Proposed changes to the Charities Act 2005- what you need to know

The Minister for the Community and Voluntary Sector has proposed a range of new amendments to the Charities Act which will be introduced in Parliament this year, and expected to be effective in 2023. The changes relate to judicial appeals, reduced reporting for small charities, and a clarification of the roles of officers in charities.

Changes to regulatory decision making

There will be some changes to the regulator’s decision making processes including:

•          The Charities Registration Board will publish all decline and deregistration decisions, as well as                          providing a process for charities to object to significant decisions.
•          The number of Board members will increase from three to five.
•          The time to submit information to Charities Services on administrative issues will be extended from 20              working days to two months.
•          Charities Services will consult with the charities sector when developing guidance material.
•          The currently implicit obligations to remain registered, such as having a charitable purpose, having a                 rules document, and having qualified officers, will be changed to explicit obligations.
•          The Board will be able to disqualify an officer for serious wrongdoing or a persistent breach of                            obligations, without the charity being de-registered.

Changes to judicial appeals

Charities will be able to have their first appeal heard by The Taxation Review Authority instead of the High Court. This will save on time and costs, and it allows charities to represent themselves in a less formal setting. The High Court will still be available as an appeal court from The Taxation Review Authority.

The timeframe for lodging an appeal from decisions made by Charities Services or the Board will be extended from 20 working days to two months.

Changes to charities accumulating funds

Charities in Tiers 1 to 3 with accumulated funds (includes cash, assets, and other resources) will be required to report the reasons for their accumulated funds. This change will be reflected in the annual return form. The definition of ‘accumulation’ will include the Te Ao Maori view in light of Charities Services’ consultation with iwi.

Changes to reporting requirements for small charities

It is suggested that charities with annual payments under $10,000 and total assets under $30,000 be exempt from the financial reporting standards set by the External Reporting Board. These small charities will still have to file an annual return with basic financial information.

Changes to officers of charities and governance requirements

The following changes are proposed in this area:

•          Individuals previously convicted of an offence related to the financing of terrorism will not be permitted           to hold an officer role in a charity;
•          At least one officer needs to be 18 years old or over, but the minimum age requirement for the                              remaining officers can be 16 years or over; and
•          The rules document will need to be reviewed annually by the charity to ensure their governance system           is up to date.

While these changes are still tentative, it is important to note that the public will have an opportunity to make submissions on these amendments when the proposed law reaches the Select Committee process.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Claire Tyler