From the 2023 Annual Information Statement (AIS), all charities (except for Basic Religious Charities) are required to report their related party transactions to the Australian Charities and Not-for-profits Commission (ACNC).
Following a period of public consultation, the ACNC has now released guidance on how charities will be required to report their related party transactions in the 2023 AIS.
The reporting requirements for related party transactions will vary based on the size of the charity.
Starting from the 2023 AIS, small charities only need to disclose reportable related party transactions.
Small charities must choose from a pre-defined list of reportable transactions, which include:
If there are no reportable related party transactions, small charities should answer “No” to the question asking if they had any such transactions in the 2023 reporting period.
If small charities have other types of reportable related party transactions, they should select the “Other” option and provide a description of the transaction.
Small charities can provide additional information about their charity’s related party transactions in an optional question asking for “any other relevant details”.
Medium and large charities
From the 2023 AIS onwards, medium and large charities only need to disclose material related party transactions.
If a medium or large charity had no related party transactions during the reporting period, they should answer "No" to the question in the 2023 AIS.
Alternatively, if a medium or large charity did have material related party transactions, they must select one or more applicable types of transactions from a list similar to the one provided for small charities.
Medium and large charities can select the "Other" option if the transaction does not fit any predefined category and provide a description.
Additional information about related party transactions can be provided in the optional question asking for "any other relevant details."
What does this mean for your charity?
This new requirement means that charities must keep records of their related party transactions starting from the beginning of their 2023 reporting period, typically from 1 July 2022.
In order to comply with the new rules and streamline the reporting process, we recommend that all charities act now to establish and maintain a related party transactions register.
The ACNC has provided a template related party transaction register here.
Assistance from Jackson McDonald
Jackson McDonald’s highly experienced team can provide your charity with assistance in complying with the new ACNC reporting requirements. If you would like more information, or if you would like assistance, please contact Elizabeth Tylich or David Murphy.