Following a five-year long process the Charities Amendment Act 2023, that makes amendments to the Charities Act 2005, has received the Royal assent. The result is some changes for charities in the statutory requirements around governance, reporting, the Charities Registration Board, compliance, and appeals. Different changes become effective on three key dates: 5 July 2023, 5 October 2023, and 5 July 2024.

Governance

The definition of who counts as an officer is now wider and includes all those with significant influence over the management or administration of the entity. At least one officer of the charity must be 18 years of age or over, while the remaining officers can be 16 years of age or over.

Charities now have a statutory duty to review their governance procedures before 5 October 2026, and then every 3 years thereafter. ‘Governance procedures’ includes an entity’s founding documents and any other policy documents, and ‘review’ means formally assessing whether these documents are still fit for purpose, and, if not, changing them. This process presents an ideal opportunity to review your charities rules/constitution/trust deed for any unnecessary requirements that you can take out. One possible example is provisions regarding the preparation and audit of financial statements which are covered by comprehensive requirements in legislation, so duplication is unnecessary.

Reporting

It gives the Department of Internal Affairs (DIA) Chief Executive the power to exempt ‘very small’ charities from preparing general purpose financial reports in accordance with the External Reporting Board (XRB) reporting standards. It provides for the definition of ‘very small’ to be defined in regulations. Such charities will still be required to file an annual return with Charities Services containing some basic financial information.

Charities Services annual returns

New forms are now available for charities to use when filing annual returns (as well as applying for registration and updating details). These new forms align with the new requirements of the Charities Act 2005, and the XRB’s revised Tier 3 and 4 reporting standards. The new annual return forms are mandatory for reporting periods beginning on or after 1 April 2024. For reporting periods that ended on or after 15 June 2023, charities can choose to use the new annual return forms if they have early adopted the XRB’s revised Tier 3 or 4 reporting standards.

Tier 4 charities (those with less than $140,000 in annual operating payments) now have the option to complete a new ‘Combined Tier 4 Annual Return’ which includes all the information which would normally be provided in a Performance Report. Those that choose this option no longer need to prepare and file a separate Performance Report with Charities Services.