Before you apply to register a charity Sam Lawry | Manager, Guidance & Education Matt Crichton | Communications Officer Matthew Petersen | NFP Risk Manager, Australian Taxation Office Nicola Bennett | Law Interpretation Specialist, Registration Li Luo| Legal Counsel, ACNC 9 February 2016

Before you apply to register a charity About the ACNC Charities, not-for-profits and deductible gift recipients Should you register a charity? (Benefits and obligations) What you need before you apply Tax concessions Applying for charity registration More information

About the ACNC: What we do Register new charitiesMaintain a charity registerRegulate charities (reporting and compliance)Advice, guidance and educationReduce red tape for charities

About the ACNC: What we are not Internal dispute resolution serviceSubstitute for your incorporating regulatorAdvocacy body for the sectorTrying to run your organisationLegal adviserAustralian Taxation Office or other agency

Charities, NFPs and DGRs Charities (55,000) Not-for-profit Charitable purpose Public benefit Meet ACNC requirements Deductible Gift Recipients (DGRs) 32% of charities Not-for-profits (NFPs) (600,000) The ACNC regulates charities

Should you register a charity? Want to set up a new charity? Is setting up a charity the best way to achieve your goals? Is there another charity you could support or work with? Is your NFP eligible to register? acnc.gov.au/whocanregister Do you need to register to receive tax concessions? Want to register your NFP? Are there benefits to registering? acnc.gov.au/applyregister acnc.gov.au/startcharity acnc.gov.au/findacharity

Benefits of being a registered charity Can apply to Australian Taxation Office (ATO) for charity tax concessions (CTCs) such as income tax exemption or goods and services tax (GST) concessions Depending on subtype (purpose), may apply to be endorsed as a deductible gift recipient (DGR) Other Commonwealth concessions, benefits or exemptions Presence on the ACNC Register

Obligations of registered charities Keep charity status Notify of changes and report annually Keep certain financial and operational records Meet the ACNC governance standards Meet other obligations Guidance: acnc.gov.au/ongoingobligationsacnc.gov.au/ongoingobligations

What to check about your organisation before you apply Be eligible to be a charity –not-for-profit –charitable purpose for the public benefit Legal structure –not an individual, a political party, or a government entity Australian Business Number (ABN) Rules or governing documents Charity name Responsible person details Knowledge of tax concessions

Not-for-profit Not-for-profit clause How assets and income will be used and distributed. 'The assets and income of the organisation shall be applied solely to further its objects and no portion shall be distributed directly or indirectly to the members of the organisation except as genuine compensation for services rendered or expenses incurred on behalf of the organisation.‘ Dissolution clause What happens to the organisation’s assets if it winds up. 'In the event of the organisation being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to another charitable organisation with similar purposes which is not carried on for the profit or gain of its individual members.'

Charitable purpose or subtype Charities Act 2013 (Cth) has 12 charitable purposes including: –advancing religion –advancing education –advancing health –advancing the natural environment. Only charitable purposes or purposes ancillary or incidental to a charitable purpose Non-charitable purposes include: –sports, recreational or social purposes –providing private benefits –promoting activities that are unlawful or contrary to public policy –promoting or opposing a political party or candidate. Charitable purpose must benefit the public generally, or a particular group of people. acnc.gov.au/charitablepurpose

Your charitable purpose Does it say what the organisation wants to achieve?Will it be suitable over time?Is it clear and easy to understand?Will the activities of your organisation work towards it?Examples: acnc.gov.au/templatesacnc.gov.au/templates

Charitable purpose: DGR categories Public benevolent institution (PBI) To relieve suffering that is serious enough that it would arouse a feeling of pity or compassion in members of the community Institution, not merely a fund Main purpose of ‘benevolent relief' Relief provided only for people in need Health promotion charity (HPC) To promote the prevention or control of diseases in people Institution Promote the prevention or control of disease in people Must work towards prevention or control of disease Promoting the prevention or control of disease must be its principal activity

Legal structure Size Interstate and/or overseas Employees and/or volunteers Accountability to members and the public Liability of members and office holders Government grants Charity assets Things to consider Incorporated association Company limited by guarantee Indigenous corporation Public or private ancillary fund Trust Co-operative Unincorporated association Not an individual, a political party or a government entity Types of structures ACNC: acnc.gov.au/legalstructure and acnc.gov.au/startcharity ATO: ato.gov.au/Non-profit/Getting-started-for-non-profit- organisations/Choosing-a-legal-structure Other regulators: acnc.gov.au/otherregulators Legal advice More information

Australian Business Number (ABN) Before you can apply to register, you need an ABN. Apply on the Australian Business Register website: abr.business.gov.au abr.business.gov.au ACNC uses ABN (no separate charity registration number) Name must match your governing documents ABN ‘entity type’ must match your legal structure ACNC cannot register your charity before the date the ABN commences

Governing documents Rules, constitution, articles of association, trust deed etcMust include Object or purpose Not-for-profit basis, including on winding up May include Membership rules How the organisation makes decisions How meetings are held Appointment and powers of ‘responsible persons’ on the governing body (committee of management or board) DGR clause (if applicable). acnc.gov.au/governingdocument ato.gov.au/nonprofit > Getting started

Governing documents: Templates acnc.gov.auacnc.gov.au > Register my charity > Register my charity type > Template governing documents

Charity name: Dos and don’ts acnc.gov.au/findacharity abr.business.gov.au DoDon’t Meet other regulators’ requirementsMake it similar to another charity Make it distinctiveUse offensive words or acronyms (in English or another language) Get permission to use itMake it misleading Include it in governing documents

Responsible persons Must provide name, date of birth and address of all responsible persons Choose responsible persons carefully. They: –are responsible for the charity’s direction and governance –have responsibilities under the ACNC Act –in rare situations, may be suspended or removed by the ACNC acnc.gov.au/responsibleperson

Who are your responsible persons? Charity structureResponsible persons Incorporated associationMembers of the committee of management Company limited by guaranteeDirectors Indigenous corporationDirectors TrustTrustees or the directors of a corporate trustee Co-operativeDirectors Organisation incorporated another way (such as by an Act of Parliament) Depends on the legislation or charter (may be a trustee, director or council member) Unincorporated association Not always clear (for example, for a religious organisation, may be a central governing body and branches)

Responsible persons ACNC governance standards 1.Purposes and not-for-profit nature Must be not-for-profit and work towards the charitable purpose 2.Accountability to members Must take reasonable steps to be accountable to members and provide them with adequate opportunity to raise concerns about charity governance 3.Compliance with Australian laws Must not commit a serious offence or breach a law with a penalty of 60 penalty units (currently $10, 800) or more 4.Suitability of responsible persons Must take reasonable steps to be satisfied that responsible persons are suitable and are not banned or disqualified 5.Duties of responsible persons Must take reasonable steps to ensure responsible persons are subject to, understand and carry out the seven duties in this standard Guidance: acnc.gov.au/governancestandardsacnc.gov.au/governancestandards Webinar: acnc.gov.au/webinarsacnc.gov.au/webinars

Withholding charity information Charity information on the ACNC Register charity name address contact details ABN governing documents responsible persons’ names Annual Information Statements ACNC may withhold certain information from the Register Commercially sensitive and publication could cause harm to the charity or a person Inaccurate or likely to confuse or mislead Offensive Could endanger public safety, or For private ancillary funds – is likely to identify the donor or create an administrative burden Public interest test appliesacnc.gov.au/withholding

Charity tax concessions and deductible gift recipient (DGR) status Select option on ACNC registration application form ACNC passes the application to the ATO ATO accepts ACNC decision on charity status and decides if TCC and DGR status May be special conditions for some concessions ato.gov.au/Non-profit ato.gov.au/Non-profit > Getting started Tax basics for non-profit organisations Endorsement to access tax concessions

ATO endorsement If your charity has applied for tax concessions the ACNC will automatically refer your application to the ATO ATO Case officers – –Will contact you –Only ask you for information that hasn’t already been provided –Generally determine entitlement to charity tax concessions within 14 days of receiving all the required information

ATO endorsement Endorsement is the approval process charities must follow if they want to access tax concessions. There are two types of endorsement - 1. Tax concession charity (TCC) –Income tax exemption –GST concessions –FBT concessions 2. Deductible gift recipient (DGR)

Can your charity be endorsed as a Tax Concession Charity? To be endorsed to access all charity tax concessions, your charity must: have an Australian business number (ABN), and be a registered charity. Income Tax Exemption To get income tax exemption it must meet at least one of three tests: 1.In Australia test 2.Deductible gift recipient test 3.Prescribed by law test

Income tax exemption – three tests In Australia test Your registered charity will meet this test if it meets both of the following requirements: It has a physical presence in Australia. To the extent that it has a physical presence in Australia, it incurs its expenditure and pursues its objectives principally in Australia Deductible gift recipient test Your registered charity will meet this test if it either: has been endorsed as a deductible gift recipient (DGR) in its own right and not merely for a fund, authority or institution it operates is listed by name in the tax law as a deductible gift recipient Prescribed by law test Your registered charity will meet this test if it is prescribed by name in the income tax regulations, and one of the following applies: It is located outside Australia and is exempt from income tax in its country of residence. It has a physical presence in Australia but incurs its expenditure and pursues its objectives principally outside Australia.

GST and FBT concessions GST charity concessions No additional tests are required to access this concession FBT concessions FBT rebate is only available to registered charities endorsed to access income tax exemption with the exception of: Registered charities that are not institutions Registered charities that are institutions of the Australian Government, a state or a territory Registered public benevolent institutions and registered health promotion charities – these organisations may be eligible for the FBT exemption.

FBT concessions FBT exemption The FBT exemption is only available to endorsed and registered: – public benevolent institutions or – health promotion charities. Public and NFP hospitals and public ambulance services are eligible for FBT exemption and do not need to be endorsed to access the FBT exemption.

State, territory and local government concessions ACNC registration is not required May include concessions on: –state/territory stamp duty –state/territory payroll tax state/territory land tax –local government rates. Each state and territory has different requirements Contact your local government or state or territory revenue officestate or territory revenue office

ACNC application process Apply free of charge at acnc.gov.au/registeracnc.gov.au/register Use our registration application guide acnc.gov.au/registrationguide acnc.gov.au/registrationguide For assistance call or

After you submit your application Contact you Ask you for any extra information needed Answer your questions about your application Registration Analyst willIf successful We will tell you why You can ask for our decision to be reviewed – see our guidance on review of ACNC decisionsreview of ACNC decisions If unsuccessfulGenerally determined within 28 days of us receiving all information You will receive a Charity Pack:

Common problems with applications ACNC: Lack of suitable rules or governing documents Not charitable or not solely charitable Private benefit to members ATO: Income tax exemption - missing or conflicting information DGR endorsement – missing or ineffective revocation clause DGR endorsement – DGR item number does not appear to correspond with charities stated purposes

More information ACNC Registration application guide acnc.gov.au/registrationguideacnc.gov.au/registrationguide Starting a charity acnc.gov.au/startcharityacnc.gov.au/startcharity Register my charity acnc.gov.au/registeracnc.gov.au/register Register my charity type (structure) acnc.gov.au/legalstructureacnc.gov.au/legalstructure Governing documents acnc.gov.au/governingdocumentacnc.gov.au/governingdocument Responsible persons acnc.gov.au/responsiblepersonsacnc.gov.au/responsiblepersons Charity tax concessions acnc.gov.au/taxconcessionsacnc.gov.au/taxconcessions ATO ATO Non-profit ato.gov.au/non-profitato.gov.au/non-profit

Keep in contact with the ACNC Commissioner’s Column, updates, Quarterly Update Web guidance 13 ACNC ( ) 9.00 am – 6.00 pm AEDT youtube.com/ACNCvideos

Keep in contact with the ATO Subscribe to the Non-profit News Service via Call NFP Advice on am – 6.00 pm AEST, Monday to Friday

THANK YOU Next webinar Welcome to the board Tuesday 8 March 2016, 12.00pm to 1.00pm Register at acnc.gov.au/webinars