The Federal Budget and the not for profit sector

The Gillard Government's Federal Budget contains a raft of proposals relevant to the Australian not- for -profit sector. A detailed guide to the measures can be found here.

Third Sector e-news identifies three major provisions in the Budget relevant to the regulation and governance of the sector:

These provisions are: the introduction of a statutory definition of 'charity' to be used in all Commonwealth laws to take effect from 1 July 2013, the establishment of an Australian Charities and Not for profits Commission and the implementation of a not-for-profit income tax.

‘Charity’ definition The definition of ‘charity’ will be based on the 2001 Report of the Inquiry into the Definition of Charities and Related Organisations, taking account of the findings of recent judicial decisions, such as Aid/Watch Incorporated v Commissioner of Taxation. The Government will also consult with the states and territories with the intention of developing and introducing a definition of 'charity' that can be adopted by all jurisdictions.

Not-for-profit Commission $2.8 million over the next four years will be contributed to the new Australian Charities and Not for profits Commission. It is expected that the commission will develop guidance for the sector, implement system changes, and re-assess the charitable status of entities on the basis of the new statutory definition. It is also expected that the Commission will reduce red tape and improve transparency and accountability of the sector.

Not-for-profit tax reform Tax reforms will be introduced to ensure that concessions provided to not-for-profit entities are targeted only at those activities that directly further altruistic purposes. As such, any income retained from commercial activities that is not directed towards altruistic work will not be tax exempt. The new arrangements will commence on 1 July 2011 and will initially affect only new unrelated commercial activities that commence after 10 May 2011

Of particular interest is that the Gillard Government has allocated $53.6 million  to establish a single independent national regulator for the not-for-profit sector.

The Federal Government's Office for the Not for Profit Sector reports that:

The Australian Charities and Not-For-Profit Commission (ACNC) will improve the accountability and transparency of the sector while removing reporting overlap for general reporting requirements at the Commonwealth level.

The ACNC will be responsible for determining charitable, public benevolent institution and other NFP status for all Commonwealth purposes. It will provide education and support to the sector and implement a report-once use-often general reporting framework.

An implementation taskforce will be operational from 1 July 2011 to prepare for the commencement of the ACNC on 1 July 2012 and consult with the public, the sector and state governments on general reporting and public information portal requirements.