Guidelines for allowable exceptions

Charitable Restriction

The Registrar considers that section 15(2)(c) of the National Law does not contemplate a limitation on the type of registered CHPs which may receive community housing assets on winding up. A clause may be deemed invalid if it limits the class of receiving CHPs to particular entities or types of entities.

A restriction that a transferee registered CHP must be charitable offends, on one view, the literal terms of section 15(2)(c) of the National Law. However, the Registrar acknowledges that most registered CHPs are charities with Deductible Gift Recipient (DGR) status. In order to maintain DGR status under the Income Tax Assessment Act 1997 (Cth), charities are required to transfer any surplus assets to another entity with DGR status on wind up.

Taking into account these two cumulative obligations, the Registrar is of the view that a restriction on a transferee registered CHP being charitable is not inconsistent, subject to the particular drafting of a constitution, with the objects of the Act and the National Law.

Housing Agency

Under Section 4(1) of the National Law Housing Agency of a participating jurisdiction, means a body or officer declared to be a Housing Agency of that jurisdiction by the community housing legislation for that jurisdiction for the purposes of the provision of this Law in which the expression occurs.

Imposing procedural steps

Depending on the construction of the relevant wind up provision, a CHP may impose procedural steps to select the transferee provided that the class of potential transferees is not significantly diminished and is as broad as possible.

Registrars consider that a restriction on the type of registered CHPs which may receive community housing assets on a winding up is allowable if it involves restricting the type of registered CHP to one:

•  which is a charity,
• has DGR status,
  
• has a provision prohibiting the distribution of assets to its members,
  
• has similar objects to the CHP that is being wound up, provided those objects or the class of transferees are not overly restrictive. This last provision will be only very sparingly allowed.

Registrars consider the above acceptable as:

•  Transfer to the Housing Agency is unrestricted and acts as a fail-safe;
•  CHPs will be able to meet their obligations under the Australian Charities and Not-for-profits Commission (ACNC) and tax legislation, maintaining their charitable and DGR status, noting the benefits that this status brings to the CHP sector; and
  
• CHPs will be readily able to locate a registered CHP with charitable status to transfer the assets to, as this is a large group unlikely to diminish significantly.