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    Charities must report related party transactions
    16
    May
    Charity

    Charities must report related party transactions

    Charities have had their say on how they will report related party transactions, the ACNC reports.

    From the 2023 Annual Information Statement (AIS), all charities except for Basic Religious Charities will be asked to report their related party transactions to the ACNC, due to changes announced in November 2021.

    The ACNC recently closed a consultation on how charities should report those transactions in the AIS.

    ACNC Commissioner Sue Woodward AM said, “The ACNC collecting information about related party transactions is an important part of our work to support good governance and transparency by registered charities. Keeping a record of related party transactions is also part of how charities should manage any conflicts of interest.

    “We want to obtain the information charities are now required to lodge without imposing an undue burden, particularly on small charities. We consulted through our forums, which are our key feedback channels, and through a survey open to all charities.

    “It’s critical that we consult charities about changes to reporting requirements and are aware of how any changes will affect organisations of different sizes with varying levels of resourcing.”

    A selection of potential reporting options was provided in the consultation.

    Ms Woodward said, “One option was supported by the majority of respondents, including small charities. We have used this feedback to develop the question that we will include in the 2023 AIS. Charities will choose from a pre-defined list of reportable transactions.”

    Reportable related party transactions include:

    fees paid to a related party for providing goods or services to the charity
    loans from or to a related party
    salary or wages paid to a related party’s relative
    transfer of charity property or assets to a related party
    charity goods or services provided at a discount to a related party
    significant use of charity property by a related party
    investment in a related party.

    ACNC guidance on related party transactions has been updated and outlines how the new obligations apply to charities of different sizes.

    The ACNC recommends charities keep their own register of related party transactions and we have a template to use for this purpose.

    SOURCE

    Consultation informs related party reporting to the ACNC (ACNC)

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