Australian Charities Pay the Price with New ASIC Levy

Australian charities and not-for-profit organisations are being hit with the new Australian Securities and Investments Commission (ASIC) levy forcing them to part with $321 in administrative costs.

The levy comes from Government changes to how ASIC is funded. Treasury announced in a recent consultation exposure draft schedule that there were fees associated with ASICs administrative involvement in businesses that were currently not being covered.

Under the new funding system, all companies managed by ASIC will be required to pay a levy covering the current financial year. This amount differs between business types, but for publically unlisted companies (including organisations that are also registered with the Australian Charities and Not-for-profits Commission (ACNC)), the flat fee is $321.

Sue Woodward, director for national projects and not-for-profit law expert at Justice Connect, disagreed that such a fee was justified.

“Some of the fees are a flat fee based on the company type, rather than being directly attributed to a single entity,” Woodward said.

“The fee applicable to companies limited by guarantee is an example of this – so a charity with $10,000 in annual revenue pays the same levy as one with $1 billion in annual revenue.

“$321 doesn’t sound like a huge amount of money, particularly if you’re a big organisation or a big business. For many smaller organisations, that is still a significant amount of money particularly if they haven’t had it on their radar. Some very small volunteer-run organisations might need to get that amount approved from their committee.”

Woodward said there was only a $4 increase for small proprietary companies, collected through an increase of $4 to their annual review fee (from 1 July 2018).

“This was designed as the most efficient way to recover ASIC’s regulatory costs for small proprietary companies while minimising their reporting burden. Why not apply the same type of thinking to small charities and other not-for-profits?” she said.

The law for the new levy was passed last year and took effect from 1 July 2017 covering the current financial year.

All charity and business owners required to pay the levy will be notified by post in January of next year where they will be given a turn-around time of 30 days to pay, regardless of whether ASIC has had a role in their regulation.

Typically, ASIC’s involvement with charities is limited to when they begin or when they are wrapping up. Most of a charity’s activity while they are in operation would be regulated through the ACNC.

“The ASIC levy is supposed to reflect where ASIC is doing regulatory activity and in this case there is very little general regulatory activity. To an extent they’re doing transactional activity and there is already a fee for service there to cover that,” Woodward said.

Woodward explained there was a clear policy decision at the time of the establishment of the ACNC not to charge fees.

“We don’t understand why that has changed – we are not sure if this is a backdoor mechanism,” she said.

In addition to the levy, ASIC are currently in discussion about a new fee-for-service regime that is set to be introduced.

Justice Connect said its main concern was that charities were forced to pay ASIC a fee for services already provided by the ACNC.

“We think the Supervisory Levy is more problematic as it is whacking charities even though they are predominantly regulated by the ACNC,” Woodward said.

“We consider the ASIC Supervisory Levy should be removed for charities. The existing levy is not reflective of a service being provided by ASIC and, therefore, is not a legitimate form of cost recovery from charities.”