) Bill 2012 (Consequential and Transitional Bill).
2.2 These amendments are explained by way of modification to the
explanatory memorandum to the Bill.
Amendments 1 to 3
2.3 The Consequential and Transitional Bill provides the Australian
Charities and Not-for-profits Commission Commissioner (ACNC
Commissioner) with the discretion to accept reports, statements and other
documents given under an Australian law to other Australian government
entities, as satisfying the reporting obligations under the Bill [Schedule 1,
item 10 of the Consequential and Transitional Bill]. In exercising this discretion,
the Commissioner must have regard to certain matters identified in
paragraph 14.33 of the explanatory memorandum. The purpose of this
transitional arrangement is to enable the ACNC Commissioner to address
potential reporting duplication during the process of establishing the
ACNC as a one-stop shop regulator. It applies until the 2014-15 financial
year, or a later financial year prescribed by the regulations.
2.4 Amendment 1 to the Consequential and Transitional Bill adds a
sub-heading for ease of reference.
2.5 Amendment 2 to the Australian Charities and Not-for-profits
Commission (Consequential and Transitional) Bill 2012 provides that a
report (or reports) given under section 24 of the Schools Assistance
Act 2008 that covers the financial operations of a registered entity for a
financial year must be accepted by the ACNC Commissioner as meeting
the annual financial reporting obligations under Subdivision 60-C or 60-D
of the ACNC Bill 2012.
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Australian Charities and Not-for-profits Commission (Consequential and Transitional)
Bill 2012
2.6 Amendment 3 allows a substituted accounting period to be
adopted in relation to the report (or reports).
2.7 These amendments remove the discretion of the ACNC
Commissioner to accept the specified reports given under the Schools
Assistance Act 2008, and instead require the ACNC Commissioner to
accept the report (or reports), irrespective of the criteria listed in
subitem 10(2) in Schedule 1 to the Consequential and Transitional Bill.
The amendment applies only in relation to annual financial reporting and
does not apply to annual information statements.
2.8 These amendments will provide greater certainty that
non-government schools will not be subject to reporting duplication
during the process of establishing the ACNC.
2.9 Replace paragraph 14.32 of the explanatory memorandum with
the following:
14.32 Charitable Indigenous corporations are an example of a class
of entity that are intended to benefit from the exercise of the discretion
of the ACNC Commissioner. In the case of non-government schools,
however, the ACNC Commissioner has no discretion in respect of a
report (or reports) lodged under section 24 of the Schools Assistance
Act 2008, and must accept such a report (or reports) as meeting the
annual financial reporting obligations under Subdivision 60-C or 60-D
of the Consequential and Transitional Bill. This will provide greater
certainty that non-government schools will not be subject to reporting
duplication during the process of establishing the ACNC.
Amendments 4 and 5
2.10 The Consequential and Transitional Bill provides that
administrative penalties payable under the ACNC Bill are tax debts that
are collectable by the Commissioner of Taxation behalf of the
Commonwealth.
2.11 Amendments 4 and 5 make a number of minor consequential
amendments to tables in the Taxation Administration Act 1953, which
ensure that the Commissioner of Taxation will be able collect
administrative penalties under the taxation laws general collection and
recovery provisions.
14
Amendments to the Australian Charities and Not-for-profits Commission
(Consequential and Transitional) Bill 2012
2.12 Replace paragraph 15.50 of the explanatory memorandum with
the following:
15.50 The ACNC Consequential and Transitional Bill amends
Subdivision 426-B in Schedule 1 to the Taxation Administration
Act 1953. This Subdivision sets out the ATO's endorsement processes
for charitable entities under numerous tax laws including the A New
Tax System (Goods and Service) Act 1999. The ACNC Consequential
and Transitional Bill also amend section 8AAB of the Taxation
Administration Act 1953 to ensure that unpaid administrative penalties
issued by the ACNC accrue general interest charge; and
subsection 250-10(2) in Schedule 1 to the Taxation Administration
Act 1953 to clarify that administrative penalties issued by the ACNC,
and related general interest charge, are treated in the same way as
tax-related liabilities.
Amendment 6
2.13 The amendment replaces the reference to subsection 601HD(2),
with a reference to subsection 601DH(2). This amendment corrects a
typographical error.
15
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