Wednesday May 2013

piggy bankSummary – The Federal budget which was delivered on 14 May 2013 contained the following announcements that relate particularly to charities and not-for-profit organisations:

 

  1. Not-for-profit sector reforms — introducing a statutory definition of ‘charity’

Statutory definition of charity

Revenue ($m)

2012/2013

2013/2014 2014/2015 2015/2016

2016/2017

Australian Taxation Office

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The Federal budget included an amended start date for the proposed definition of charity which was due to commence on 1 July 2013.

This has now been deferred until 1 January 2014. The long awaited exposure draft legislation was released in April and submissions for consultation closed on 3 May 2013. For more information regarding the proposed definition please take a look at our previous blog. Despite the later start date the Federal Government still proposes to introduce and pass the legislation in the final sitting session before the election, although we question whether this will occur with the limited number of sitting days available. The measure is estimated to have a small but unquantifiable cost to revenue over the estimates period.


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Lehman BrothersSummary – Update:  Local Councils, Church, Charities and Not-For-Profit Groups who purchased complex financial products from Lehman Brothers are set to vote on a settlement proposal to get up to half their money back from liquidators of the failed investment bank.

You may recall we posted a blog article in October 2012 titled “Lehman Brothers class action – a win for NFPs” regarding the representative proceedings or ‘class action’ filed on behalf of 75 Councils, Charities, Church and other Not-For-Profit groups who collectively lost over $200million when they purchased toxic securities sold by a subsidiary of Lehman Brothers called Grange Securities (Grange) prior to 2008.

After a long running legal battle the Federal Court held last October that Grange had breached its fiduciary duty to 3 Councils who filed proceedings as representative plaintiffs on behalf of 72 other Councils, charities, Church and other Not-For-Profit groups. By filing representative proceedings the Court may resolve issues of fact and law involving the applicants and the respondent that are common to claims that other group members have against the same respondent.


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