Senate

Supplementary Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Chapter 2 Amendments to the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012

Outline of chapter

2.1 This Chapter explains the amendments to the Australian Charities and Not-for-Profits Commission (Consequential and Transitional) Bill 2012 (Consequential and Transitional Bill).

2.2 These amendments are explained by way of modification to the revised explanatory memorandum to the Bill.

Amendments - Transitional arrangements

2.3 There are currently entities which are endorsed to operate a public benevolent institution or a health promotion charity that need to be properly transitioned into the ACNC framework in relation to the institution which they operate. These arrangements need to be compared with the usual practice of entities that seek entity endorsement as a public benevolent institution or a health promotion charity.

2.4 The complexity with this arrangement is that the public benevolent institution or a health promotion charity which is operated by another entity is entitled to concessions that the entity is unlikely to be able to access itself. While the entity operating the public benevolent institution or a health promotion charity is likely to be separately required to register with the ACNC to retain its own concessions, it will also need to seek special registration in respect of the public benevolent institution or a health promotion charity it operates.

2.5 These amendments will simplify the initial transition of entities to the ACNC where entities are operating a public benevolent institution or a health promotion charity where the whole of the entity is not such an institution (that is, where the institution is notionally operated or conducted in-house, usually by an unincorporated religious institution). These amendments will ensure these entities transition appropriately to the ACNC, and both the operated institution of the entity, and the remainder of the entity (which may include multiple public benevolent institutions or health promotion charities) keep the existing concessions they currently have access to.

2.6 These amendments will incorporate a further transitional provision for operated public benevolent institutions or health promotion charities which allows for the transfer to ACNC regulation, entities which are operating a public benevolent institution or health promotion charity in instances where the whole of the entity is not itself a public benevolent institution or a health promotion charity.

2.7 This transition is achieved by treating the operated public benevolent institution, or public benevolent institutions if there are more than one, or health promotion charity (or multiple health promotion charities) of the entity to be a separate entity for taxation and ACNC purposes. The operated public benevolent institution or institutions or health promotion charity or charities will be automatically allocated an ABN by the Australia Business Registrar, registered by the ACNC as a charity with either sub-type public benevolent institution or sub-type health promotion charity and endorsed by the Commissioner of Taxation for access to an income tax exemption, goods and services tax concessions, fringe benefits tax concessions and deductible gift recipient status in line with their existing endorsed entitlements.

2.8 This creates a seamless transition for these operated public benevolent institutions and health promotion charities as they will continue to operate as separate and distinct parts of their 'parent entity' with an independent taxation treatment.

2.9 A regulation making power will enable further minor modifications to be made to the ACNC Bill and taxation law (on a transitional basis) to ensure the seamless transition should any unintended consequences arise for these complex charitable structures. [Amendments 1 to 11, items 3A to 4E in Schedule 1 and items 44A, 56A, 58, 68, 68A, 68B and 68C in Schedule 2 to the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012]