The Australian Charities and Not-for-profits Commission (ACNC) was created by the former federal Labor government and began operation in December 2012. It is so new that some charities are yet to be required to submit their first annual information statement. But the Coalition government, acting on an election promise, has introduced legislation to abolish the commission as part of its red tape reduction program.
The Catholic Church is among the loudest voices against the ACNC. Cardinal George Pell reportedly lobbied the government to abolish it. The church claims that the ACNC places an unreasonable burden upon it and its associated organisations.
Religious charities have some of the lowest reporting obligations of all ACNC-registered charities.
Registration is voluntary. However, charities wishing to access tax exemptions must register with the ACNC. The size of the charity determines the level of reporting required. Charities are classified as small, medium or large depending on their revenue.
All charities are required to provide annual information statements to the ACNC. From 2014, the content of these statements varies depending on the size of the charity. Medium and large charities must also submit audited annual financial reports.
Basic religious charities are not required to provide any financial information to the ACNC. They are exempt from financial questions in the annual information statement and do not need to provide annual financial reports regardless of size. Basic religious charities are the only type of charity to receive this level of exemption from reporting obligations.
Even this low level of reporting may appear onerous to a small religious group. However, the annual information statement primarily consists of basic identifying information and questions, which require charities to select an answer from a drop-down menu or from a check box list.
What is a basic religious charity?
A basic religious charity is a special subgroup of charities for the advancement of religion. The ACNC recognises 12 different charitable purposes, including advancing religion, advancing health, advancing culture, promoting or protecting human rights and preventing or relieving the suffering of animals.
Which type of charity an organisation registers as depends on its purpose. For example, the University of Western Australia is registered as a charity for advancing education. A charity with more than one purpose must register all of these purposes. For example, the Mandandanji Charitable Trust is registered as having seven charitable purposes.
Charities that register as having the purpose of advancing religion can register as basic religious charities if they meet the criteria. Most individual churches and parishes would qualify as a basic religious charity.
To register as a basic religious charity the charity must:
Be entitled to be registered as a religious charity; and
Not be entitled to register as any other type of charity.
In addition, the charity must not:
Be a corporation registered under the Corporations Act 2001;
Be an Indigenous corporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006;
Be a corporation registered under the Companies Act 1985 of Norfolk Island;
Be an incorporated association in any state or territory;
Be endorsed as a deductible gift recipient;
Have been allowed by the ACNC to report as part of a group; or
Have received more than $100,000 in government grants in the current or previous two financial years.
This may appear to be a long list of exclusions, but most parishes and individual churches would meet these requirements – including Roman Catholic parishes. For example, the Catholic Parish of St Mary North Sydney Lavender Bay is registered as a basic religious charity.
Not all religious charities will qualify as a basic religious charity. A religious school would also need to register as a charity for advancing education. That would disqualify it from registration as a basic religious charity.
Less red tape or more?
The original aim of the ACNC was to “drive work to cut red tape for charities and support transparency and accountability” and to operate as a “report-once, use-often reporting framework”. The Abbott government appears to have deemed it a failure despite evidence to the contrary.
Most religious charities that are excluded from the category of basic religious charity had reporting requirements to other regulators such as ASIC before the ACNC was created. The aim of the ACNC is to reduce red tape with a system that allows charities to report only to the commission. Other organisations such as ASIC would then access the information they need from the ACNC.
This process is already under way. Scrapping the ACNC will not remove reporting requirements to these other organisations and may in fact increase red tape.
Admittedly, prior to the ACNC, most charities classified as basic religious charities are unlikely to have had any reporting obligations. However, the reporting now required is a small price to pay for the tax benefits and status that come with being a charity.
The ACNC has launched a survey asking charities about their experiences of red tape. It will be interesting to see what the results show.