The pandemic and recent lockdowns have placed an enormous burden on businesses, not to mention the additional pressure put on charities and not-for-profit sector.

There have been some recent changes to support this sector that will reduce the reporting burden for charities.

The thresholds for determining a charity’s size are changing. This delivers excellent news for thousands of charities that will now see their sizes shift downward and, consequently, reduce their reporting obligations.

Who are the Australian Charities and Not-for-Profit Commission (ACNC), and what do they do?

The Australian Charities and Not-for-Profit Commission (ACNC) regulates charities and not-for-profits in Australia. Previously, charities and not-for-profits were regulated under several different bodies dependent upon the type of entity and the state it was run in.

The ACNC’s objectives per their website are to:

  • maintain, protect, and enhance public trust and confidence in the Australian not-for-profit sector
  • support and sustain a robust, vibrant, independent, and innovative not-for-profit sector; and
  • promote the reduction of unnecessary regulatory obligations on the sector.

What changes have been announced by the ACNC?

The ongoing work in identifying ways to reduce the reporting burden on charities has resulted in changes to the thresholds for reporting purposes for entities governed by the ACNC. This is a win for this sector by allowing smaller charities and Not-for-Profits to focus their time and efforts on their charitable objectives rather than extensive reporting obligations.

For the year-ended 30 June 2022, charities and not-for-profits will now only be required to obtain an audit if their annual revenue is $3 million or more, or a review if their revenue is between $500,000 and $3 million.

  Size of charity Current Revenue threshold for the 2021 AIS Revenue threshold from
1 July 2022 for the 2022 AIS
Audit/ review requirement
  Small Less than $250,000 Less than $500,000 Only have to complete their Annual Information Statement online
  Medium $250,000- $999,999 $500,000 – $2,999,999 Financial report can be either reviewed or audited
  Large $1 million or more $3 million or more Financial report must be audited

When are charities or not-for-profits required to conduct an audit regardless of size?

Other instances where an audit will still be required, regardless of revenue, are if the charity’s or Not-for-Profit’s governing documents state an audit is required, or if the charity’s directors voluntarily elect for an audit to be performed.

Will charities still need to lodge an Annual Information Statement (AIS)?

Charities will still need to lodge an Annual Information Statement (AIS) with ACNC regardless of its size.

How can Morrows help?

Morrows has extensive experience in supporting charities and not-for profits with taxation, audit and strategic business advisory.

For more information on determining whether a review or an audit is required, or for advice regarding your audit requirements, please contact your Morrows Audit team.

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