Changes to Charities’ Financial Reporting Obligations
July 2021 | News | Posy McGrane
On 30 June 2021, the Federal Government announced changes to financial reporting obligations in the next financial year: https://ministers.treasury.gov.au/ministers/michael-sukkar-2019/media-releases/cutting-red-tape-charities
Changes to thresholds that determine charity size
As foreshadowed in December 2020, from 1 July 2022, for the purposes of reporting for the 2021-22 financial year, financial reporting thresholds for ACNC-registered charities will be raised as follows:
- Small charities – charities with annual revenue of less than $500,000 will no longer be required to submit to the ACNC reviewed financial statements as part of the Annual Information Statement (AIS) process. To date, ‘small charities’ were only those with annual revenue of less than $250,000.
- Medium charities – charities with annual revenue of between $500,000 and $3 million will be required to submit to the ACNC reviewed financial statements as part of the AIS process. To date, ‘medium charities’ were those with annual revenue of between $250,000 and $1 million.
- Large charities – charities with annual revenue of 3 million or more will be required to submit to the ACNC audited financial statements as part of the AIS process. To date, ‘large charities’ were those with annual revenue of $1 million or more.
Basic religions charities (whatever their size) will remain exempt from the requirement to lodge financial reports although remain subject to the ACNC’s record keeping obligations.
Additional financial disclosures required
- Reporting of remuneration paid
In addition, from 1 July 2022, large charities (annual revenue of $3 million or more) with two or more key management personnel will be required to report on the remuneration paid (on an aggregated basis) to their responsible persons (e.g. directors or trustees) and to their senior executives as part of completing the 2022 AIS process.
- Reporting of related parties
In addition, from 1 July 2023, all charities will be required to report related party transactions in their AIS.
These reforms are intended to provide for greater accountability to donors, beneficiaries, and the public and to increase transparency of certain transactions that may carry a higher degree of a risk of a (actual or perceived) conflict of interest.
The Government’s announcements indicate that the ACNC will develop and make available guidance materials regarding these reforms.
Please contact Posy McGrane or Jae Yang should you wish to discuss your charity’s financial reporting obligations or any related inquiry.