Legislation update

Hot topics for charities

Greg Cox, Michael Patane, and Catherine Nufer-Barr / 20 October 2020
5 min.
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Worthwhile read for: Charitable Organisations, Not-for-Profit Organisations, donors

There have been a number of hot topics which charities and not-for-profits should be aware of as they are due to take effect in the near future. Below is a summary of some of the topics.

Queensland duty, land tax and payroll tax concessions – have you checked your governing documents?

In November 2018 the Queensland Office of State Revenue (OSR) made changes to its eligibility requirements for charities seeking to be registered to receive Queensland stamp duty, land tax and payroll tax concessions.

As part of these changes, charities seeking to be registered must be able to show the OSR that their governing documents expressly provide that:

  • its income and property are used solely for promoting its objects; 
  • no part of its income and property is to be distributed, paid or transferred by way of bonus, dividend or other similar payment to its members; and
  • on its dissolution, the assets remaining after satisfying all debts and liabilities must be transferred to charity which would be entitled to be registered with the OSR or for a purpose the Commissioner is satisfied is charitable or for the promotion of the public good.

Charities which were already registered with the OSR were given a transitional period to make these changes to their governing documents until 8 November 2020. With November fast approaching, there has never been a better time to conduct a review of your governing documents.

As part of good governance, we recommend that charities conduct regular reviews of their governing documents and charitable status to make sure that they are still fit for purpose and reflect the organisation’s charitable purposes, as well as comply with best practice modern drafting principles.

If your charity is currently registered with the OSR and requires an update or are looking to register in future, HopgoodGanim has extensive experience in reviewing and providing advice on all aspects of charities and not-for-profits – from structuring and establishment, registration with the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office (ATO), governance and compliance.

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Director identification numbers

New legislation has been passed to amend the Corporations Act 2001 (Cth) to require all directors of Australian registered companies and registered Australian bodies (which will include charitable companies, such as public companies limited by guarantee, and incorporated associations who operate outside their state of registration) to have a unique director identification number (DIN).

The DIN is part of a suite of changes designed to modernise Australia’s corporate gatekeeping, which includes updating all registers into a single Commonwealth Business Register to be administered by the ATO. One of the objects of the changes is to assist with tracking directors who are involved in repeated illegal activity or are disqualified.

Originally, the legislation was expected to commence in 2021. However, due to recent challenges arising from COVID-19, it is likely that the new requirements will come into effect in 2022. Once the legislation comes into effect existing directors will have an 18-month period to apply for a DIN.

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Victoria cuts fundraising red tape

Victoria has recently made changes to its fundraising law allowing charities registered with the ACNC to conduct fundraising in Victoria without the requirement of applying for a fundraising licence. Instead, charities registered with the ACNC will only be required to notify Consumer Affairs Victoria of their intention to conduct fundraising activity.

Similar to Victoria, South Australia and the Australian Capital Territory operate streamlined frameworks for charities that are registered with the ACNC and undertake fundraising activities. After 1 July 2020, Western Australia now issues continuous licences that do not expire and ACNC registered charities are not required to submit annual statements or financial reports to WA Consumer Protection.

Although the above changes are welcome, there is still much work to do to adopt streamlined processes for ACNC charities wishing to fundraise in other states – particularly in New South Wales, Tasmania and Queensland.

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Proposed changes to DGR registration requirements 

The Commonwealth Treasury is currently seeking submissions on the draft bill and explanatory memorandum to require organisations seeking endorsement as a deductible gift recipient (DGR) to be registered as charities with the ACNC as a prerequisite to eligibility.

Currently the majority of the 52 general DGR categories require that the fund, authority or institution is registered with the ACNC. However, the amendments will extend this requirement to all categories.

The DGR categories subject to the amendments are as follows:

  • Health:
  1. public fund for hospitals;
  2. public fund for public ambulance services,
  • Education:
  1. public fund for religious instruction in government schools;
  2. Roman Catholic public fund for religious instruction in government schools;
  3. school building funds;
  4. public fund for rural school hostel building,
  • Approved research institute;
  • Welfare and rights – public fund for persons in necessitous circumstances;
  • Environment – public fund on the Register of Environmental Organisations;
  • Cultural organisations – public fund on the Register of Cultural Organisations; and
  • Fire and emergency services fund.

Organisations which already hold DGR status under the above categories will have 12 months from the date the amendments come into effect to register with the ACNC (unless granted a further extension from the Commissioner of Taxation (ATO)).

For organisations thinking about applying for DGR status under one of the above categories, we recommend that proactive steps are taken to register as a charity with the ACNC as part of your application process.

At the moment there does not appear to be any changes to the conditions which need to be satisfied, however this may change as a result of feedback received during the consultative stage and once the draft bill is introduced to Federal Parliament.

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For further information or discussion,  please contact our experienced Taxation or Estates and Succession teams.

Authors
Greg Cox
Special Counsel
Greg leads HopgoodGanim’s Estates and Succession team and offers more than 30 years’ experience in estate planning, administration and litigation.
Michael Patane
Partner
Michael is a senior and well-respected tax lawyer and a Partner in our Taxation team.
Catherine Nufer-Barr
Associate
Catherine is an Associate in our Taxation practice and a Chartered Tax Advisor.

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