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How to manage governance and compliance with the new NFP regime. Anne Robinson Solicitor Director Prolegis Lawyers, Sydney. Outline. Introduction Reform Timeline ACNC role and impact Governance Standards Definition of Charity Tax Concession Charity (TCC) Deductible Gift Recipient (DGR)

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How to manage governance and compliance with the new NFP regime

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How to manage governance and compliance with the new NFP regime

Anne Robinson

Solicitor DirectorProlegis Lawyers, Sydney


Outline

Introduction

Reform Timeline

ACNC role and impact

Governance Standards

Definition of Charity

Tax Concession Charity (TCC)

Deductible Gift Recipient (DGR)

Compliance …


Introduction

The whole landscape for charities/NFPs is changing. What are the implications for you:

  • governance

  • compliance


Scope of reforms


ReformTimeline

Changes already made

Imminent changes


What are the relevant changes?

Further proposed, likely or possible changes


What are the relevant changes?

Further proposed, likely or possible changes


What are the relevant changes?

Further proposed, likely or possible changes


New ACNC and related changes: structure of ACNC


New ACNC: roles of ACNC?


New ACNC: who will be affected?

All charities:

Eventually, all NFPs


New ACNC: Day 1 impact on you and your board?


New ACNC: Reporting and other ongoing requirements?


New ACNC: Reporting and other ongoing requirements?


New ACNC: Extensive new compliance, enforcement and related powers

Compliance pyramid


New ACNC: Extensive new compliance, enforcement and related powers

Compliance pyramid


Governancestandards

ACNC Act framework for principle-based minimum standards to apply to all registered entities

Effect of the standards is to enable trigger for sanction regime

Consultation still on ‘turning off’ of Corporations Act provisions ss.180-183 etc


Personal liability re management of registered entities

‘registered entity’= charity registered with ACNC (initially)

‘responsible entity’ = individual directors/trustees/trustee corporation responsible for decision-making/management/compliance

Different regimes and standards for:

  • bodies corporate,

  • trusts, and

  • unincorporated associations.


Personal liability re management of registered entities


Definition of Charity

Four heads of charity:

  • The relief of poverty

  • The advancement of education

  • The advancement of religion

  • Other purposes beneficial to the community

    Statutory definition

  • Bill & Explanatory Memorandum to be released in February 2013


What hasn’t changed…

Requirement to self-assess entitlement to endorsements for TCC, ITEF and DGR

What has changed?

Further transparency with ACNC public portal

Annual Information Statement (AIS)


Tax Concession Charity (TCC)

Requirements for TCC endorsement:

  • Established and maintained for charitable purposes

  • Not-for-profit

  • Satisfy ‘in-Australia’ test

    What changes are coming?

  • Statutory definition of charity

  • Change of the ‘in-Australia’ test

  • Applications to be lodged with ACNC


Tax Concession Charity (TCC): charitable fund and ITEF

The fund must be applied for the purposes for which it is established.

Additional 3 tests for a charitable fund:

  • Australian purpose test; or

  • DGR test; or

  • Distribution test

    Other requirements for ITEF

  • Not provide for, or establish ancillary funds; and

  • Established solely for establishing DGRs or for the purpose of providing money, property or benefits to income tax exempt DGRs.


Deductible Gift Recipient (DGR): basics

Donations to a DGR is tax deductible.

More than 40 different categories of DGR set out in the Income Tax Assessment Act (Cth) 1997.

Requirements for endorsement as a DGR differ depending on which DGR category you are applying (e.g. taxation rulings, guidelines, ministerial approval).


Compliance how to…

Develop and maintain a compliance manual for recording self-reviews

Report to the board annually on compliance outcomes

Maintain checklist of governance standards compliance for on-going reference


How to manage governance and compliance with the new NFP regime

Anne Robinson

Prolegis Lawyers, Sydney


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