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How the 2011–12 Budget will affect not-for-profit organisations

4 min read

The recent release of the 2011–12 Federal Budget has seen the inclusion of certain provisions to ensure the implementation of a reform agenda for the not-for-profit sector.

Third Sector hears again from Minister Plibersek in light of the Budget, as she details its implications for the sector, as well as a renewed partnership between the Government and the sector, and how to improve the lives of Australia’s most vulnerable people. The frailties of the global economy and the impact of recent natural disasters have presented a major challenge to the NFP sector and for governments around the world. The Australian Government has had a unique response: while other nations have cut social supports and welfare, the Australian government has sought to invest in our people and institutions. That can’t happen without a strong partnership with the third sector.

Investment in social programs

Rather than make wholesale cuts to social programs the way governments in Europe and the United States have done, the 2011–12 Budget made record investments in areas including education, training, job-creation and mental health. These measures build on the other major social reforms we have undertaken over the past four years, including a $20 billion investment in the supply of affordable housing for low and moderate income earners, $5 billion for new initiatives to tackle homelessness, record investments in education directed toward the most disadvantaged schools, investments in closing the gap for Indigenous Australians the creation of fairer workplace laws, and more affordable child care.

The Federal Budget will ensure that every Australian has the opportunity to participate more fully in our society and our economy. It extends training and education opportunities, supports for work and childcare, individualised case management and a place-based approach to some our most disadvantaged people and communities.

Across Australia there are disadvantaged communities that are missing out on the benefits of the growing economy and the opportunities it brings. To address this, the Australian Government is implementing a new approach to help people living in communities with high rates of entrenched disadvantage, including those faced by families with young children and the long-term unemployed. We particularly want to tackle the challenge of inter-generational welfare dependence.
Targeting new initiatives in specific locations will concentrate our resources to find and support local solutions.

Working side-by-side

The simple truth is that the Government and the NFP sector are often working side-by-side to support the same individuals and families. That is why enhanced support from Government to the sector is a key element of our strategies to assist disadvantaged and vulnerable Australians.

The Australian Government is committed to building on the foundation provided by the National Compact to generate a stronger partnership with the sector in the way we form policy, administer funding and deliver services. To this end, in the 2011–12 Budget we made several significant announcements that will have a historic impact on the sector (an overview of which can be found at

Commonwealth regulator

In particular, we agreed to provide $53.6 million over four years to establish an independent Commonwealth regulator for the sector. The Australian Charities and Not-for-profits Commission (ACNC) will improve and simplify regulatory requirements for the sector.

From 1 July 2012, the ACNC and not the Australian Taxation Office will be responsible for determining organisations’ applications to attain charitable and public benevolent institution status. The ACNC will create a ‘one-stop shop’ for the engagement of the sector with the Australian Government, providing educational material, technical support, reporting guidelines and a public information portal. The portal will incorporate a ‘report once, use often’ reporting framework to eliminate the need for charities to provide similar information over and over to numerous government departments, and it will also streamline the provision of information to the community, including potential donors or volunteers. The portal will be implemented in July 2013.

Implementation Taskforce

An Implementation Taskforce will precede the ACNC, starting work on
1 July 2011 to ensure the ACNC is ready for operation by 1 July 2012. I am delighted that Robert Fitzgerald AM has agreed to chair the advisory board supporting this Taskforce. He authored the Productivity Commission report calling for this reform and his extensive experience in the NFP sector makes him the ideal candidate to guide the implementation.

‘Charity’ definition

The Government will also introduce a statutory definition of ‘charity’, to take effect from 1 July 2013, based on the 2001 report of the Inquiry into the Definition of Charities and Related Organisations. The new definition will be easier to understand and simpler to implement, and will take into account the findings of recent high court decisions to clearly identify that the definition of ‘charity’ includes advocacy. Members of the public and the NFP sector will have the chance to comment on the final form of the definition.

Tighten tax concessions

We will also tighten tax concessions for charities that conduct activities that are unrelated to their charitable work, to protect the integrity of the sector.

From 1 July 2011, charities will have to pay income tax on the profits of any newly created businesses that do not go back into their charity work. This reform will ensure that valuable tax concessions are utilised to further the altruistic aims of the sector, rather than being used to provide an uncompetitive advantage to a purely commercial activity.

This change won’t affect op shops or small scale fundraisers such as lamington drives, and nor will it affect income derived from innovative commercial activities, including social enterprises, that is directed back to the altruistic purpose. Such enterprises will also continue to receive the benefit of charitable tax concessions and NFP entities will keep all their tax concessions for their altruistic activities.

A consultation paper on the implem-entation of this reform was released on 27 May, for comment by Friday, 8 July 2011 (

Exciting times

These are exciting times and I am pleased to be part of a renewed partner-ship with the sector. I thank everyone involved for the great work you do to help make the lives of some of the most vulnerable people in our community so much better.

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