From 1 July 2022, small charities registered with the Australian Charities and Not‑for‑profits Commission (ACNC) will see their financial reporting annual revenue threshold increased from $250,000 to $500,000.
The financial reporting threshold for medium-sized charities will also be lifted to under $3 million, up from the previous threshold of less than $1 million.
The changes, approved by the Council on Federal Financial Relations, will mean nearly 2,500 small charities will no longer be required to produce reviewed financial statements, saving each charity around $2,400 in accounting fees annually.
Likewise, nearly 2,700 medium-sized charities will no longer be required to produce audited financial statements, saving them around $3,000 in accounting expenses annually.
Assistant Treasurer Michael Sukkar said the reporting threshold changes would help charities “redirect their resources to help vulnerable Australians”.
The new thresholds, however, remain lower than those recommended by the ACNC’s 2018 review. It had called for the thresholds to be increased to less than $1 million for a small entity, from $1 million to less than $5 million for a medium entity, and $5 million or more for a large entity.
Several other recommendations from the ACNC’s review will also be implemented by the government to enhance charities’ reporting obligations to provide greater accountability to donors, beneficiaries and the public.
From 1 July 2022, large charities with two or more key management personnel will be required to report remuneration paid to responsible directors and senior executives on an aggregated basis in their 2022 Annual Information Statement.
In addition, from 1 July 2023, all charities will be required to report related-party transactions in their annual reporting to the ACNC.
This will increase transparency of transactions with related people or organisations that pose a higher risk of conflicts of interest.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.