Introduction
Receiving a “show cause” notice from the Australian Charities and Not-for-profits Commission (ACNC) is a critical event for any charity. This formal document signifies the ACNC Commissioner’s intention to revoke your charity registration, which is the most serious enforcement power available and can threaten your organisation’s very existence and its entitlement to operate.
Responding effectively to this notice is your opportunity to present a case against the proposed revocation. Given the complexity of these proceedings and the severe consequences of losing registration, seeking advice from an experienced not-for-profit lawyer is essential to protect your charity’s interests and professional standing. This guide provides crucial information on how to prepare a formal submission and challenge the grounds for revocation.
Understanding What a Show Cause Notice Legally Means for Your Charity
The Serious Nature of Revocation Proceedings
The revocation of a charity registration is the most serious enforcement action available to the ACNC Commissioner. This measure is reserved for high-risk situations or cases involving serious or deliberate misconduct, and it is not taken lightly.
The ACNC’s regulatory approach is to use the least intrusive powers necessary. Therefore, revocation is considered only after other options have been exhausted.
This significant power is typically exercised in response to severe compliance failures. Examples of conduct that may warrant a revocation of charity registration include:
- Using a charity as a front for criminal activity or money laundering.
- Intentionally and repeatedly failing to comply with the ACNC Act.
- Refusing to engage with the ACNC after multiple attempts at contact.
Understanding the Notice to Revoke
A show cause notice is a formal written document issued by the ACNC Commissioner. It serves to inform a charity of the specific grounds on which the Commissioner proposes to revoke its registration, and it provides the charity with an opportunity to present its case and explain why its entitlement to registration should be maintained.
Upon receiving the notice, the charity has 28 days to provide a written statement in its defence.
Given the complexity of these matters and the serious risk to the charity’s professional standing and operations, it is crucial to seek independent legal advice. Consulting a not-for-profit lawyer can help ensure your response effectively addresses the allegations and protects the organisation’s interests.
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Grounds for Revocation & Loss of Entitlement
Serious Non-Compliance with ACNC Governance Standards
The ACNC Commissioner holds the power to revoke a charity’s registration if it has contravened the Australian Charities and Not-for-profits Commission Act 2012 (Cth) or failed to meet key ACNC compliance and governance standards. This regulatory action is typically reserved for serious or deliberate misconduct.
The ACNC will only revoke a charity registration as an enforcement action in serious circumstances and after considering less intrusive measures. Before deciding to revoke a charity registration, the Commissioner must evaluate several factors, including:
- The nature, significance, and persistence of the non-compliance
- Any harm to public trust and confidence
- The actions taken by the charity to address the contravention
These considerations are key in the final decision regarding revocation.
Disqualifying Purposes & Loss of Entitlement
A charity can face revocation if it is no longer entitled to be registered. To maintain its entitlement, an organisation must continue to meet several core requirements under Commonwealth law.
A charity loses its entitlement to registration if it is found to have a disqualifying purpose. This includes being involved in or promoting activities that are unlawful or contrary to public policy. Key examples of disqualifying purposes that can trigger a revocation include:
- Engaging in or supporting terrorist activities
- Being used as a front for serious criminal activity
- Laundering money or facilitating significant private benefit
If the ACNC determines a charity is operating for a disqualifying purpose, the Commissioner may revoke its registration to protect public trust and confidence in the sector.
Failure to Submit Annual Information Statements
A persistent failure to meet reporting obligations is considered serious non-compliance and is a common ground for the revocation of a charity registration. Specifically, the ACNC may revoke the registration of a charity that fails to submit its Annual Information Statements for two or more years.
These reporting periods do not need to be consecutive. The ACNC views this failure as an indication that the charity is intentionally not complying with its obligations, despite receiving multiple reminders.
This action is taken to ensure the ACNC Charity Register remains a full and accurate source of information for the public.
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Consequences of Revocation for Commonwealth & NSW Charities
Loss of Commonwealth Tax Concessions & DGR Status
The revocation of a charity’s registration by the ACNC is the most serious enforcement action the Commissioner can take. This decision results in the immediate loss of the organisation’s Commonwealth charitable status, which has significant financial consequences.
Once a charity registration is revoked, the organisation:
| Consequence of Revocation | Impact on the Organisation |
|---|---|
| Loss of Commonwealth Tax Concessions | The organisation is no longer eligible for any Commonwealth tax concessions, exemptions, or benefits it was previously entitled to receive. |
| Loss of DGR Status | The organisation loses its Deductible Gift Recipient (DGR) status, which directly impacts its ability to attract donations. |
The ACNC notifies the Australian Taxation Office (ATO) of the revocation, ensuring these changes are implemented. Given the severity of losing tax concessions, it is important to consult a not-for-profit lawyer to fully understand the implications.
Automatic Loss of Authority to Fundraise Under the Charitable Fundraising Act 1991 (NSW)
For charities operating in New South Wales, the consequences of ACNC revocation extend to state-level fundraising activities. The revocation of a charity’s registration is a specific ground for the suspension or cancellation of its authority to conduct charity fundraising appeals in the state.
Under the Charitable Fundraising Regulation 2021 (NSW), the NSW Secretary has the power to take this action if an organisation’s ACNC registration is revoked. This means a charity could:
| Consequence in NSW | Impact on the Organisation |
|---|---|
| Loss of Fundraising Authority | The charity could automatically lose its legal ability to conduct fundraising activities in New South Wales. |
| Operational & Financial Viability | The organisation could face severe impacts on its overall operations and long-term financial viability. |
This highlights the need for professional legal advice to manage compliance across both federal and state jurisdictions.
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Crafting Your Legal Response to the Commissioner
Steps to Prepare a Formal Submission
Upon receiving a show cause notice, your charity must prepare a formal written submission that directly addresses the grounds on which the ACNC Commissioner proposes to revoke your registration. This response is your opportunity to present evidence and arguments explaining why your charity’s registration should be maintained.
A comprehensive response requires a structured approach. Key steps include:
| Step | Description |
|---|---|
| Review the Allegations | Carefully examine the details in the notice to fully understand the specific reasons for the proposed revocation and ensure all facts presented are accurate. |
| Gather Evidence | Collate all relevant documentation to support the case, such as constitutions, trust deeds, meeting minutes, financial records, and policy documents. |
| Prepare a Written Statement | Draft a clear and thorough written statement that responds to each of the Commissioner’s points, explaining the charity’s context and justifying its conduct. |
| Demonstrate Proactive Improvements | If shortcomings are identified, take immediate steps to rectify them and communicate these improvements to the ACNC to show a commitment to good governance. |
The Importance of Consulting a NFP Lawyer
Given the complexity of revocation proceedings and the severe consequences for your charity’s professional standing and operations, seeking independent legal advice is essential. An experienced not-for-profit lawyer can provide critical guidance throughout the process.
Engaging a lawyer early can significantly strengthen your response. They can assist by:
| Area of Assistance | How a Lawyer Can Help |
|---|---|
| Understanding ACNC Requests | Helping the organisation understand the scope of the ACNC’s requests for information and documents. |
| Articulating the Charity’s Position | Assisting the organisation in articulating its context and explaining its actions in a legally sound manner. |
| Identifying & Rectifying Non-Compliance | Identifying specific areas of non-compliance and recommending appropriate improvements to address them. |
| Protecting the Charity’s Interests | Ensuring the formal submission effectively addresses all allegations and protects the charity’s legal and professional interests. |
Addressing the 28-Day Response Timeframe
The Australian Charities and Not-for-profits Commission Act 2012 (Cth) specifies a strict timeframe for responding to a show cause notice. Your charity has 28 days from receiving the notice to provide a written statement to the Commissioner.
This deadline is short, making it crucial to act promptly. If you cannot meet the deadline, you should contact the ACNC as soon as possible to request an extension. While the ACNC may negotiate additional time on a case-by-case basis, an extension is not guaranteed.
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Using Remediation as a Defence to Prove Compliance
Demonstrating Actions Taken to Address Non-Compliance
When deciding whether to revoke a charity registration, the ACNC Commissioner must consider any actions the charity has taken or can take to address the non-compliance. Your response to a show cause notice is a critical opportunity to demonstrate that your organisation has rectified the issues that led to the proposed revocation.
A prudent charity will use the ACNC investigation period to proactively make improvements. Taking immediate steps to fix any identified shortcomings can show a strong commitment to good governance.
Actions you can communicate to the ACNC include:
| Remedial Action | Purpose |
|---|---|
| Update Internal Policies & Procedures | To prevent future breaches of compliance obligations. |
| Implement New Training | To educate board members and staff on their governance and legal obligations. |
| Restructure Governance Arrangements | To improve organisational oversight and accountability. |
| Conduct an Independent Audit | To independently verify that compliance issues have been rectified. |
Engaging an experienced not-for-profit lawyer early in the process is vital. A lawyer can help identify specific areas of non-compliance, recommend appropriate improvements, and ensure your formal submission effectively communicates the remedial actions taken to the Commissioner.
Protecting Public Trust & Confidence
A key factor in the ACNC Commissioner’s decision-making process is the need to protect public trust and confidence in the charity sector. Your submission should therefore frame any remedial actions within the context of upholding this trust and ensuring your charity’s assets are applied to its charitable purpose.
By demonstrating that you have addressed the root cause of the non-compliance, you can reassure the Commissioner that your charity is conducting its affairs responsibly.
This involves not only fixing the immediate problem but also showing that your organisation is committed to long-term compliance and accountability. In doing so, you safeguard both your charity’s reputation and its entitlement to registration.
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Next Steps Regarding Appeals & NSW Fair Trading Actions
Appealing a Final Revocation Decision to the Administrative Appeals Tribunal
If your charity is dissatisfied with the ACNC Commissioner’s decision to revoke its registration, there is a formal review and appeal process. The first step is to lodge an objection with the ACNC for an internal review, which must be done within 60 days of receiving the final revocation notice.
Should the internal objection be unsuccessful, your charity has further options, including:
- Applying to have the decision reviewed by the Administrative Review Tribunal
- Appealing the decision directly to a court
Given the legal complexities of this process, it is highly advisable to consult an experienced not-for-profit lawyer. This guidance will help your organisation navigate these steps and protect its interests.
Responding to Subsequent Action from NSW Fair Trading
For charities operating in New South Wales, the revocation of ACNC registration can lead to additional regulatory action at the state level. Under the Charitable Fundraising Regulation 2021 (NSW), the loss of ACNC registration is a specific ground for NSW Fair Trading to suspend or cancel an organisation’s authority to fundraise.
This action is not automatic but is initiated through a separate written notice issued by NSW Fair Trading. Your charity will need to prepare a distinct response to this notice to address the potential loss of its fundraising authority in the state.
Engaging a lawyer is crucial to manage these parallel state-based proceedings effectively.
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Conclusion
Receiving a show cause notice from the ACNC Commissioner is a serious challenge to your charity registration, based on grounds such as non-compliance or loss of entitlement. A timely and well-prepared response is crucial to avoid revocation, which carries severe consequences including the loss of tax concessions and fundraising authority.
If your organisation is facing this critical challenge, seeking specialised legal guidance is essential to protect its future. Contact LawBridge’s experienced not-for-profit lawyers today for trusted expertise in charity law to ensure your submission effectively addresses the ACNC’s concerns and safeguards your charity’s standing.
