From 1 July 2023, charities registered with the Australian Charities and Not-for-profits Commission (ACNC) will be required to report their related party transactions annually through their Annual Information Statements. These changes were introduced with the aim of increasing transparency and accountability regarding related party transactions.
What is a related party transaction?
Related party transactions are defined by the ACNC as the transfer of resources, services, or obligations between related parties. It does not necessarily have to include financial payment. Examples of related party transactions include and are not limited to; purchases/sales, donations, loans, leases and the provision of employees or volunteers.
How does this impact charity reporting?
The ACNC has released guidance to assist charities in understanding these new rules. From the 2023 Annual information statement (AIS) onward:
- Charities that lodge an AIS as the end of the financial year must disclose related party transactions from 1 July 2022.
- Charities that lodge an AIS at the end of the calendar year must disclose related party transactions from 1 January 2023.
Furthermore, under these new rules, medium and large charities are required to report related party transactions in their financial reports.
Managing related party transactions
Charities should take steps to record and manage related party transactions. This can involve maintaining a related party transactions register, implementing appropriate policies and procedures for dealing with related party transactions and taking reasonable steps to manage conflicts of interest.
Next Steps
If you have any questions regarding the recent changes in disclosure requirements of related party transactions for charities, please get in touch with our team.
