The Law Handbook 2024

618 Section 6: Houses, communities and the road charities must comply with similar ACNC obligations and requirements. Charities’ reporting requirements Charities are required to report to the ACNC each year. The type of reports that must be submitted vary according to the annual revenue of the charity: • small charities (annual revenue of less than $500,000): an annual information statement and an optional annual financial report; • medium charities (annual revenue of $500,000 or more but less than $3 million): an annual information statement and an annual financial report that is either reviewed or audited; • large charities (annual revenue of $3 million or more): an annual information statement and an audited annual financial report. For more information about reporting requirements, see the ACNC’s website (www.acnc.gov.au/for- charities/manage-your-charity/obligations-acnc/ reporting-annually-acnc) . Charities also need to notify the ACNC when certain things change, such as the organisation’s name, address, governing documents (e.g. the constitution) or when the ‘responsible persons’ (e.g. board members) in the organisation change. Charities also have obligations regarding record- keeping, compliance with governance standards, and compliance with external conduct standards. For more information about these obligations, see www.acnc.gov.au. Tax concessions Income tax Community organisations, unless exempted, must pay tax on income and money received from people who are not members. Income from members (e.g. membership fees) is exempt from income tax on the basis of what is called the mutuality principle. Examples of money received from non-members include where an organisation holds functions, raffles or street stalls, operates a shop or canteen, or otherwise raises income from the public. If, after expenses and deductions, there is net income from non-member sources, many types of community organisations can obtain an exemption from income tax for that income. All charities registered with the ACNC can apply for income tax exemptions from the ATO. A charity must be endorsed by the ATO to be exempt from income tax. From the 2023-2024 income year, not-for-profit organisations with an active ABN that are not charities registered with the ACNC may be entitled to self-assess their income tax status and lodge an annual self-review return. ‘Self-assess’ means an organisation can work out for itself whether it is income tax exempt or taxable. Organisations that can self-assess their income tax status do not need to be endorsed by the ATO or get confirmation of their income tax status from the ATO. The categories of income tax exempt organisations are registered charities, and organisations in the community service, cultural, education, employment, health, resource development, science or sport sectors. For more information about income tax exemptions, see the ATO’s website (www.ato.gov.au) and Not-for-profit Law’s website (www.nfplaw.org.au) . Deductible gift recipient status There are other tax concessions that might be relevant for community organisations; in particular, the ability for those who donate to the organisation to claim a tax deduction for their donation. This is called deductible gift recipient ( DGR ) status. It refers to being endorsed as a DGR by the ATO because the organisation falls within a DGR category specified in the Income Tax Assessment Act 1997 (Cth) or, in exceptional cases, because the organisation is listed by name in the Income Tax Assessment Act 1997 (Cth). There are over 50 DGR categories, which include: • public benevolent institutions ( PBIs ); • health promotion charities; • harm prevention charities; • environmental charities; and • animal welfare charities. Each category has specific requirements. The organisations most commonly endorsed as deductible gift recipients are PBIs. Generally, to gain PBI status, an organisation must be an institution that organises, conducts itself or promotes for the relief of poverty, sickness, destitution, helplessness, suffering, misfortune, disability or distress. Such an organisation usually has to address this purpose in its constitution, which also has to contain a not-for-profit clause, aDGR revocation clause, and a suitablewinding