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The latest changes to ACNC financial Reporting explained. By Olivia Cassano (Lawyer) and Julian Ryan (Senior Associate)
Effective 1 July 2022, the Australian Charities and Not-For-Profits Commission (ACNC) has eased financial reporting obligations of registered charities. The purpose of the changes is to increase the transparency of registered charities and to alleviate the pressures on charities so they can focus their resources to help disadvantaged Australians.[1] Here is a summary of the key changes:
Increases in reporting thresholds
A charity’s financial reporting obligations to the ACNC are determined by their size (small, medium or large). Their size is in turn based on annual revenue for the relevant reporting period. While all charities are required to lodge an Annual Information Statement (AIS) with the ACNC, medium and large charities have an additional obligation to lodge an annual financial report.
From 1 July 2022 (reporting for the 2021-22 financial year), the revenue thresholds which classify small, medium and large charities will increase as follows:
| Charity size | 2021 threshold | 2022 threshold |
| Small | Less than $250,000 | Less than $500,000 |
| Medium | More than $250,000 but less than $1,000,000 | More than $500,000 but less than $3,000,000 |
| Large | More than $1,000,000 | More than $3,000,000 |
The net effect of these changes is to reduce the number of charities which are subject to more detailed financial reporting obligations, simplifying compliance for many.
Changes to reporting for large charities
To increase transparency and accountability of larger charities, large charities with two or more key management personnel will need to report in their 2022 (and later) AIS remuneration paid to ‘Responsible Persons’ (such as directors) and senior executives on an aggregated basis.
Changes to reporting for all charities
Similarly, from 1 July 2023, all charities must report ‘related party transactions’ to the ACNC in their annual reporting. Related party transactions are those between a charity and ‘related parties’ (which can include board members or executive officers, and members of their family, as well as organisations with a significant influence over the charity). Different requirements apply to small, medium and large charities.
Need help?
Charities will need to consider and incorporate the abovementioned changes in upcoming financial reports and AISs. If you have any questions or require any assistance, please do not hesitate to contact a member of our Not-For-Profit Law Team.
