The Coronavirus Pandemic (COVID-19) has caused a significant increase in stress and anxiety for many charities and NFPs operating in many areas and sectors across our community. Charities may be seeking to respond to the crisis by helping those in need while being under significant stress and anxiety themselves.
Both the Federal and Victorian governments, as well as the national charity regulator, the ACNC, have announced a number of support measures aimed at helping charities and NFPs stay afloat and ease compliance regulation so they can get on with the job of supporting people at need in our community.
In this article, we provide answers to some of the most common questions we are receiving in relation to these issues and pointers to the government support available to charities and NFPs.
Cash flow boost for charities – PAYG credit
Eligible Charities, including those established from 12 March 2020, with a turnover of less than $50 million in the prior year will be able to access tax-free cash flow support in the form of a credit for Pay As You Go Withholding, spread over its activity statements from March 2020 to September 2020.
Charities that are not required to withhold will receive a minimum of $20,000 over this period.
The cash flow support measures will be provided in the form of a credit in the activity statement system. The credits will be automatically calculated by the ATO and employers will only need to lodge an activity statement to trigger the entitlement.
Organisations that lodge activity statements on a quarterly basis will be eligible to receive credits in the first phase for the quarters ending March 2020 and June 2020. Credits in the second phase will be available for the quarters ending June 2020 and September 2020. The minimum $10,000 payment will be applied to the first lodgement.
Organisations that lodge on a monthly basis will be eligible for the credits in the first phase for the March 2020, April 2020, May 2020 and June 2020 lodgements. Credits in the second phase will be available for the June 2020, July 2020, August 2020 and September 2020 lodgements. The minimum $10,000 payment will be applied to the first lodgement.
For more information see here – COVID 19 – Economic Response for NFPs
Support for charities providing emergency food relief
The federal government has announced (on 29th March 2020) an additional $200 million will be provided to support charities and other community organisations which provide emergency and food relief as demand surges as a result of coronavirus. Given the unprecedented nature of the situation, emergency relief services are being heavily relied upon and this demand will increase.
The Community Support Package will provide flexible funding to boost support to services where demand is quickly increasing, including:
- Emergency Relief which will help vulnerable Australians who need assistance with bills, food, clothing or petrol and increase and retain workforce capacity including volunteers.
- Assistance for food relief organisations to source additional food and transport for emergency relief service providers, and rebuild workforce capacity.
- Immediately scale-up services through the National Debt Helpline — which is often the first point of contact for people experiencing financial difficulties, and to support one-on-one tele-financial counselling.
- Creating a short-form Financial Counselling course through Financial Counselling Australia to train new financial counsellors to boost the workforce, potentially providing hundreds of new jobs.
- Expanding access to safe, affordable financial products through the No Interest Loan Scheme which provides an immediate financial relief alternative to other high-risk, high-interest products such as credit cards and payday loans.
For more information on the $1.1 billion package which boosts mental health services, domestic violence support, Medicare assistance for people at home and emergency food relief, see here
Solvency safety net
A safety net has been put in place to protect companies in temporary financial distress as a result of the pandemic by lessening the threat of actions that could unnecessarily push them into insolvency and force their winding up. These include:
- a temporary 6-month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000;
- the time a company has to respond to statutory demands will increase from 21 days to 6 months, and
- for 6 months, directors will be provided with temporary relief from personal liability for trading while insolvent.
Debts incurred will still be payable by the organisation. Only those debts incurred in the ordinary course of its activity will be subject to the safety net measures.
Victorian government support for Charities
Certain tenants in government buildings will be able to apply for rent relief. Private landlords will be encouraged to do the same where possible.
Business Support Fund
- A $500million Business Support Fund will be established to support hardest hit industries, including hospitality, tourism, accommodation, arts and entertainment and retail, including charities operating in such industries
- Businesses (including charities) can apply if they:
— Employ staff
— Have been subject to closure or is highly impacted by shutdown restrictions announced by the Victorian Government to-date.
— Have a turnover of more than $75,000
— Have payroll of less than $650,000
— Hold an Australian Business Number (ABN) and have held that ABN at 16 March 2020 (date of the State of Emergency declaration)
— Have been engaged in carrying out the operation of the business in the Australian State of Victoria on 16 March 2020.
- Eligible businesses can apply for a one-off $10,000 grant which can be used towards costs such as utilities, rent and salaries, and activities to support business continuity planning.
- See here to register for the Business Support Fund
ACNC - Annual Information Statement Extension
All annual information statements due between 12 March 2020 and 30 August 2020 have received a blanket extension until 31 August 2020. At the time of writing due dates showing on the ACNC register had not been updated, but this is expected to be done shortly.
For all ACNC COVID-19 measures see – Charity operations and COVID-19
Virtual General Meetings
Many organisations will be asking whether they can hold their Annual General Meeting remotely, via Zoom or other video or tele-conferencing technology.
Start by reading your Constitution carefully to determine whether it allows the use of technology for general meetings.
- Yes? Go ahead. Provide your members with all of the information they need to remotely join, participate and vote in the meeting. If your rules have been based on the model rules for Victorian Incorporated Associations, or the ACNC companies limited by guarantee template the use of technology will be permitted, although quorum requirements must still be met.
- No? Notify your members of your intention to postpone the meeting. The ACNC has announced that if you delay or postpone your AGM because you cannot conduct it safely, the ACNC will not take action against a charity unless there is evidence of wider non-compliance.
- Unclear? You may need to seek legal advice.
For more information see the ACNCs – Charity meetings and AGMs
How can Sharrock Pitman Legal assist?
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information contact
Dan is a Legal Practitioner at Sharrock Pitman Legal.
He deals with areas of Charities & Not for Profit Law and Commercial Law. For further information, contact Dan on his direct line (03) 8561 3325.