Fewer charities required to prepare financial reports in future

In an exciting development for charities registered with the Australian Charities and Not-for-profits Commission (ACNC), the Government is set to cut red tape and reduce the reporting and compliance burden of charities for their 2021-2022 financial reporting, i.e. for the 2022 and later Annual Information Statements (AIS). This will enable smaller charities to focus more of their resources (time and money) to help vulnerable Australians.

The mechanism for reducing this burden is increasing the reporting thresholds for medium and large charities as shown in the table below:

Size of charity	Current revenue thresholds for the 2021 AIS	Thresholds from 1 July 2022 for the 2022 AIS	Audit / review requirement?
Small	Less than $250,000	Less than $500,000	None
Medium	$250,000 - $1 million	$500,000 - $3 million	Review or audit
Large	Greater than $1 million	Greater than $3 million	Audit

The above changes are part of the Government’s response to Recommendation 12 of the ACNC Legislation Review (Review).

However, in response to Recommendation 14 and 15 of the Review, the Government will also enhance (increase) charities’ reporting obligations to provide greater accountability to donors, beneficiaries and the public as follows:

Key management personnel (KMP) remuneration (in aggregate) – details will be required for large charities with two or more KMPs in the 2022 and later AIS
Related party transactions – disclosures will be required for all charities in annual reports for their 2022-2023 financial reporting, i.e. for the 2023 and later AIS. This information will increase transparency of transactions with related people or organisations that pose a higher risk of conflicts of interest.

We will include more information in future editions of Accounting News when these legislative changes have been made.