Commissioner's Policy Statement: Revocation by the ACNC

This Commissioner’s Policy Statement is issued under the authority of the Commissioner and should be read together with the ACNC Policy Framework, which sets out the scope, content and definitions common to our policies.

Policy Statement

1. This Commissioner’s Policy Statement gives guidance on the circumstances in which the Commissioner may revoke the registration of charities under Division 35 of the ACNC Act.
2. This policy does not cover the process by which registered charities can voluntarily apply to be deregistered under section 35-10(1)(e) of the ACNC Act (see Choosing to deregister policy).

Legislative context

3. Under Division 35 of the ACNC Act, the Commissioner may revoke (cancel) a charity’s registration if the Commissioner reasonably believes that certain circumstances exist under section 35-10(1), namely if a registered charity:
   1. is not entitled to registration
   2. has provided information that was false or misleading in a material particular in its application for registration
   3. has contravened the ACNC Act or has not complied with a Governance Standard (or is more likely than not to contravene or not comply in the future)
   4. has a trustee in bankruptcy, a liquidator, or a person appointed, or authorised, under an Australian law to manage its affairs because it is unable to pay all its debts as and when they become due and payable.
4. An organisation maintains its entitlement to registration if it:
   1. continues to be a charity (meaning it continues its not-for-profit nature, have a charitable purpose and be for the public benefit)
   2. continues to meet the description of the subtype of charity that it is registered as
   3. is complying with the ACNC Governance Standards
   4. has an Australian Business Number (ABN)
   5. is not involved in terrorist or other criminal activity (s25-5).
5. A charity may also request to have its registration revoked under s35-10(1)(e). The process for this is set out in the Choosing to deregister policy.
6. Before deciding to revoke a charity’s registration, the Commissioner must consider a range of factors under s35-10(2):
   1. the nature, significance and persistence of any contravention or noncompliance
   2. the actions that have or can be taken to address any contravention or noncompliance
   3. the need to ensure any contributions to the charity are applied consistently with its not-for-profit nature and charitable purpose
   4. the objects of any Commonwealth laws that refer to ACNC registration
   5. the harm to public trust and confidence
   6. the welfare of beneficiaries of the charity
   7. any other matter the Commissioner considers relevant.
7. Before revoking registration, the Commissioner must give the charity a written ‘show cause’ notice which states:
   1. the grounds on which the Commissioner proposes to revoke registration
   2. the charity has 28 days to give a written statement on why the Commissioner should not revoke the registration (section 35-15(1)-(2)).

   The Commissioner does not have to give a show cause notice, if it is considered appropriate to revoke without such a notice being given (s35-15(3)).

8. The Commissioner must give the charity notice within 14 days if the registration is revoked and the revocation must specify the date from which registration is taken to be revoked (s35-10(3)-(4)).
9. If a charity is dissatisfied with a decision to revoke registration, it can object to the decision in line with Part 7-2 of the ACNC Act (see Reviews and appeals policy).

Principles

Principle 1: Consistency with the ACNC Act, the regulatory approach and ACNC values

10. The statutory objects of the ACNC Act include promoting public trust and confidence in charities. Section 35-10(2) requires the Commissioner to consider the potential harm relating to the conduct in question, not just in terms of risk to public trust and confidence, but also in terms of protecting charitable assets and vulnerable beneficiaries, and considering the objects of any other Commonwealth laws that may be impacted by the removal of ACNC registration.
11. The ACNC’s regulatory approach is based on an understanding of charities, and the ACNC will use the least intrusive powers that are sufficient to address any compliance concerns. In choosing whether to act, the ACNC will consider the type of problem involved, what or who is at risk, the nature of potential harm, the charity’s past behaviour and likelihood of future non-compliance and the charity’s risk profile. The values underpinning the regulatory approach includes fairness, support for charities, proportionality and consistency.
12. Any decision to revoke registration must therefore be done to protect public trust and confidence in charities, for example by maintaining the integrity of the ACNC Register, and only made after the values and factors outlined in the regulatory approach and section 35-10(2) have been fully considered.

Principle 2: ACNC will only revoke registration in serious compliance cases

13. Revocation is the most serious enforcement action available to the Commissioner, and results in the loss of Commonwealth charitable status (including losing access to Commonwealth tax concessions). In line with the regulatory approach statement, the Commissioner will only revoke registration as an enforcement action in serious circumstances, and only after less intrusive actions have been considered.
14. The ACNC will take a risk-based approach in determining the cases of high risk, or serious or deliberate misconduct that warrant revocation. For example, it would clearly be appropriate to revoke where an organisation has been established as a charity merely to launder money or as a front for conducting serious criminal activity (including financing terrorist activities or for significant private benefit). Another example may be, where revocation is the only enforcement action available (that is, the charity is not a federally regulated entity), when a charity intentionally and repeatedly fails to comply with the ACNC Act, or refuses to engage with the ACNC at all after multiple attempts at contact.
15. The ACNC considers the failure to meet reporting obligations for two or more years demonstrating persistent non-compliance to be serious non-compliance, as it indicates that the charity is intentionally not complying, despite multiple contacts from the ACNC.
16. In some situations, the ACNC will contact charities who have made material errors in their Annual Information Statement (see Commissioner’s Policy Statement 2013/12: Annual Information Statements). These charities will be required to submit a corrected Annual Information Statement. If, after being asked to correct the Annual Information Statement the charity fails to do so, they will be considered non-compliant with their obligation to provide a corrected Annual Information Statement. For small charities, this statement or report is due within 60 days of the error being identified. For medium and large charities, the statement is due within 28 days of the error being identified.
17. As a matter of policy, the ACNC will revoke the registration of charities that fail to submit either their Annual Information Statements or provide corrected Annual Information Statements (from the 2016 reporting period onwards) for two reporting periods (these periods do not need to be consecutive), unless exceptional circumstances apply. For example, a charity that did not submit a corrected Annual Information Statement in 2016 and who also failed to submit an Annual Information Statement in 2017 would have its status revoked.
18. For charities that fail to submit their Annual Information Statements, this policy approach takes into account:
    • the multiple reminders and warning letters that non-complying charities would receive over the two reporting periods
    • the support provided to comply (including guidance, education sessions and in some cases, direct phone calls)
    • the targeted media to raise awareness and encourage compliance (including local and regional media)
    • the ACNC’s Annual Information Statement policy which allows charities to defer their reporting due date if it is fair and reasonable to do so
    • the ACNC’s statutory object to promote public trust and confidence in registered charities, and the need to maximise charities’ compliance with the obligation to submit Annual Information Statements in order to maintain a full and accurate ACNC Register.
19. For charities that fail to submit corrected Annual Information Statements (from the 2016 reporting period onwards), this policy approach takes into account:
    • the emails that non-complying charities would receive
    • the support provided to comply (including guidance, education sessions and in some cases, direct phone calls)
    • the targeted media to raise awareness and encourage compliance (including local and regional media)
    • the ACNC’s statutory object to promote public trust and confidence in registered charities, and the need to maintain a full and accurate ACNC Register.
20. In considering whether to revoke registration, the ACNC will follow our decision-making policy, and in line with section 35-15 of the ACNC Act, charities will also have the opportunity to respond to the show cause notice before the ACNC revokes registration.
21. When a charity is sent a notice of intention to revoke registration for failing to provide two Annual Information Statements they will be required to lodge all outstanding reports within the timeframe set out in the notice to avoid revocation. To satisfy this requirement, the information submitted in the reports must be complete and accurate.
22. Charities that have been revoked for failing to meet reporting obligations for two or more years may be able to apply for re-registration, if they contact the ACNC and comply with outstanding obligations. If the charity meets the requirements for reregistration under s25-5(1)(c) (including submitting any outstanding Annual Information Statements or annual financial reports), its registration may be backdated by the ACNC. The ACNC will then advise the ATO and the ATO will assess any entitlement to backdated tax concessions. Where appropriate, the ACNC may also ask for more information before allowing re-registration to verify that the charity still meets the other requirements under s25-5(1) and to ensure their details are up-to-date (see Registration policy).

Principle 3: ACNC may revoke registration if entitlement to registration is not maintained

23. Aside from principle 2, the ACNC Act requires the Commissioner to consider revoking a charity’s registration if it was not entitled to registration (regardless of whether this involves serious misconduct). This could refer to serious compliance cases (such as the organisation not being a charity because it is being used as a front for criminal activity) or for technical reasons (for example the organisation does not have a valid ABN or has had its ABN cancelled).
24. As part of transitioning charities to the new subtypes of charity available under the Charity Act 2013, the Commissioner may also need to revoke subtypes of charity in order to better reflect an organisation’s charitable purpose.

Principle 4: ACNC may revoke registration if it is apparent that charities are inactive or not operating

25. Besides principles 2 and 3, and as part of building the integrity of the ACNC Register, the Commissioner may also revoke a charity’s registration if it becomes apparent that the charity has been inactive or not operating for a sustained period of time. This determination will be made after multiple attempts to:
    • contact the charity directly (by letter and phone)
    • publicly reach the charity through the ACNC website and mainstream media (by requesting charities on a published list to contact the ACNC, and by listing the charity as failing to lodge their Annual Information Statement on the ACNC Register)
    • verify which charities are active by comparing ACNC data to data held by other regulators.
26. Based on the need to maintain the integrity of the ACNC Register (and thereby promote public trust and confidence in registered charities), and that an inactive charity is no longer entitled to registration under s25-5, the Commissioner may revoke the registration of charities that are determined to be inactive under paragraph 20.
27. Revoked charities that contact the ACNC within six months of their revocation date (or a longer period subject to the Commissioner’s approval) and can verify that they are operative will not be disadvantaged. These charities can apply to register through a re-registration process. If they meet the requirements for re-registration under s25-5(1)(c) (including submitting any outstanding Annual Information Statements or annual financial reports), their registration will be backdated by the ACNC. The ACNC will then advise the ATO and the ATO will assess any entitlement to backdated tax concessions. Where appropriate, the ACNC may also ask for more information before allowing re-registration to verify that the charity still meets the other requirements under s25-5(1) and to ensure their details are up-to date (see Registration policy).

References

• Australian Charities and Not-for-profits Commission Act 2012
• Charities Act 2013
• ACNC regulatory approach
• Commissioner's Policy Statement: Voluntary revocation
• Commissioner's Policy Statement: Compliance and enforcement
• Commissioner's Policy Statement: Registration
• Commissioner's Policy Statement: Reviews and appeals