Venue:
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Teleconference
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Date:
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23 November 2011
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Start:
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10.00am
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Finish:
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12.30pm
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Chair:
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Jason Aitchison
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Contact and Secretariat:
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Amy Land Pejoska
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Contact phone:
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(02) 6216 1111
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Attendees
Don O'Brien
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BDO
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James Winter
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BDO
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David Farley
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RSL NSW and Lawler Partners
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Victor Hamit
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Wentworth Lawyers
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Anthony Bowd
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VicSport
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Jason Wrigley
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Ersnt & Young
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Peter Fogale
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KPMG
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Paul Lyon
John MCallum
Penny Wilson
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PKF
Clubs Queensland
RSL & Services Clubs Associations
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Chris Leggett
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Treasury
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Tamara Hartwich
Liz Swaine
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Treasury
Treasury
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Mark Ferguson
Jason Aitchison
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ACNC Implementation Taskforce
Director, Non-Profit Centre and Government Liaison ATO
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Peter McConville
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ME&I, Employee Obligations ATO
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Marloney Ng
Mark Campbell
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ITX, Risk & Intelligence ATO
Technical Advisor, Non-Profit Centre ATO
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Disclaimer
Clubs Consultative Forum agendas, minutes and related papers are not binding on the Australian Taxation Office (ATO) or any of the other bodies referred to in these papers. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.
Jason Aitchison welcomed members to the teleconference and asked for comments on the draft minutes from 21 September 2011.
It was agreed to remove Forum member names from the minutes in line with the Charities Consultative Committee practice, unless they want their names attributed. ATO names will stay in as will the names of those requesting changes to the minutes.
An update on the action items from the 21 September 2011 meeting was provided:
Action item
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1
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Description
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Incorporate change to minutes from last meeting.
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Responsibility
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Amy Land Pejoska
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Due date
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Completed
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Action item
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2
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Description
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Reiterate to Treasury the Clubs Consultative Forum's interest in having a day-long detailed meeting with Treasury officials on the Better targeting of not-for-profit tax concessions exposure draft legislation, as soon as possible after the public consultation period commences, and arrange the meeting if Treasury agrees to it.
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Responsibility
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Jason Aitchison
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Due date
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Completed
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The second Treasury Not-for-profit Reform newsletter was issued Monday 21 November and currently has 2000 subscribers.
The senate passed the reforms to public ancillary funds yesterday.
The draft guidelines will likely change slightly to reflect comments received during consultation. These guidelines need to be in place by end of calendar year for a 1 January 2012 start date.
COAG not-for-profit working group
- Made up of all government Treasuries around Australia
- Had productive conversations at the meeting predominantly around reducing red tape
- Most State and Territory Treasuries have set up a process to disseminate information to all relevant departments
- Planned work schedule will be agreed early next year
Review into company guarantee
Considering the amount of consultations for the sector occurring at present, the review has been postponed til March 2012.
Fundraising review
The draft consultation paper is being finalised - it will be released shortly.
Better targeting of not-for-profit tax concessions
- Finalised first round of consultation and developed a number of models for further consultation.
- A Framing Paper will go to confidential consultation in December.
- There was some discussion, including:
- Jason Aitchison queried whether the backdating to 1 July 2011 is a concern and asked whether grandfathering and transition periods would be developed. Treasury acknowledged the concern and responded that the Framing Paper outlines these arrangements.
In Australia
A revised exposure draft to incorporate concerns is being finalised. Major changes have been made to address concerns raised during consultation.
Next stages - second round of consultation will occur in two stages.
- Consult with a select group including Non-Profit Sector Reform Council - please contact us if you would like to be included.
- A revised draft to issue for a second round of public consultation late 2012.
Outcomes of the Tax Forum
Government will be establishing a Special Tax Forum Not-for-profit (NFP) Working Group to further NFP tax reform. They will feed into the second round of tax reforms.
The terms of reference are to issue shortly.
Review into government arrangements for not-for-profit sector
Discussion paper is being finalised.
The governance review is scheduled to be released by the end of November-early December and will feed into Australian Charities and Not-for-profits Commission (ACNC) legislation.
ACNC legislation
The appointment processes - ACNC needs a commissioner and remaining advisory board members. Treasury will run this recruitment process in line with government guidelines.
ACNC legislation needs to be passed before appointments can be made.
Process and timing
- The newsletter outlines planned implementation dates.
- Legislation needs to receive Royal Assent by mid May 2012.
- Things need to be finalised by the end of February so consultation over the Christmas period will be necessary.
- There are three Treasury forums being run in mid-December in various places. The forums will cover governance and legislation issues.
- The ACNC Taskforce discussion paper deals with mainly administrative issues - statements, forms etc. Whilst these are complimentary there are different issues to the proposed legislation. The paper is scheduled to be linked with the release of the ACNC legislation.
- There will be gaps in the ACNC legislation with some amendments required to be made. Factsheets will accompany the legislation.
- Explanatory material will be provided.
Definition of charity
Discussion paper out now - consultation closes 9 December 2011.
Next step is draft is legislation - likely to be out mid 2012. Treasury will be running public consultation for the draft legislation. It may go to a senate committee before being introduced to parliament.
Treasury will also consider including a question and answer section about codification in its next newsletter.
Treasury are working with the states and territories to close any gaps and attempting to align the charities law. There will be continued attempts to align the law through state consultation.
Outcome of Tax Forum
The Fringe Benefit Tax (FBT) and other NFP concessions were discussed as being inequitable, complicated and imposing undue compliance costs. A special Tax Forum NFP Working Group is to be set up but the terms of reference and membership are not yet announced. It will focus on the FBT and Deductible Gift Recipient (DGR) concessions.
Anthony Bowd presented his agenda item on the definition of charity reforms. He made the following points:
- He is aware the ATO and Treasury have some cross over in forming the ACNC.
- The Clubs sector considers the definition of charity reforms to be very important.
- The main issue is will there be any other changes to any other NFP tax concessions once the definition of charity is legislated?
Treasury responded that the reform will only affect the word 'charity' in the tax law. For widespread impact the agreement of the states and territories is required.
The definitions of religion and Public Benevolent Institution will not change. The distinction between institutions and funds will be removed.
From 1 July 2012 the ACNC will develop its own guidance on the current definition of charity according to the common law. The ATO rulings in respect of determining whether an entity will be charitable will be withdrawn, however the ACNC has indicated it will adopt the ATO rulings for consistency and clarity until the new definition of charity is introduced from 1 July 2013.
Division 50 of the Income Tax Assessment Act 1997 and some other sections of the Act are being reviewed and updated to ensure consistency in language.
The phrase 'registered charity' will be used to signify that a charity is registered with the ACNC, which it must be in order for the ATO to endorse it for tax concessions.
Anthony Bowd asked how much the Better Targeting reforms will cut across the availability of tax concessions for the NFP sector.
Chris Leggett responded that the changes will be quite significant for unrelated commercial activities. It will be the special conditions that will be specified in the 'In Australia' legislation that will apply when registered charities seek tax concessions.
He added that there will be an opportunity to comment on the Better Targeting reforms. Once the reforms are in place they will ensure that the tax concessions only support altruistic activities, be they charitable or broader NFP activities.
Treasury confirmed that within the other NFP tax concessions a 'mainly' test would remain, and would not be tightened to an 'only' test, for example, entities promoting sport on a not-for-profit basis.
Mark Campbell reminded members that a statutory definition of not-for-profit will be included in the In Australia reforms.
Paul Lyon presented his agenda item on the Mount Pritchard decision. According to an Aggressive Tax Planning article on the case, a seven year ruling was given, and an amalgamation occurred. The Division 50 income tax exemption no longer applied.
Jason Aitchison noted that the ATO generally does not comment on the specific taxpayers even if the main facts and decision of the court are in the public domain as certain information not in the public domain may be at risk of accidental disclosure.
Mark Campbell led some discussion on the broad principles for determining whether an exemption still applies, and stated that looking at point-in-time fact changes from those a private binding ruling relies on is very important.
It was noted that a period of three years is the standard length of a private binding ruling.
Action item
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3
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Description
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Circulate relevant extracts on private binding rulings to Clubs Consultative Forum members out of session.
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Responsibility
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Amy Land Pejoska
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Due date
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As soon as possible
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Mark Ferguson of the ACNC taskforce provided an update to implementation of arrangements to establish the new regulator.
General update
- Since the last meeting the Taskforce has been very busy with consolidation of early work, building relationships and operationalising as much as possible.
- The taskforce has moved to new premises in MTAA House, Barton. This will enable co-location with others such as ATO staff working on ACNC implementation.
- We have attended meetings with some of the states, advancing the idea of a 'one stop shop'. The response has been largely welcoming and open.
- The idea of using the term 'passport' as a reference to reporting once, use often was proposed. The members' agreed that is was an appropriate description.
- Some secondees were staying with the Taskforce for longer than the three months that was originally announced by Ms Pascoe.
- Currently Taskforce members are meeting with professional or peak bodies around twice a week, including Pilch Connect, CPA and Our Community. Some recurring themes are emerging:
- there is not a high level of awareness of ACNC
- people have only very basic understanding of what is happening
- primarily only simple questions are being asked
- informed people are concerned that there will be an increase of red tape
- there is also a recurring concern that the ACNC won't be independent.
- On a positive note, the implementation of a regulator for the sector has been viewed as positive. We advised of our regulatory approach as:
- assuming honesty unless proved otherwise
- being a benign regulator except where there is deliberate wrongdoing
- operating for the community.
- There have also been many questions about the impact of ACNC in relation to small not for profits. The taskforce plans to meet with small NFPs as well as church groups to address these concerns.
Location
- The ACNC head office has been announced as being in Melbourne, having secured a floor in 735 Collins Street. This will be a co-location with the ATO as the biggest tenant in the new building. The ACNC will have separate entrance and signage but many shared services and facilities.
- We hope to move in on 1 May 2012.
- The need for a presence in Canberra has been critically assessed. We are looking at keeping some people in Canberra - particularly liaison roles and the new commissioner, however it won't be a dedicated full time team. We have had discussions re: renting space from another independent regulator.
Portal design
(Incorporating messages coming out of roundtables)
- It is clear that a portal is an important vehicle to get messages out but also to receive messages and transact with people.
- We are keen to build a level of capability - one stop shop, passport etc.
- We are impressed with the New Zealand capability in this space particularly around the open search function which provides various categories to use as search parameters.
- The taskforce is taking a lead in working closely with the ATO to make this happen.
- A supplier who has worked with non profits previously has been chosen to help build this.
- A big advantage of the system that has been chosen is its flexibility.
- Functionality and content of the portal need to be signed off.
Recruitment
- We have finalised a proposed organisational structure which sees two Assistant Commissioners sitting under the Commissioner. The structure is finalised subject to the sign-off from the Public Service Commissioner for the additional Assistant Commissioner role.
- A copy of the structure was provided.
- The communications team will be closely linked with the policy and education team.
- All registrations will be directed to website with a phone support team staffed by ACNC personnel.
- A recruitment agency has been employed to look after the recruitment needs with advertisements to appear by end of November, with interviews in January 2012.
- The Assistant Commissioners will likely be appointed prior to the confirmation by the Government of the Commissioner.
ACNC culture
- ACNC Implementation Taskforce has commissioned Val Braithwaite from the ANU to write a draft paper relating to the values and culture of the ACNC. Important values to be listed include independence, integrity, fairness, respect and accountability.
- Relating to regulatory approach we will adopt:
- mainstreaming accepted practice e.g. expect reasonable fiduciary and governance standards
- use of the public as watchdogs and having open interactions with them
- a benign approach to the sector, unbiased, however firm but fair.
Memorandum of understanding
ACNC Implementation Taskforce has been in discussion with the ATO in relation to recruitment and human resource issues. To address perceptions of independence, a recruitment agency has been employed.
As a side issue, we would like to add that the ATO have been fantastic with their support to us and specifically now in organising a delegation so the ACNC Taskforce Commissioner can sign off on recruitment.
Discussion Paper
There will be a discussion paper out shortly outlining where we are at and what considerations have been made and still need to be made to further implementation.
Roundtable topics
The summaries of issues from the roundtables will feed into the discussion paper due soon. The discussion paper will also cover issues related to other aspects of ACNC implementation.
Portal timing
Functionality and content for the portal is still to be signed off. There is a large section about these topics in the discussion paper.
Consultation
A timeline of planned consultation was provided to the group. The consultation is to complement the discussion paper.
There will be two sessions in most capital cities around the country. Discussion will be centred on the proposals contained in the discussion paper.
The ACNC website contains more information. Content is updated on a weekly basis.
We are promoting the consultations through the normal communication channels plus local media.
We are also conscious of the fact that there is alot of consultation and feedback sought presently so timing is very important.
More content is being added to YouTube all the time which includes providing list of sector representatives and visiting international speakers.
In response to a question about who is the target for consultation, it was stated that the whole sector, public and anyone with an interest is welcome. There will be an online forum and face-to-face consultation.
Jason Aitchison provided an update of the ATO's progress in implementing the ACNC's operating environment.
The following activities are presently continuing:
- The funding required for ACNC to build systems and conduct consultation is being delivered.
- Assistance with recruitment processes and location issues is continuing.
- Assistance with back office systems has also been given and continues.
Jason Aitchison checked with members if they thought the International Tax Schedules consultation was of relevance to them. Members suggested that while they may be interested in some ATO consultations as tax practitioners there was no relevance for the Clubs Forum itself.
Meeting closed 12.30pm.
The next Clubs Forum meeting is scheduled for March 2012 in Sydney
Last Modified: Wednesday, 15 May 2013