We recently made submissions to Treasury on the Government’s NFP Reform papers in relation to both the:

• Exposure Draft - Australian Charities and Not-for-profit Commission Bill 2012 and Explanatory Materials; and
  
• Consultation Paper – Review of Not-for-profit Governance Arrangements.

These proposals will have significant implications for all NFPs, if enacted.

We have major concerns in respect to many of the proposals and in particular:

• The implementation cost and significant increased ongoing compliance costs for the sector;
• The excessive nature of the proposed changes without any demonstrated need;
• The number of charities and ultimately all NFPs that will be impacted by these changes;
• The likely inability of the proposals to achieve a ‘one-stop shop’ for the sector;
• The sense of ‘one-size fits all’ approach rather than distinguishing between the types of NFPs currently operating; and
• The haste with which the proposals are being implemented and the likely duplication that will result.

Given the above we have set in detail our concerns in full within our submissions in relation to the following areas:

• Concerns with respect to the definition of Responsible Individuals and those that might be included;
• Concerns with respect to the registration processes and the types and nature of entities required to be registered;
• Issues in respect to the interaction of the proposals and eligibility for tax concessions, and the proposed statutory definition of Charity;
• Concerns with the approach to determining the reporting and auditing requirements and the size criteria proposed.  We have set out an alternative approach within our submission;
• Issues with the onerous nature of the level of reporting requirements; and
• The lack of alignment with other statutory requirements that may currently apply.

In respect to our commentary on the Governance discussion paper we are concerned as to the possibility of over-regulation for the majority of NFPs and the over-prescriptive nature of the rules that could result.  These concerns equally apply to the duties of Responsible Individuals that might be legislated.  Given the diverse nature and size of organisations within the sector, in our view, rather than having legislation that is prescriptive, the particular purpose and objectives of the NFP should be the primary focus of any governance requirements.

Moore Stephens supports the overall approach and intent of the proposals and foresee benefits for the sector in the long term.  Nevertheless, we are concerned with many aspects of the proposals and have provided alternatives in a number of areas within our submissions.  These include a proposed exemption from the financial reporting requirements for those charities whose primary objectives are for the advancement of religion, given the lack of relevance to the public of their financial affairs.

To access a copy of our submission on the Exposure Draft click here

To access a copy of our submission on the Governance Discussion Paper click here

These latest reform proposals continue the many Discussion Papers and proposals issued by the Federal Government since
they initially announced the establishment of the Australian Charities and Not-for-profit Commission (ACNC) and other
reforms for the sector in the May 2011 budget. In addition to the papers mentioned above, since the May budget the
Government has also released the following for comment:

• A consultation paper on the use of NFP tax concessions for unrelated commercial activities (May 2011);
• An Exposure Draft updating the ‘in Australia’ special conditions for tax concessions entities (July 2011);
• A consultation paper on introducing a statutory definition of Charity (October 2011);
• A consultation paper on the implementation design aspects of the ACNC including education and support activities; portal design and the reporting framework. This paper remains open for comment until 27 February 2012; and
• A consultation paper on reforming charitable fundraising legislation. Submissions are due on 5 April 2012.

Each of these proposals independently have major implications for many NFPs. When combined these reforms may result in fundamental changes to the sector. Within our Not For Profit Interests Resource Centre on our website www.moorestephens.com.au you will find further commentary on the issues and impacts that arise from these proposals with links to our submissions to Treasury on each.

If you would like to discuss any issue in relation to these matters or any aspect of our submissions please contact one of the contributors of the submission listed below or your Moore Stephens relationship partner.

Joe Shannon
Moore Stephens Sydney
T +61 2 8236 7700
jshannon@moorestephens.com.au

Katrina Daly
Moore Stephens Sydney West
T +61 2 9890 1111
kdaly@moorestephens.com.au

Stephen O'Flynn
Moore Stephens Melbourne
T  +61 3 8635 1986
soflynn@moorestephens.com.au

William Laird
Moore Stephens Queensland
T + 61 7 4616 3017
wlaird@moorestephens.com.au

Allan Mortel
Moore Stephens Sydney
T +61 2 8236 7700
amortel@moorestephens.com.au

www.moorestephens.com.au