The Australian Charities and Not for Profit Commission (ACNC) has recently announced its new 2017 Reporting Requirements for all registered charities. The requirement to report annually applies to all non-government schools that are registered with the ACNC as a charity. As most schools would be aware by now, failure to provide an Annual Information Statement (AIS) to the ACNC leads to removal of the organisation’s charitable status and subsequent removal of tax concessions, Deductible Gift Recipient (DGR) status, as well as the huge reputational damage of being named as a transgressor.
Registered charities are required to provide the AIS as well as a Financial Statement if they are classified as a medium to large charity. There have been no changes regarding the ACNC classification of what is considered to be a small, medium or large charity. This is based on annual revenue where less than $250,000 denotes small charities, between $250,000 and less than $1,000,000 for medium charities and above $1,000,000 for large charities. Note that any non-government schools that identify as a small charity do not need to have their financial statements reviewed or audited for ACNC purposes and the submission of a financial report is optional. However they must still provide financial information to the Department of Education and Training (the DET).
For the last three annual reporting periods (2014, 2015, 2016) the ACNC Commissioner has agreed to accept non-government schools which submitted financial questionnaires to the Department of Education and Training (DET) as a requirement under the Australian Education Act 2013 (Cth), as meeting the financial reporting requirements under the Australian Charities and Not‑for‑profits Commission Act 2012 (Cth) (ACNC Act).
The situation for the 2017 financial statements is not so clear cut.
If schools read the Fact Sheet for Schools and follow the Transitional Reporting Arrangements link it will take them to the webpage Information for School Reporting for Non-Government Schools. Within this document, the ACNC states that while non-government schools do not have to provide financial information to them directly for the 2014, 2015 and 2016 reporting periods there is no indication of the process that needs to be followed for the 2017 reporting period. This information has been tucked into the 2017 Annual Information Statement (AIS) Guide (AIS Guide). Schools can refer to Question 15 where it states:
15. Does your charity want to provide financial information in the AIS?
It is optional for Basic Religious Charities to provide financial information.
If your charity is a non-government school and reports to the Department of Education and Training (the DET), and you answer ‘yes’, you will not be able to take advantage of the transitional arrangements with the DET.
If you answer ‘no’, we will use the financial information your charity submits in the financial questionnaire to the DET as the financial information in the AIS.
Please be advised that this only applies to schools and not to funds or organisations associated with the school such as parents and friends’ associations or building funds that are registered separately with the ACNC, which have their own ABN and do not lodge separate financial questionnaires with the DET. These separate funds or organisations will need to submit an AIS and complete the financial information section like all other charities. In addition, this section only applies to the lodgement of financial information. It does not exonerate a school from completing and submitting the other requirements of the AIS.
However, the ACNC has completely redesigned the AIS Guide with the document broken up into shorter sections corresponding with the AIS form itself. This will reduce the compliance burden for schools.
The new AIS webpage creates a ‘one-stop shop’ for non-government schools wishing to complete their reporting. It also provides links to a comprehensive range of support and guidance materials such as the Fact Sheets that are written for specific charity groups and also for specific charity issues. The Schools Fact sheet can be found here.
Most schools’ report from January to December of each year, instead of the ACNC Act's usual reporting period of 1 July to 30 June. In this case, the ACNC will approve your school’s calendar year as a different reporting period (substituted accounting period) if your school notifies the ACNC that the law requires reporting on this basis.
Schools are aware of their responsibilities regarding the use of state/territory and Commonwealth funds as noted in this previous School Governance article. They are also equally aware of their accountability and the expected transparency for the use of those funds if they wish to maintain their charitable status and gain tax benefits from GST, Payroll Tax and so forth. The ACNC should be credited for taking the effort to reduce the compliance burden for schools when they complete their annual AIS.
Editorial Note: Remunerating Board members
School Governance readers may recall an article published in April 2017 ‘Remunerating your School Board members – is it a valid proposition?’ In the ACNC ‘Commissioners Column’ on 19 July, the Commissioner, Susan Pascoe AM was quoted as saying: “Whether or not to pay board members is an important consideration for charities, and one that depends on the unique circumstances of each charity. Ultimately, the decision rests on whether paying board members is in the best interests of the charity.”
The new ACNC guide, Remunerating Charity Board Members, provides an overview of issues relating to board remuneration, as well as some of the factors non-government schools need to properly consider when deciding on whether to pay board members for their duties.