The Government will cut red tape for NFPs, with financial reporting obligations set to be eased. These changes aim to reduce the reporting burden on charities, whilst providing good accountability to donors, beneficiaries, and the public.
From 1 July 2022, there will be three key changes to reporting requirements.
1. Changes to reporting thresholds:
- Current reporting obligations to the ACNC depend on whether a charity is classified as small, medium or large. While all charities must lodge an Annual Information Statement (AIS) with the ACNC, medium and large charities must also lodge an annual financial report.
- Under the changes, many charities will be re-classified as ‘small’ and will therefore only need to submit an AIS.
- From 1 July 2022 (reporting for the 2021-22 financial year), financial reporting thresholds for charities will increase as follows:
- ‘Small’ charities will increase (from under $250,000) to under $500,000 annual revenue
- ‘Medium’ charities will increase (from $250,000 or more but under $1 million) to $500,000 or more but under $3 million annual revenue
- ‘Large’ charities will increase (from $1 million or more) to $3 million or more
2. Changes to reporting for large charities:
- Large charities with two or more key management personnel will need to report remuneration paid to responsible persons (Directors) and Senior Execs on an aggregated basis, in their 2022 AIS (and beyond).
3. Changes to reporting for all charities:
- From 1 July 2023 (reporting for the 2022-23 financial year), all charities will need to report related party transactions in their annual reporting. This aims to increase transparency of transactions with related people or organisations that pose a higher risk of conflicts of interest.
The ACNC will work with the sector to develop guidance to help charities meet these new reporting requirements.