ACNC Cautions on Return to ATO and ASIC

The return of charity regulation back to the Australian Tax Office and ASIC would mean a return to regulatory deficiencies and unnecessary transitional costs for charities, the charity regulator has said in a submission to a Parliamentary inquiry into the ACNC’s Repeal Bill.

The submission by the Commissioner of the Australian Charities and Not-for-profits Commission, Susan Pascoe AM, sets out its own defence in favour of good charity regulation.

“While I am proud of what the ACNC has achieved in its short life, I continue to posit that it is not the ACNC brand which should be the focus of debate, rather what constitutes good charity regulation,” Pascoe said in her introductory letter.

“As indicated in my meetings with Ministers, their advisers and departmental officials, I am willing to share my experience to inform proposals for models of effective charity regulation.

"This submission will demonstrate that the ACNC offers one model of effective charity regulation for Australia.”

The Senate inquiry into legislation to repeal the Australian Charities and Not-for-profits Commission (ACNC) has received more than 100 submissions by the closing date of May 2.

The submissions come from a broad cross-section of organisations and individuals, including legal peak bodies, a grants foundation, a social impact analyst, a small charity, a finance and compliance consultancy, and individual community members.

As previously reported by Pro Bono Australia News, legislation to abolish the ACNC was referred to the Economics Legislation Committee for inquiry in late March.

The ACNC’s own submission said that after decades of inquiries and submissions, the deficiencies with the regulatory landscape facing charities were well documented.

“The ACNC was established to address some of these deficiencies,” the submission said.

It said a return of regulatory functions back to ATO and ASIC would mean a return to the same regulatory deficiencies, the loss of a specialist regulator and unnecessary transitional costs for charities.

“It would also mean a significant loss of public transparency and accountability,” the submission said.

“If the ATO was the successor agency to the ACNC, there would be a return to ‘de facto regulation’, and a perceived conflict of interest between the functions of determining charitable status and tax revenue collection.

“If reporting and governance requirements were returned to ASIC, charities would face the re-introduction of more prescriptive obligations, filing and late fees and strict enforcement of penalties.

“Being regulated by generalist regulators such as the ATO and ASIC would again see fragmented and patchy oversight, with the loss of specialist sector-specific expertise and support, and a regulatory approach tailored to the needs of charities.

“There would be significant costs associated with this proposed policy change. These include working through legislative amendments to 42 Acts, transitional costs (such as transferability of IT systems, loss of staff expertise) and challenges (such as re-integrating data to the ASIC register).

“The majority of charities have invested in adjusting to ACNC requirements and may feel their time and money has been wasted if there is a return of functions without discernible benefits.”

Susan Pascoe argues that the ACNC has made significant progress, setting up Australia’s first free, online, national register of charities, a ‘report-once use-often’ framework to reduce red tape, and a specialist sector-tailored approach.

“The public and charities would lose this if the ACNC is abolished,” she said.

"If allowed to be fully implemented, the ACNC model has the potential for very significant longer term benefits (such as simplifying and streamlining fundraising requirements and reducing duplicative reporting across agencies and jurisdictions).

“Such opportunities will be lost if the ACNC model is not given time for full implementation.”

The submissions can be found here.