Charities Consultative Committee minutes - 14 February 2012

8. ACNC Implementation Taskforce update

Susan Pascoe presented this topic. Two handouts were distributed.

Recruitment

• Extremely high calibre candidates. Strong bias towards legal and accounting skills.
• From April transition will commence between Taskforce and ongoing staff.
• Tremendous support from recruitment people in ATO.

Communications

• YouTube is being updated regularly.
• Facebook forum has been being well used while the Taskforce were out for consultations.
• Feedback on the ACNC Taskforce consultation paper is due on 27 February 2012. The Taskforce will spend a lot of time on reporting framework and educational strategy in March.

Consultations and feedback

• We got a range of suggestions like delaying full reporting or allowing each entity to determine their own reporting format.
• The sector supports the 'report once use often' concept.

Information Portal

The website is sophisticated. An enormous amount of work is going into its development, with the ATO. Increasingly, ACNC recruits will take it up and continue the work. The Taskforce have recruited a technical expert.

Document 2 - Key themes from Community Consultations

• A short summary will be prepared in the coming weeks.
• The reporting framework was a key topic.
• Role of ATO was discussed.
• Registration process was clarified.
• Governance arrangements - a lot of suggestions were received.
• One stop shop reporting - people supported the initiative and hoped the states and territories would come on board.
• Tasmania and WA currently have no reporting requirements, so harder to be credible that reporting requirements will be reduced for these jurisdictions.
• The tension between red tape reduction and accountability was evident.
• Tensions around privacy of public ancillary funds that need to be worked through.
• Standard business reporting, very strong views about the AASB.
• Fundraising was a key issue. Notion of whether a charity was spending too much money on administration vs charitable purposes. Could a sensible amount be imposed?
• The issue of fees taken by fundraising 'third parties' was also raised as a concern.
• Members raised some questions and comments.
• There needs to be some education about administrative costs. A certain level of costs is required, and the public needs to understand this.
• Administrative costs will become more transparent with the new reporting requirements.
• Transparency had to be weighed against privacy and autonomy. There are valid reasons why donors do not wish to be identified. Members thought that accountability should remain tiered between DGRs, charities and other NFPs.
• It is incumbent on government only to ask for financial information that is defined in the standard chart of accounts.
• Education, information portal were not big issues.
• Standard business reporting - some issues.
• Other issues such as local government were touched on.
• The Committee further discussed Susan Pascoe's presentation:

Need to guarantee there would be no "disendorsement - re-endorsement" process, but it would be a seamless process for charities to internally restructure, merge, demerge, but each sub-entity could remain endorsed for charitable status with the ACNC if they have an internal process to certify the status.

• Members queried how the roles would be shared between ACNC and ATO for example with compliance activity. Michael Hardy explained that the ATO could share information with the ACNC. The ATO could investigate purely tax issues. It would not be looking at mission drift but it could pass the information on. The ACNC would likewise not pursue tax concession issues in its compliance activities but could share information with the ATO.
• The two special conditions will be the 'in Australia' requirement and the winding up clause.
• The ATO would be making the assessment, and even if an entity obtained charitable status from the ACNC, if it didn't meet the in Australia requirement, it would not get the tax concessions.
• If the ACNC looks back and deregisters a charity and backdates the deregistration, the ATO then needs to also review back the tax concessions to the same date.
• A member suggested that assets should stay with a charitable purpose and poor directors should be replaced, rather than winding up the charity as a whole. This was the purpose of giving the ACNC the power to intervene in charities to replace directors. If you simply remove the tax concessions or the registration without protecting the assets, this is a poor outcome. But the cooperation of the states and territories is essential.

Sections within Agenda items

• 1. Introductions of new members; review of minutes
• 2. Review of action items from previous meetings
• 3. General update on the Government's NFP Reform Agenda
• 4-7. Subject to confidentiality
• 8. ACNC Implementation Taskforce update
• 4-7. Resumption of discussion on Treasury topics
• 9. Other business