Organisations that are registered charities are often regulated by a number of State, Territory and Commonwealth Government departments, including the Australian Charities and Not-for-profits Commission (ACNC) and, where an organisation is an incorporated association or undertakes charitable fundraising, State and Territory authorities. One consequence of this is often burdensome financial reporting requirements. Whilst there has been increased harmonisation of reporting requirements for charities subject to multiple regulators, a further reduction of the regulatory burden faced by the sector is currently being considered.

What is proposed?

As part of the Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislative Review 2018 (ACNC Review), a recommendation was made to increase the financial reporting thresholds for ACNC registered charities. The Commonwealth Government supported this recommendation and the Council on Federal Financial Relations has asked that a framework for increasing harmonised financial reporting thresholds across jurisdictions be announced by 30 June 2021.

The proposed threshold increases are lower than those recommended in the ACNC review but still represent an increase to the current thresholds. This can be seen in the following table:

Charity size

Current annual revenue threshold

ACNC Review recommended annual revenue threshold

Proposed annual revenue threshold


less than $250,000

less than $1 million

less than $500,000


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

$1 million to less than $5 million

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


$1 million or more

$5 million or more

$3 million or more

In making the proposed thresholds lower than the recommendation but higher than their current levels, Government are seeking to balance a reduction in regulatory red tape while maintaining transparency to promote accountability, public trust and confidence in the charity sector.

Information on the current reporting thresholds and requirements is available on the ACNC website.

Why increase reporting thresholds?

The benefit in increasing reporting thresholds is an anticipated decrease in professional service expenses for charities that move to a lower threshold. It is estimated this will be the case for almost 6,800 charities (more than 10 per cent of the sector).

The Thresholds Working Group have estimated:

  • approximately 3,300 charities would move from the medium to small category and therefore no longer need to produce reviewed financial reports, with an annual professional service expense saving of about $2,400 per charity per annum; and
  • almost 3,500 charities would move from the large to medium category and therefore no longer be required to produce audited financial reports, with an annual professional service expense saving of about $3,000 per charity per annum. 

These savings would hopefully be translated to increased funds to allow charities to further their charitable purpose i.e. spend more of their money on their activities rather than on regulatory compliance.

It is important to note that even if your charity does not need to submit financial reports to the ACNC it must still keep financial records that:

  • correctly record and explain how your charity spends or receives its money or other assets (transactions);
  • correctly record and explain your charity’s financial position and performance; and
  • allow for true and fair financial statements to be prepared and audited or reviewed, if required.

These obligations apply regardless of whether your charity is small, medium, large or a basic religious charity.

In recent years the ACNC and the States have made significant progress in reducing the regulatory burden associated with financial reporting for registered charities that are also incorporated associations. The current intention is that the change to the ACNC reporting thresholds will not disrupt the current level of harmonisation of reporting requirements for charities across jurisdictions. However, this is subject to formal agreement by each jurisdiction.

Similarly, additional financial reporting obligations arise for charities that also undertake charitable fundraising activities. All states except New South Wales and Queensland currently accept the financial report a charity lodges with the ACNC as meeting their fundraising reporting requirements. It is hoped that the changes to ACNC reporting thresholds will not result in added regulatory burden for charities undertaking charitable fundraising.

Obviously, the anticipated benefit arising from increased reporting thresholds will be significantly reduced if it reduces harmonisation across jurisdictions and heralds a return to increased dual reporting for organisations that are incorporated associations or that undertake charitable fundraising.

There are clearly other considerations involved in making such changes, including whether and how the proposed changes align with the Australian Accounting Standards Board (AASB) standards and whether there should be alignment of reporting thresholds between ACNC registered and non-ACNC registered entities. Such matters are also being considered by the Thresholds Working Group as part of the consultation.

How can your charity be involved?

The Thresholds Working Group are currently seeking stakeholder views on the issues associated with increasing financial reporting thresholds. To have your say, or find out more, about the consultation visit the Treasury website. Responses to the consultation are currently open until 11:5pm on Sunday, 21 March 2021.

If you want to know more about the proposed changes, or better understand your reporting obligations to the ACNC, please get in touch with our Charities + Social Sector team.

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