Most Australian entities will now be aware that the Modern Slavery Act 2018 (Cth) (Commonwealth Act) commenced on 1 January 2019.

However, you may not be aware that the NSW government has recently passed its own Modern Slavery Act 2018 (NSW) (NSW Act), which will commence on 1 July 2019.

Obligations under the Commonwealth Act

Under the Commonwealth Act, entities based or operating in Australia which have AU$100 million or more in annual global revenue must report annually on their efforts to address modern slavery in their operations and supply chains. “Modern slavery” constitutes things such as human trafficking and child labour.

Entities covered by the Commonwealth Act are required to provide a “Modern Slavery Statement” every year. The Minister will publish these on a Modern Slavery Statements Register, which is available to the public online.

In preparing a Modern Slavery Statement, a covered entity is required to:

  • identify the risks of modern slavery practices in their own operations and those of their supply chains as well as the supply chains of any subsidiary entities they may have
  • describe what actions the covered entity (and any subsidiary entities it may have) has taken to assess and address those risks; and
  • assess the effectiveness of such actions. Whilst the Commonwealth and NSW Acts have many similarities, the NSW Act has a wider range than the Commonwealth Act. It applies to entities which:

What will change under the NSW Act

Whilst the Commonwealth and NSW Acts have many similarities, the NSW Act has a wider range than the Commonwealth Act. It applies to entities which:

  • are not government agencies;
  • have employees in New South Wales;
  • supply goods and services for profit or gain; and
  • have a total turnover in a financial year of $50 million or more.

The requirements for Modern Slavery Statements under the NSW Act will be set out in regulations which are yet to be passed. However, the information required under the NSW Act is likely to be very similar to that required under the Commonwealth Act.

One of the criticisms of the Commonwealth Act is that it currently does not contain any penalties for non-compliance.

However, under the NSW Act, if an entity fails to prepare a Modern Slavery Statement under the NSW Act, the maximum penalty is $1.1 million.

How should you prepare for the NSW Act?

To prepare for the commencement of the NSW Act, you should consider whether there is any risk of modern slavery arising from your (and your subsidiaries’) operations, as well as those of their business partners and suppliers.

We would suggest that all entities do this, even if they believe that they are likely to be below the threshold for either or both of the Commonwealth Act and the NSW Act.

Some examples of NSW entities whose operations may be at risk of modern slavery are:

  • schools who have their uniforms manufactured by third parties overseas
  • importers of sea food from Thailand or Burma

Entities should also consider reviewing their contracts with third parties as to whether those contracts include a provision relevant to modern slavery.

Please do not hesitate to contact us if you have any questions about the Commonwealth Act or the NSW Act.

It is quite common for charities to provide gifts or honorariums to individuals who are important to their organisations as a gesture to express their gratitude and appreciation. However, as registered entities with the Australian Charities and Not-for-profits Commission (ACNC), charities are required to comply with the ACNC’s Governance Standards when applying its resources. Therefore, careful consideration should be given to certain potential legal issues and financial reporting requirements when making the decision to provide gifts or honorariums.

The question whether it is appropriate for a charity to provide gifts or honorariums under certain circumstances should be determined on a case-by-case basis.  To discharge their duties to act in good faith in the charity’s best interest and to further its purposes, a charity’s Responsible Persons must properly consider the issues and concerns with providing gifts or honorariums and adopt a formal policy on their provision where necessary.

The ACNC has released a guide to explain its expectations on this issue, which also recommends 10 questions for charities to ask themselves before providing a gift or honorarium (please be aware that this does not constitute an exhaustive list of legal issues):

  1. Do the charity’s governing rules allow it to provide gifts or honorariums?
  2. Who receives a gift or honorarium and why?
  3. How should the charity determine the value of the gift or honorarium? It may be through a discussion among the Responsible Persons or at the management level. It may be by consulting with other similar charities.
  4. Will the payment of a gift or honorarium affect any current funding arrangements? For example, schools receiving funding from the Government are subject to legal obligations to ensure that funds must be used in a particular way.
  5. What will supporters or the public think of the charity providing a gift or honorarium? For example, it could pose a risk to the charity’s reputation and its donations especially if the gift or honorarium is of significant value?
  6. Is the gift or honorarium going to be a once-off occurrence? If not, it might not be a true gift or honorarium, especially if recipients are expected to do something in return, or if it is made in exchange for services. There may be implications for this under employment and tax law.
  7. Is the charity considering the gift or honorarium because its rules prevent it from offering remuneration? If so, the charity may not be taking reasonable steps to ensure that its Responsible Persons are acting in good faith and in the charity’s best interests, particularly if the person receiving the gift or honorarium is likely to be regarded as an employee or contractor.
  8.  Is the charity considering making a gift or honorarium to cover the out-of-pocket expenses incurred by individuals – for example, travel costs to attend a board meeting? If so, the charity should consider reimbursing those individuals for the actual costs incurred instead, if allowed by its governing rules.
  9. Is the charity providing a gift or honorarium on a regular basis to recognise an individual for their services? If so, the charity should consider if it is more appropriate to recognise them as an employee or contractor instead.
  10. Is the charity providing a gift or honorarium to a Responsible Person? If so, the charity should make sure there is a proper process for making a decision and determining a reasonable value. To avoid any conflict of interest, a Responsible Person should not participate in any decision about a gift or honorarium to themselves.  The charity should further consider: How will the charity’s Responsible Persons be accountable for and transparent about the gift or honorarium and will the charity consult with its members or put the decision to its members?

Please don’t hesitate to contact us if you require further information or specific advice in relation to your charity’s practice and policy for gifts and honorariums.

The holiday season is over, everyone’s back at their desks and we’ve already completed the first month of 2019. It can be scary how time flies.

As with all years in recent times 2018 was a busy year for charities and other not-for-profits and with the start of the new year we thought this was a good opportunity for us to look at what may be in store for charities and not-for-profits during 2019.

We have summarised some of the changes and issues that will confront the sector this year.

  • The ACNC review – we expect the Government to provide its response to the review in the first half of this year.
  • The “in Australia” draft ATO Ruling will be finalised.
  • The ACNC External Conduct Standards will commence on 1 July 2019 (unless disallowed by Parliament).
  • DGR reforms are slated to come into effect from 1 July 2019: with non-government organisations with DGR status to be registered as charities with the ACNC, and the ACNC to administer the registration of harm prevention charities, cultural organisations and overseas aid funds.
  • The federal election is likely to bring up a number of issues which may impact upon charities and not-for-profits. Already the Labor Party platform denying cash refunds for excess dividend imputation credits may have an impact upon tax exempt entities.
  • Will this be the year that there is some significant fundraising reform? Perhaps the Australian Consumer Law may be expanded to include charitable fundraising? This would provide consistency in approach throughout all jurisdictions in Australia and a welcome relief from administrative burdens to NFPs across the country.
  • Meanwhile the NSW Government is busy drafting new charitable fundraising guidelines for public consultation later this year.
  • The Royal Commission into Aged Care Quality & Safety is underway and it will no doubt impact significantly on a number of charity and not-for-profit aged care providers, (click here to read our Royal Commission into Aged Care Quality and Safety brochure).
  • The National Redress Scheme is well underway after a slow start. We can expect the number of claims to increase as more organisations agree to enter the Scheme.
  • The new FBT Ruling will come into effect.
  • The legislative package containing the Government’s response to the Ruddock Religious Freedom Review should be tabled in Parliament.
  • Hopefully there will be further state or territory take-up of ACNC reporting and further cutting of red tape.

These are just some of the things that may come across our desk in the next 12 months … and of course there’s always the unknown!

Please don’t hesitate to contact us if you need assistance in navigating your way through any of these changes in the coming year.

 

 

 

 

 

 

The Prime Minister released the terms of reference for the Royal Commission into Aged Care Quality and Safety on 9 October 2018.

The terms of reference are very broad and it is important that all those organisations involved in the provision of aged care either directly or indirectly consider what preparations they may need to make at this stage and into the future to be ready for the Royal Commission.

To assist you, we refer you to our short brochure summarising a number of preliminary legal and administrative issues which you may wish to consider at this stage.

Click on the image to download the brochure.

The ACNC legislation passed in 2012 allowed for the creation of minimum external conduct standards that are required to be met by registered charities.

To date, this issue seems to have been in the government’s too hard tray but Treasury has now issued draft external conduct standards and is seeking submissions on them.

The draft regulations are intended to be a principles based set of minimum standards of conduct, governance and behaviour that ACNC-registered charities must comply with when operating outside Australia. There is no exception for basic religious charities (unlike the exception that exists for basic religious charities in respect of governance standards).

Details of the draft external conduct standards can be found at the Treasury website. And interested parties can submit responses up until 21 September 2018. In addition, Treasury is proposing to hold meetings with interested parties and should you wish to be involved you can express your interest via email to externalconductstandards@treasury.gov.au by 17 August 2018.

We expect that these external conduct standards may have some significant practical implications for charities operating outside Australia. We recommend that you carefully review these to see whether they will have any implications for your charity and, if so, whether it would be appropriate to lodge a submission.

Treasury seems to be focusing on the activities of charities and other NFPs operating or controlled outside Australia with the release of a draft ruling on the “In Australia” requirements in July 2018.

Should you have any questions or should we be able to assist please don’t hesitate to contact Bill d’Apice of our office.

Amendments to the Privacy Act introducing the Notifiable Data Breaches (NDB) scheme commences today, 22 February 2018.

The NDB scheme will apply to all organisations currently required to take steps to secure personal information, including but not limited to businesses and not-for-profit organisations with an annual turnover of $3 million, health service providers, TFN recipients etc.

If your organisation is currently required to secure personal information under the Privacy Act, including compliance with the Australian Privacy Principles under the Act, it will need to comply with the NDB scheme on and from 22 February 2018.

The NDB scheme applies to data breaches of personal information likely to result in serious harm to individuals affected.  Consider the following three questions when assessing a data breach:

  1. Is there an unauthorised access to or unauthorised disclosure of personal information, or a loss of personal information that your organisation holds?
  2. Is this likely to result in serious harm to one or more individuals?
  3. Was your organisation not able to prevent the likely risk of serious harm with remedial action?

If the answer is “yes” to all of the above, then a notifiable data breach has occurred.

If a notifiable data breach has occurred you need to notify the effected individual(s) and the Office of the Australian Information Commissioner.  Significant legal penalties of up to $1.8 million could apply for not complying with the NDB scheme.

What your organisation should do:

  • Understand the requirements of the NDB scheme. There are resources and guidelines available on the OAIC website.
  • Carry out an audit of your organisation from a privacy perspective. Consider asking yourself questions such as:
    * Does your staff understand your organisation’s obligations in respect of privacy and do you have an adequate policy in place?
    * How are you securing personal information and what might need to be done to better secure such information?
    * Where are the vulnerabilities in your organisation that could lead to a data breach?
  • Have a data breach response plan drafted and tailored to the needs of your organisation and the personal information it holds.
  • Train your staff as to the requirements of NDB scheme and your organisation’s data response plan.

Should you require any further information or specific advice in relation to the NDB scheme or if you have any other privacy-related questions, please do not hesitate to contact our office.

Bill d’Apice, Chairman and Partner, has been recognised in Chambers and Partners’ Asia Pacific 2018 edition as a Band 1 lawyer in the area of Charities.

This is a well-deserved acknowledgement and recognition of Bill’s dedication to the Charity sector over many decades.

From the Chambers Asia-Pacific guide: 

“Bill d’Apice of Makinson & d’Apice in Sydney “has been in this space a long time” and “is definitely an expert,” according to market sources. He possesses particularly focused expertise on the ways in which charity and not-for-profit law impacts on ecclesiastical organisations, having represented the Australian Catholic Bishops’ Conference and a wide range of bodies at archdiocesan, diocesan and individual congregation level for a number of years.”   

Click here to view the 2018 Chambers and Partners guide.

The Retirement Villages Regulation 2009 NSW will be automatically repealed on 1 September 2017.

There has been a consultation process underway which has now been finalised and a new Regulation will come into force on and from 1 September 2017. Operators and residents should familiarise themselves with these changes.

The major changes that are proposed are as follows:

•  clarifying that repainting of external surfaces once every 10 years is capital maintenance;
•  requiring copies of a village’s insurance policy documents to be available to residents;
•  a new “average resident comparison figure” in the disclosure statement to facilitate more effective comparison between villages;
•  reducing the maximum amount payable for an operator’s legal and other expenses to $50.00;
•  adding new matters for which village rules can be created, including smoking in communal areas;
•  requiring clearer information in annual budgets around head office expenses;
•  lowering the maximum amount allocated for contingencies to $1.00;
•  prohibiting additional matters that cannot be financed by recurrent charges;
•  simplifying the process for allowing residents to hold office on a residents committee for longer than 3 years; and
•  allowing service of documents by electronic means.

We recommend that you familiarise yourselves with the draft Regulation.

The Regulatory Impact Statement may be helpful to you in understanding the proposed changes.

However, should you require any advice in relation to them, please do not hesitate to contact our office.

Bill d’Apice, Partner | +61 2 9233 9013 | wdapice@makdap.com.au

The ACNC have recently released an information paper ‘Remunerating Charity Board Members‘ for charities considering paying board members for their services as a board member.

The term ‘board members’ is used throughout the information paper to generically refer to the responsible persons of a charity, such as committee members, directors or Trustees.

The ACNC have confirmed that it is permissible for charities registered with the ACNC to pay their board, provided that the payments are:

– in furtherance of the charity’s charitable purpose;

– permitted under the charity’s governing document; and

– properly authorised within the charity.

The information paper provides a range of reasons why a charity may or may not choose to remunerate its board which may be valuable for charities considering this issue.

The Importance of Transparency

The ACNC suggest that charities which choose to remunerate board members should have a clear policy in place outlining how remuneration is determined, the process of approval, and how the charity will address any concerns or disputes of board remuneration.

The ACNC has also highlighted the importance of transparency for board remuneration and that stakeholders should be given the opportunity to raise any concerns about these payments. Charities are reminded that this responsibility is found within ACNC Governance Standard 2 – Accountability to Members and are encouraged to familiarise themselves with these obligations.

Medium and large sized charities are reminded that they must disclose the remuneration for key management personnel (such as board members) in accordance with the Australian Accounting Standards Board Related Party Disclosures Standard (AASB 124) in their Annual Information Statement lodged with the ACNC.

If your charity is considering remunerating its board members please do not hesitate to contact us for further information.

Bill d’Apice, Partner | +61 2 9233 9013 | wdapice@makdap.com.au