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How to manage governance and compliance with the new NFP regime

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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  1. How to manage governance and compliance with the new NFP regime Anne Robinson Solicitor DirectorProlegis Lawyers, Sydney

  2. Outline Introduction Reform Timeline ACNC role and impact Governance Standards Definition of Charity Tax Concession Charity (TCC) Deductible Gift Recipient (DGR) Compliance …

  3. Introduction The whole landscape for charities/NFPs is changing. What are the implications for you: • governance • compliance

  4. Scope of reforms

  5. ReformTimeline Changes already made Imminent changes

  6. What are the relevant changes? Further proposed, likely or possible changes

  7. What are the relevant changes? Further proposed, likely or possible changes

  8. What are the relevant changes? Further proposed, likely or possible changes

  9. New ACNC and related changes: structure of ACNC

  10. New ACNC: roles of ACNC?

  11. New ACNC: who will be affected? All charities: Eventually, all NFPs

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

  13. New ACNC: Reporting and other ongoing requirements?

  14. New ACNC: Reporting and other ongoing requirements?

  15. New ACNC: Extensive new compliance, enforcement and related powers Compliance pyramid

  16. New ACNC: Extensive new compliance, enforcement and related powers Compliance pyramid

  17. 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

  18. 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.

  19. Personal liability re management of registered entities

  20. 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

  21. 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)

  22. 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

  23. 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.

  24. 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).

  25. 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

  26. How to manage governance and compliance with the new NFP regime Anne Robinson Prolegis Lawyers, Sydney

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