The Coalition Government will cut red tape for thousands of Australian charities, with financial reporting obligations to be eased from the upcoming financial year.
Under reforms agreed to by the Council on Federal Financial Relations, financial reporting thresholds for small and medium charities registered with the Australian Charities and Not-for-profits Commission (ACNC) will be lifted, allowing over 5,000 charities to redirect their resources to help vulnerable Australians.
The new ACNC financial reporting thresholds for small charities will increase to under $500,000 annual revenue. This will mean nearly 2,500 charities will no longer be required to produce reviewed financial statements, saving each charity around $2,400 in accounting expenses annually.
Financial reporting thresholds for medium-sized charities will increase to under $3 million annual revenue, meaning over 2,700 charities will no longer be required to produce audited financial statements, saving around $3,000 in accounting expenses annually.
The thresholds will take effect from 1 July 2022 (reporting against the 2021-22 financial year).
This reduction in red tape for the charity sector implements the Government response to recommendation 12 of the ACNC Legislation Review.
In line with the Review’s recommendations 14 and 15, the Government will also enhance charities reporting obligations to provide greater accountability to donors, beneficiaries, and the public.
From 1 July 2022, large charities with two or more key management personnel will be required to report remuneration paid to responsible persons (directors) and senior executives on an aggregated basis in their 2022 Annual Information Statement.
In addition, from 1 July 2023 all charities will be required to report related party transactions in their annual reporting to the ACNC. This will increase transparency of transactions with related people or organisations that pose a higher risk of conflicts of interest.
The ACNC will work with the charity sector to develop appropriate guidance and education resources to allow the sector to easily understand and meet these new reporting requirements.