On 30 June 2021, the Australian Government announced changes to the financial reporting thresholds under the Australian Charities and Not-for-profits Commission Act 2012 (Cth) (Act). The changes aim to reduce the financial reporting obligations of registered charities so that they can direct more of their resources towards pursuing their charitable purpose, and will take effect from 1 July 2022 (reporting against the 2021-22 financial year).
What are the reporting obligations of registered entities under the Act?
All registered charities must submit an annual information statement for a financial year to the Commissioner no later than 31 December in the following financial year.
Medium and large registered charities must submit an annual financial report for a financial year to the Commissioner no later than 31 December in the following financial year. Large registered entities must have their annual financial reports audited, whereas medium registered entities may have their annual financial reports either audited or reviewed. The audit or review must be carried out by a registered auditor in accordance with the auditing standards issued by the Australian Accounting Standards Board (AAS).
The Commissioner may place additional reporting obligations on registered charities in special circumstances (such as when the Commissioner is concerned about a charity’s compliance with the Act).
What changes are being made to the reporting thresholds under the Act?
The changes will change the raise the thresholds that apply to the reporting obligations, reducing the reporting obligations for some charities.
|Until 30 June 2022|
(20/21 Financial Year)
|From 1 July 2022|
(21/22 Financial Year)
< $249,999 revenue
$250,000 – $499,999 revenue
|→||Small charity – no longer required to submit annual financial reports|
$500,000 – $999,999 revenue
$1,000,000 – $2,999,999 revenue
|→||Medium charity – can choose to have financial reports reviewed rather than audited.|
≥ $3,000,000 revenue
As a result of these changes, the Australian Government estimates that:
- around 2,500 charities will no longer be required to submit annual financial reports because they will be recognised as small registered entities rather than medium registered entities; and
- around 2,700 charities will no longer be required to submit audited financial reports because they will be recognised as medium registered entities rather than large registered entities.
Effect on incorporated associations
Registered charities that are incorporated associations must continue to adhere to the financial reporting thresholds that apply in their state or territory of incorporation. Incorporated associations are required to adhere to those thresholds to the extent that they impose more restrictive reporting obligations than those imposed by the Act. For example, an association incorporated in Victoria with revenue of $2 million will be required to meet the reporting obligations of a tier three association in Victoria notwithstanding that it will only be considered a medium registered entity once the changes to the Act summarised above take effect.
State regulators are working to align the reporting thresholds with the ACNC thresholds. However, unless and until these changes are made, the thresholds and associated reporting requirements summarised in the attached table will continue to apply to incorporated associations:
How we can help
Incorporated associations should continue to monitor the information released by their relevant state or territory regulator in order to confirm their 21/22 reporting requirements. Moores will release information about these announcements as they are made.
For more information or guidance regarding any of the above, please do not hesitate to contact us.