Possible increases in revenue thresholds for charities reporting to the ACNC

Charities registered with the Australian Charities and Not-for-profits Commission are currently required by the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) to prepare and lodge financial statements as follows:

Type of entity Revenue Thresholds Financial report required Audit or review engagement
Small Less than $250,000 Χ N/A
Medium Greater than or equal to $250,000 but less than $1 million Review engagement
Large Greater than or equal to $1 million Audit

However, in future, if the recommendations of the Review Panel in its report, Strengthening for Purpose: The Australian Charities and Not-for-profits Commission Legislation Review 2018 (Report) are taken on board, we could see thresholds increasing as part of further red tape reduction initiatives, such that many entities currently submitting audited financial statements with the ACNC will no longer need to.

The Report notes that the current thresholds are too low, resulting in increased red tape for smaller charities. While there are no changes to review and audit requirements for ‘medium’ and ‘large’ entities, the Report recommended the following higher revenue thresholds as follows (from 1 July 2019):

Type of entity Revenue Thresholds Financial report required Audit or review engagement
Small Less than $1 million1 Χ N/A
Medium Greater than or equal to $1 million but less than $5 million1 Review engagement
Large Greater than or equal to $5 million1 Audit

1Determined on a rolling three-year basis

 Other financial reporting recommendations include:

  • Registered entities to be required to disclose related party transactions, and
  • Large registered entities to be required to disclose the remuneration paid to responsible persons and senior executives on an aggregated basis.

If the recommendation to increase the size thresholds is adopted, the necessity for the exemption from financial reporting for basic religious charities would be reviewed.

Overall the Report notes that there was strong support for the ACNC and its accomplishments in the first five years.