Charity sector’s regulatory burden to reduce

The charity sector’s interest in the financial reporting regulatory requirements will have been sparked following a recent announcement proposing some relief from their currently burdensome financial reporting requirements.

In December 2020, Josh Frydenberg, Federal Treasurer, and Senator Zed Seselja, Assistant Minister for Finance, Charities and Electoral Matters, announced they will be providing the relief under an agreement signed by all Federal, State and Territory treasurers.

The announcement is expected to be welcomed by the charity sector who have been pushing for reduced complexity and duplication particularly associated with the compliance of operating across multiple jurisdictions, which ultimately diverts their focus and resources away from their core purpose.

Further detail regarding the potential changes was provided in the Increasing financial reporting thresholds for ACNC - registered charities, consultation paper released by the Australian Government’s Treasury department, in February. Responses to the consultation paper close on 21 March 2021.

Expected threshold relief for charities

Approximately 6,800 medium or large charitable entities are expected to benefit from the lifting of the current reporting thresholds, allowing resources to be redirected to assist vulnerable Australians.

The current reporting thresholds, and those proposed in the consultation paper are summarised in the table below.

Entity size

Financial report requirment

Current annual revenue threshold

Proposed annual revenue threshold


Not required

Less than $250,000

Less than $500,000


Reviewed or audited financial report

$250,000 or more and less than $1 million

$500,000 or more and less than & $3 million


Audited finanacial report

$1 million or more

More than $3 million

Source:  Increasing financial reporting thresholds for ACNC - registered charities

It is interesting to note that the reporting thresholds proposed in the Australian Government’s consultation paper differ to those recommended by the Australian Charities and Not-for-profits Commission (ACNC) in the 2018 paper, Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislative Review 2018.

In this paper the recommended reporting thresholds were:

  • Small entities - Less than $1 million
  • Medium entities - Between $1 million and $5 million
  • Large entities - Greater than $5 million

What does this mean for charitable entities?

It is estimated that 3,500 charities will move from large to medium sized entities and 3,300 charities will move from medium to small sized entities.

While the Council of Federal Financial Relations (CFFR) intend to announce the new ACNC financial reporting thresholds by 30 June 2021, it is unclear when the new thresholds will come into effect.

The maximum benefit from a change in the reporting thresholds will transpire if all states and territories align their financial reporting requirements for charities with that of the ACNC. Regulatory change is required in New South Wales, Queensland and the Northern Territory if they are to realise the full benefits of any increase in the thresholds.

The states and territories recently agreed to implement a cross-border recognition model for fundraising. This is another step in the right direction, although there is still some way to go. Queensland and New South Wales are the only states that do not currently accept the financial report a charity lodges with the ACNC as meeting their fundraising reporting requirements.

Keeping you informed

BDO’s Not-For-Profit team is monitoring the financial reporting requirements and how the announcement will impact charitable entities.

Should you have any queries or concerns related to this announcement, please contact us.

Footnote: Easing the regulatory burden on charities | Treasury Ministers