Page Contents

What is the ACNC?
Which Organisations does the ACNC apply to?
ACNC Registration Process
Reporting Requirements
Annual Information Statement
Audit & Financial Statement Lodgement
Basic Religious Charities
Substituted Accounting Periods
ACNC Governance Standards
ACNC Register

What is the ACNC?

The Australian Charities and Not-for-profits Commission (ACNC) commenced operations on 3 December 2012. The ACNC is responsible for registration of charities seeking tax concessions in Australia and ongoing administration of charity registration requirements, including financial reporting. Failure to register with the ACNC or failure to meet ongoing registration requirements may result in a loss of Commonwealth tax concessions.

The ACNC also provides a public online information portal with charity registration and financial details for all registered charities. Some exemptions will apply for certain types of religious charities.

The stated purpose of the ACNC is:

  • To maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency;;
  • To support and sustain a robust, vibrant, independent and innovative not-for-profit sector; and
  • To promote the reduction of unnecessary regulatory obligations on the sector.

Nearly all religious institutions will be able to access tax concessions through charity registration with the ACNC.

Which organisations does the ACNC apply to?

All religious organisations that are eligible for charity registration must register with the ACNC and comply with the ACNC’s ongoing registration and reporting obligations to maintain their Commonwealth tax concessions. Key tax concessions supported by ACNC registration include:

  • Income tax exemption;
  • Fringe benefits tax (FBT) concessions; and
  • GST concessions.

A religious organisation will be eligible for charity registration where its purposes contained in its governing documents include the advancement of religion and/or other charitable purposes but does not include any significant non-charitable purposes. The organisation’s actual activities must be consistent with its charitable purpose. Further, its governing documents must also contain appropriate charitable non-profit and winding up clauses.

ACNC Registration Process

All new organisations that are eligible for registration as a charity will need to register with the ACNC. Previously, charities would register directly with the Australian Taxation Office for charity status and tax concessions.

Registration is available online through the ACNC website. The online registration form requires organisations to provide details about their purposes, activities, governing document and nominated contacts (‘responsible persons’).

In many cases, charity registrations for new organisations are simple. However, ensuring that all information is collected first and obtaining advice before applying can be helpful to streamline the process.

Once a charity’s application to the ACNC is approved, the ACNC will forward the application to the Taxation Office for consideration of entitlement to the various tax concessions , including:

  • income tax exemption;
  • refundable imputation credits;
  • fringe benefits tax rebate;
  • $30,000 capping of exempt or rebatable fringe benefits GST concessions; and
  • various GST concessions such as non-commercial activities, non-profit sub- entities, fundraising exemptions etc.

A church’s status is shown on the Australian Business Register and on the ACNC Register and therefore is public information.

Reporting Requirements

To continue to maintain charity registration with the ACNC and receive Commonwealth tax concessions, religious charities must comply with the ACNC’s financial reporting regime.

The ACNC’s reporting regime requires:

  • Small sized religious charities to lodge an Annual Information Statement with no financial questions;
  • Medium sized religious charities to prepare and lodge audited or reviewed financial statements and an Annual Information Statement; and
  • Large sized religious charities to prepare and lodge audited financial statements, and an Annual Information Statement.

Some types of religious charities (“basic religious charities”) are eligible for exemption from some of the reporting requirements. The assessed size of the religious charities is irrelevant.

For information on the size of your charity, please see this page of the guide.

Annual Information Statement

All Basic Religious Charities will be required to lodge an Annual Information Statement (AIS) with the ACNC. The due date for the Annual Information Statement is six months after the church’s reporting period. For example, if your church’s year end is 30 June then the Annual Information Statement will be due by 31 December.

Although Basic Religious Charities will need to prepare and lodge an AIS with the ACNC, it is exempted from answering the financial information questions in the statement regardless of its size.

Audit & Financial Statement Lodgement

Depending on the size and structure of a religious charity, an organisation may be required to prepare financial statements, have them audited and lodge the audited financial statements with the ACNC. Financial statements lodged must comply with Australian Accounting Standards subject to minor modifications. The lodgement of financial information required will depend on both a religious charity’s size (turnover) and structure (whether it is a basic religious charity).

The financial statement audit and lodgement requirements are outlined in the table below:

Size
Turnover threshold and reporting requirements
Large Annual revenue is $3,000,000 or more: Financial statements (either general or special purpose) must be audited and lodged with the ACNC. An Annual Information Statement must also be lodged.

Medium
Annual revenue $500,000 or more but less than $3,000,000: Financial statements (either general or special purpose) must be audited or reviewed and lodged with the ACNC. An Annual Information Statement must also be lodged.
Small
Annual revenue is less than $500,000: No requirement to lodge financial statements with the ACNC but must lodge an Annual Information Statement.

More information relating to annual reporting to the ACNC according to charity size can be found on the ACNC website.

It is important to note that revenue must be calculated using Australian Accounting Standards. This definition does not have the same meaning as income. The ACNC have prepared a definition of revenue based on the Australian Accounting Standards which is disclosed on their website. Please review this to ensure that your organisation is using the correct definition.

However, religious charities will not be required to lodge any financial information if they qualify as a basic religious charity.

If a religious charity wishes to prepare financial statements ending on a day other than 30 June, it will need to apply to the ACNC for a Substituted Accounting Period.

All financial statements lodged with the ACNC will become available for public viewing from the ACNC website.

Basic Religious Charities

Basic Religious Charities are exempt from the requirement to lodge financial statements with the ACNC. However, Basic Religious Charities are required to provide an Annual Information Statement to the ACNC each year.

A Basic Religious Charity is one which satisfies all of the below requirements:

  • It is registered for a purpose that is the advancement of religion;
  • It could not be registered as any other subtype of charity (for example, could not also be registered with the subtype of advancing education);
  • It is not an entity registered under the Corporations Legislation or the Associations Incorporation Act of the relevant State or Territory;
  • It is not endorsed as a deductible gift recipient (DGR) itself (or does not operate DGR funds with aggregated annual revenue for the funds exceeding $250,000);
  • It is not part of an approved reporting group for ACNC purposes;
  • It has not received more than $100,000 in government grants in the current financial year or either of the two previous financial years; and
  • It participate in the National Redress Scheme.

If a religious charity cannot satisfy all of the above requirements, it will not be a Basic Religious Charity. For example, religious charities structured as companies limited by guarantee or incorporated associations cannot qualify as basic religious charities.

Consequences of being a BRC

A BRC has significantly reduced reporting requirements compared to other registered charities. A BRC must still submit an annual information statement (AIS) to the ACNC, however does not have to answer the financial questions and does not have to submit annual financial reports or comply with ACNC governance standards.

The Commissioner of the ACNC cannot remove or replace a responsible person of a BRC.

BRCs are not exempt from receiving concessions available to other registered religious institutions, and must still comply with the ACNC External Conduct Standards.

More information about Basic Religious Charities and their obligations can be found on the ACNC website.

Substituted Accounting Periods

Under the ACNC reporting requirements, charities will by default be using a 30 June year end, even if financial statements have been prepared on a different year-end in the past.

However, charities are entitled to report to the ACNC on an accounting period ending on a day other than 30 June (a Substituted Accounting Period) in the following circumstances:

  • If an organisation is already required by an Australian law or statute to prepare financial statements on a basis other than a 30 June year end, the charity can notify the ACNC that it is eligible to report to the ACNC using its existing Substituted Accounting Period.
  • If a charity has not been required by an Australian law or statute to prepare a financial report on a different period but wishes to use a Substituted Accounting Period, it must apply to the ACNC. The Commissioner will then determine whether to approve the requested ACNC Substituted Accounting Period based on the reasons provided.

Charities seeking a Substituted Accounting Period can apply using the ACNC’s Form 4A – Request a Substituted Accounting Period. This Form can be obtained from the ACNC’s website.

ACNC Governance Standards

In order to satisfy the ACNC’s ongoing requirements for Commonwealth tax concessions, charities must comply with the ACNC’s Governance Standards.

Basic Religious Charities are exempt from the ACNC governance standards.

For those charities which do not qualify as Basic Religious Charities, the Governance Standards cover the five areas below and are regulated on a self-assessment basis:

  1. Purposes and NFP character of the charity: This standard requires that charities have appropriate clauses in their governing rules to demonstrate its purposes and its not-for-profit character and ensure its actual activities reflect these purposes.
  2. Accountability to members (where applicable):This standard requires that charities take reasonable steps to be accountable to their members and provide them with adequate opportunities to raise any concerns about how the organisation is governed.
  3. Compliance with Australian laws: Charities must not commit serious offences (such as fraud) under Australian law or breach laws that may result in large financial penalties ($12,600 as at June 2020).
  4. Suitability of responsible persons: Charities must take reasonable steps to ensure that their responsible persons (i.e. persons responsible for governance of the organisation) are not legally disqualified from managing a company under the Corporations Act or specifically disqualified by the ACNC Commissioner. If a religious charity does find that one of their responsible persons is disqualified, the organisation must take reasonable steps to remove that person from their role as a ‘responsible person’.
    A basic adherence to responsible management of financial affairs is also expected.
  5. Duties of responsible entities: Charities must take reasonable steps to make sure that responsible persons understand and carry out the standards required of them.

The governance standards, where they apply, are designed to be minimum standards of governance for some aspects of operating a charity.

As they are principle based standards, they are designed to be applied less strictly to smaller charities and more strictly to larger charities. In determining the size of a charity, reference should be had to its size, purposes, geographical reach, activities, people it helps, membership profile, sources of funding and existing governance arrangements.

Most organisations that are companies or incorporated associations should be currently meeting or exceeding the governance standards simply through adherence to their governing rules.

ACNC Register

The ACNC operate an online database known as the ACNC Register. This register makes publicly available the following information:

  • Key details about the organisation;
  • Contact details for the organisation;
  • Details of registrations and persons responsible for governing the organisation;
  • A history of registration status;
  • The organisation’s accounting period for ACNC reporting;
  • Annual Information Statements and financial statements previously lodged; and
  • A copy of the organisation’s governing rules.

The register is available for viewing at https://www.acnc.gov.au/charity and organisations should take care when lodging Annual Information Statements or financial reports and monitor the ACNC register to ensure that it remains correct and up to date.