Empowering Change: The Charities Amendment Act 2023 and its Impact on Nonprofits
The Charities Amendment Act 2023 (“the Act”) has been enacted with the purpose of modernising the Charities Act 2005. The Act came into force on 5 July 2023 with some changes being immediate, and other changes being implemented on 5 October 2023 and 5 July 2024.
The immediate changes implemented on 5 July 2023 were of an administrative nature. Such changes included clarification of particular information such as how decisions are made being accessible on the Charities Services website, and increasing the maximum size of the independent Charities Registration Board from 3 members to 5.
There are four significant changes to the Act which have been in effect from 5 October 2023. These are:
- Amending the definition of ‘officer’;
- A requirement for charities to review their governance procedures;
- Updated powers to disqualify officers; and
- An update to the application response time.
Definition of ‘officer’
The definition of officer is now wider under the Act and includes any person that is in a position within the charity who has powers given to them to make decisions that would otherwise fall on the trustees, board or governing body of the entity. This amendment intends to provide accountability for those who are not technically an officer but have the ability to make significant decisions about the charity. This is similar to the obligations imposed on trustees, and directors and officers under the Trusts Act 2019, Companies Act 1993 and Incorporated Societies Act 2022, respectively.
Governance procedure review
All charities are now required to review their governance procedures at least every 3 years. When a review is carried out, the entity must consider whether the governance procedures:
- Are fit for purpose;
- Assist the charitable entity to achieve its charitable purpose; and
- Assist the charitable entity to comply with the requirements of the Act.
While this appears to be burdensome, we suggest charitable entities implement a streamlined process that is carried out at least every 3 years to ensure their reviews are efficient, consistent and carried out when it required.
Disqualification of officers
The independent Charities Registration Board (“the Board”) has new powers to disqualify an officer of a charitable entity for no longer than 5 years if:
- an officer engages in serious wrongdoing in connection with the charitable entity;
- or the officer has failed to meet their obligations under the Act significantly, or persistently.
Application response time
When applying for charitable status, applicants will have two months to provide any further information or response if their application intends to be refused by the Board. This is an increase on the previous 20 working-day response time. The extended timeframe has the
intention of encouraging applicants to make submissions against an application the Registrar has indicated may be declined.
Appeal charities services decisions
From 5 July 2024, if a decision is made by the Charities Services or the Board, a charitable entity will be able to appeal such decisions to the Taxation Review Authority, rather than the High Court. Charities will have 2 months from the decision to carry out such appeal, providing greater opportunities for charities to access justice.
If you are part of a registered charitable entity, we want to help you ensure your charitable entity is prepared for the potential implications the Act may have. Contact Sarah Churstain and the Ford Sumner Commercial Team today for any questions or enquiries you may have.
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