MI Member Compliance Charity reform update Compliance with MI Member Standards Time for questions Please note: This seminar does not provide legal advice

NFP Reforms – Overview NFP Reforms – since 1995  15.5 Million words; 50,000 pages.  Gov’t commissioned 3,000 reports.  NFP Sector – 4,500 responses; 29,000 pages Prof Myles McGregor Lowndes – CMA Conference 2013

NFP Reforms – Overview  ‘In Australia’ Legislation  ACNC Act  Statutory Definition of Charity  Governance Regulations  UBIT - scrapped

Other Reforms impacting charities A multitude of Federal and State/Territory laws including:  Privacy  OH & S  Working with children  Fundraising etc

ACNC – Background  Charity Status determined by ATO  3 December 2012 – ACNC became operative Public information portal Decider of charitable status but not tax concessions (ATO) Minimum governance standards Financial reporting framework External conduct standards – not yet

ACNC – Current obligations  Good Governance Five governance standards Ensure objects in constitution are consistent with mission statement and practice.  Annual Information Statement  Keep records  Update details – constitution, responsible persons etc

ACNC – Future  To be abolished and replaced by Centre of Excellence  Options paper: Self-reporting requirements – back to ASIC Returning determination of charitable status to ATO Charities required to maintain publically accessible website with names of responsible persons, details of all government funding, financial reports.  Nothing certain

Statutory Definition of Charity  Charities Act passed in June 2013 & Commenced 1 Jan 2014  Definition previously based on common law  Gives certainty to ‘Advancing Religion’ as a statutory Head of Charity  Codifies many other purposes as charitable

“In Australia” Requirements - Background The issues (1995):  Control of funds going off-shore – tax avoidance, anti- terrorism and money laundering.  International treaty obligations – regulate movement of money between countries.  Need to protect the integrity of charitable activity

“In Australia” Requirements - Background The Answer:  Taxation law used as a control mechanism  Taxation Laws Amendment Act (No 4) 1997  Income tax exempt charities barred from sending funds overseas unless they meet certain conditions.

“In Australia” Requirements - Current To be endorsed by the ATO as income tax exempt, a charity must meet one of three tests:  “In Australia” test  Deductible Gift Recipient (DGR) test  Prescribed by law test Missions Interlink and its Members are prescribed by law

“In Australia” Requirements – Reform The issues:  Law below treaty obligations  Word Investments case Government announced in 09/10 budget that it would amend the “in Australia” Special Conditions for tax concessions to better control those organisations passing money to overseas charities and other entities.

“In Australia” Requirements – Reform Process  July/August 2011 – first exposure draft & public consultation  April/May 2012 – second exposure draft & public consultation  August 2012 – Bill introduced to Parliament  June 2013 – Some of the provisions of 2012 Bill were enacted  August 2013 –2012 Bill lapsed at the dissolution of Parliament  December 2013 – Current Government announced it would proceed with reforming the “in Australia” requirements  March 2014 – new exposure draft & public consultation

“In Australia” Requirements – Proposed  The restated “in Australia” special conditions move away from expenditure-based test to allow consideration of a wide range of circumstances.  “Tracing” of money given to another enitity.  Stricter conditions on “disregarded amounts”.  Much more difficult and greater compliance required for organisations with overseas activities to meet “in Australia” conditions.

“In Australia” Requirements – Proposed  The exposure draft maintains the existing prescription of Missions Interlink and its Members, exempting them from the new “in Australia” requirements for income tax entities.  Wait and see……

Exempt Foreign Income – personal income tax The issue (2009): Australians earning large sums of money overseas not subject to Australian income tax. “Better targeting the income tax exemption for Australians working overseas”.  Changes to Section 23AG of the Income Tax Assessment Act 1936 effective 2009/2010.

Exempt Foreign Income – personal income tax Section 23AG: Foreign income of personnel (Australian residents for income tax) working continuously overseas for more than 91 days is exempt from Australian income tax if directly attributable to activities of a prescribed institution exempt from Australian income tax because it is pursuing objectives outside Australia.  Personnel of MI Accredited Members fit this exemption.  Income to be declared as “exempt foreign income”.

Missions Interlink Member Compliance with MI Standards Missions Interlink Standards Statement Missions Interlink Member Accreditation Standards MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Compliance with MI Standards Missions Interlink Standards Statement MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Compliance with MI Standards Missions Interlink Member Accreditation Standards MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Accreditation Standards 1. An Australian organisation MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Accreditation Standards 2. Financial Standards MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Accreditation Standards 3. Governance and Accountability Structure MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Accreditation Standards 4. Tax Status MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Accreditation Standards 5. Accreditation Confirmation MI Member log-in to Username: missions Password: Psalm145

Missions Interlink Member Accreditation Renewal 2014 Member Declaration Use web link in renewal letter

Questions