MI Member Compliance Charity reform update Compliance with

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 Ø 15. 5 Million words; 50, 000 pages. Ø Gov’t commissioned 3, 000 reports. Ø NFP Sector – 4, 500 responses; 29, 000 pages Prof Myles Mc. Gregor Lowndes – CMA Conference 2013

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

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

ACNC – Background Ø Charity Status determined by ATO Ø 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 Ø Good Governance • • Five governance standards Ensure objects in constitution are consistent with mission statement and practice. Ø Annual Information Statement Ø Keep records Ø Update details – constitution, responsible persons etc

ACNC – Future Ø To be abolished and replaced by Centre of Excellence Ø 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. Ø Nothing certain

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

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

“In Australia” Requirements - Background The Answer: Ø Taxation law used as a control mechanism Ø Taxation Laws Amendment Act (No 4) 1997 Ø 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: Ø “In Australia” test Ø Deductible Gift Recipient (DGR) test Ø Prescribed by law test Missions Interlink and its Members are prescribed by law

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

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

“In Australia” Requirements – Proposed Ø 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. Ø 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”. Ø Changes to Section 23 AG of the Income Tax Assessment Act 1936 effective 2009/2010.

Exempt Foreign Income – personal income tax Section 23 AG: 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. Ø Personnel of MI Accredited Members fit this exemption. Ø 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 www. missionsinterlink. org. au Username: missions Password: Psalm 145

Missions Interlink Member Compliance with MI Standards Missions Interlink Standards Statement MI Member log-in to www. missionsinterlink. org. au Username: missions Password: Psalm 145

Missions Interlink Member Compliance with MI Standards Missions Interlink Member Accreditation Standards MI Member log-in to www. missionsinterlink. org. au Username: missions Password: Psalm 145

Missions Interlink Member Accreditation Standards 1. An Australian organisation MI Member log-in to www. missionsinterlink. org. au Username: missions Password: Psalm 145

Missions Interlink Member Accreditation Standards 2. Financial Standards MI Member log-in to www. missionsinterlink. org. au Username: missions Password: Psalm 145

Missions Interlink Member Accreditation Standards 3. Governance and Accountability Structure MI Member log-in to www. missionsinterlink. org. au Username: missions Password: Psalm 145

Missions Interlink Member Accreditation Standards 4. Tax Status MI Member log-in to www. missionsinterlink. org. au Username: missions Password: Psalm 145

Missions Interlink Member Accreditation Standards 5. Accreditation Confirmation MI Member log-in to www. missionsinterlink. org. au Username: missions Password: Psalm 145

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

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