Since the announcement of the National Redress Scheme for Institutional Child Sexual Abuse, many NSW non-government schools have been uneasy about whether they may inadvertently breach Section 83C of the Education Act if required to make a funding contribution (Funding Contribution) under the National Redress Scheme for Institutional Child Sexual Abuse Act (2018) (Cth).

From 11 October 2019, the Education Regulation 2017 (NSW) was amended to allow non-government schools to make redress payments without contravening Section 83C provided they can demonstrate that they did not use government financial assistance to make a Funding Contribution.

The new Regulation 10A provides as follows:

“10A School does not operate for profit because of funding contributions to National Redress Scheme for Institutional Child Sexual Abuse

  1. For the purposes of section 83C(3) of the Act, a non-government school is not taken to operate for profit because of a funding contribution made by or on behalf of the school to the National Redress Scheme for Institutional Child Sexual Abuse, if the school demonstrates, to the Minister’s satisfaction, that the funding contribution does not comprise any money provided by the Minister as financial assistance in respect of the school.
  2. For the purposes of this clause, a funding contribution means a funding contribution for a participating non-government institution under the National Redress Scheme for Institutional Child Sexual Abuse Act 2018 of the Commonwealth.”

As a result, a non-government school which is required to make a Funding Contribution will not be in breach of S83C so long as the funds used to make that Funding Contribution do not include any government funding. Non-government schools should be careful to keep clear records in respect of the source of funds used to make a Funding Contribution.

In recent years, many charities and other NFPs have found themselves in a position where they need to consider restructuring.

Common reasons we have seen for this are:

  • the charity or NFP may now be operating outside of the state or territory in which it was originally incorporated
  • the charity or NFP may have increased its activities and outgrown its original structure
  • the charity or NFP may have been originally set up incorrectly (for example, as a proprietary company rather than a public company limited by guarantee)
  • the structure of the charity or NFP may no longer be suitable in light of the objects and purpose of the charity or NFP
  • the charity or NFP may wish to merge its activities with another charity or NFP.

We would suggest that a charity or other NFP familiarise itself with the potential issues it faces in respect of a proposed restructure and the steps required before it commences this process rather than attempt to overcome hurdles after it has already started down the path to restructuring.

Some important factors that a charity or other NFP should consider are:

  • what steps will need to be taken on the restructure – for example, when will meetings of members need to be called to approve the proposed restructure
  • what resolutions will members be asked to pass
  • will the restructure result in the creation of a new entity
  • if so, how will property owned by the original entity be transferred to the new entity (and what steps will need to be taken to minimise any transfer duty (stamp duty) that may be payable on that transfer)
  • will regulators such as the ACNC recognise the change of structure or will the new entity need to re-register as a charity
  • will a new governing document need to be prepared
  • will the restructure result in a change to the objects and purpose of the charity or NFP.

Charities and other NFPs are also reminded that there is no one size fits all structure and that planning ahead means that they will be able to put in place a structure that works best for their individual needs.

For registered charities operating overseas or working with a third party overseas, there is a new set of standards that they must comply with in addition to the existing ACNC Governance Standards in this new financial year.

This set of new standards commonly referred to as “External Conduct Standards” are contained in the Australian Charities and Not-for-profits Commission Amendment
(2018 Measures No. 2) Regulations 2018 that were tabled in the Parliament late November 2018.

On 22 July 2019, the External Conduct Standards officially came into effect and became the new Division 50 of the Australian Charities and Not-for-profits Commission Regulation 2013 (ACNC Regulation).

What are the External Conducts Standards?

The External Conduct Standards are a set of standards that govern how a registered charity must manage its activities and resources outside Australia.

They are intended to support registered charities in fulfilling their objectives, by providing a minimum level of assurance that they meet public expectations in relation to their conduct when they undertake activities and send resources (including funds), or otherwise support activities, outside Australia.

It is well recognised that when operating outside Australia or working with a third party outside Australia, a registered charity may face risks that will vary according to its particular circumstances, such as its size, the sources of its funding, the nature of its activities (including the extent and importance of its activities outside Australia and resources given to parties outside Australia) and the needs of the public (including members, donors, employees, volunteers and benefit recipients of the registered entity).

Therefore, the External Conduct Standards do not mandate detailed procedures and requirements that registered charities must follow.

Instead, the External Conduct Standards are principles-based minimum standards and only require registered charities to take reasonable steps to ensure appropriate standards of behaviour, governance and oversight in relation to:

  • controlling their activities, funds, goods and other resources sent overseas
  • conducting an annual review of overseas activities and keeping necessary record;
  • taking anti-fraud and anti-corruption measures; and
  • taking measures aimed at protecting vulnerable individuals
Is your charity affected by the External Conduct Standards

Before you go through the trouble of assessing the implications of the External Conduct Standards that might have on your charity, we recommend that you first determine if the External Conduct Standards apply to your charity.

The External Conduct Standards apply to all registered charities that either:

  • operate outside Australia; or
  • work with a third party operating outside Australia,

regardless of the size, scale or significance of their work or operations outside Australia.

It is also worth noting that registered charities that are exempted from the ACNC Governance Standards for being Basic Religious Charities will also be subject to the External Conduct Standards if they operate outside Australia or work with a third party operating outside Australia.

What is “operating outside Australia”?

Pursuant to reg 50.4(1) of the ACNC Regulation,
“…a registered entity, or a third party, operates outside Australia if it operates outside Australia in whole or in part.”

The term ‘operate’ is not given a legal definition in the ACNC Regulation and is intended to have its ordinary meaning.   In context, the term ‘operate’ has the eleventh meaning given in the Macquarie Dictionary, namely “to bring about, effect, or produce, as by action or the exertion of force or influence”.   For a registered charity or a third party to operate outside Australia, it means taking actions to fulfill its objects, including but not limited to:

  • carrying out activities outside Australia; and
  • sending resources (including funds) to be used outside Australia.

In accordance with the guidelines published on the ACNC website, activities that may be considered operating outside Australia include:

  • sending money overseas
  • sending resources overseas
  • sending staff, volunteers, members or beneficiaries overseas
  • conducting activities or working overseas
  • buying goods and services from overseas suppliers (including online purchases) in some circumstances
  • working with individuals or organisations located overseas

This list is definitely not intended to be exhaustive.  We have observed the vast complexity and diversity in our charity clients’ activities. There are numerous borderline cases such as conducting activities purely online that are open to both people in and outside Australia.  We encourage you to contact us for detailed advice if you are unsure whether all or part of your charity’s activities are captured by the External Conduct Standards.

What is “working with a third party operating outside Australia”?

Pursuant to reg 4 of the ACNC Regulation,

“A third party, in relation to a registered entity, means an entity (other than a registered entity) that formally or informally collaborates with the registered entity for the purpose of advancing the registered entity’s purpose or purposes, and includes:
(a)    an entity with which the registered entity has some form of  membership, association or alliance; and
(b)    an entity that has an arrangement with the registered entity.”

An arrangement means any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings.

A third party is required to collaborate with a registered charity for the purpose of advancing the charity’s purposes.  This means certain types of service provision to a registered charity will not be sufficient to make that entity a third party.  For example, if an entity provides information technology support to a registered charity, the entity is not collaborating with the charity to advance its charitable objects, and is therefore not a third party.

A registered charity working with a third party outside Australia must comply with the External Conduct Standards for its own activities overseas.  The extent of oversight and responsibilities the charity has over the activities of the third party is a question that will be addressed when we look further into the specific requirements of each individual External Conduct Standard in our upcoming article “Risk Based Approach – a reasonable starting point to comply with the External Conduct Standards”.

The only exemption is overseas activities that are directly related to the charity’s purposes in Australia, namely beneficiaries in Australia and these activities also need to be merely incidental to its operations in Australia.

Reg 50.4(2) of the ACNC Regulation sets out the only exemption from the External Conduct Standards:

“However, a registered entity does not operate outside Australia only because it carries out activities outside Australia (including providing funds to be used outside Australia) that are directly related to the pursuit of the registered entity’s purposes in Australia and merely incidental to its operations in Australia.”

To qualify for the incidental exemption, the activities outside Australia must be:

  • ‘directly related’ to the pursuit of a charity’s purposes in Australia, for example, beneficiaries located in Australia; and
  • not more than incidental when those activities are compared to the charity’s operations in Australia.

These requirements render the incidental exemption only applicable under very limited circumstances.  If you are unsure whether your charity’s overseas activities fall under this exemption, please contact us for detailed advice.

The ACNC regulates the External Conduct Standards in a similar way to their regulatory approach for the ACNC Governance Standards.  If your charity is already complying with the ACNC Governance Standards and also conducts or intends to conduct activities outside Australia or work with a third party outside Australia, the External Conduct Standards might mean additional compliance obligations for your charity as well because the External Conduct Standards specify some unique requirements to regulate overseas activities.

All registered charities operating outside Australia or working with a third party operating outside Australia should take time to understand the External Conduct Standards and how they affect their operation, and devise and implement an action plan to ensure they comply with the External Conduct Standards. This is likely to be a challenging and whole new experience for all registered charities, in particular, Basic Religious Charities that are used to being exempted from the ACNC Governance Standards.

To assist your charity to be External Conduct Standards ready, we will be publishing more articles on the External Conduct Standards and their compliance requirements shortly.

In the meanwhile, if you require further information or specific advice in relation to your charity’s activities and operation outside Australia, please do not hesitate to contact us.

When an existing lease expires, a tenant may have the “option” to renew the lease. Essentially a tenant has the right to have a new lease granted to them on the same terms as the existing lease. However, the rent will be reviewed in accordance with the rent review terms of the existing lease.

So, what should a landlord be aware of when the initial term of a lease is coming to an end?

Here is a handy checklist for landlords:

  1. Option Notice Period: It is important to ensure that you have entered into your calendar the correct dates the tenant is required to exercise their option to renew the lease. Usually, there will be a window (for example, a window of 3 to 6 months before the terminating date of the initial term) when the tenant can provide notice exercising their option to renew the lease. If the tenant misses this window, then the option period lapses and you may have cause to refuse the grant of a new lease.
  2. Validity of the Notice to Exercise the Option Term: The existing lease will usually mandate and set out the formal requirements for notice of the exercise of an option term by the tenant, such as the required method for service of the notice. As surprising as it may sound, a notice can be deemed invalid based on such a technicality, so it is important to seek legal advice in this regard, if you are unsure.
  3. Ask Yourself – are there any Subsisting Breaches Under the Lease? A breach of an essential term of the lease can include, amongst other things, the tenant’s failure to pay rent, maintain the condition or permitted use of the property. If the breach is still subsisting at the time the tenant serves their notice to exercise the option, they may no longer have a right to a new lease term. In such an instance, you will be required to notify the tenant in writing of the breach within 14 days after the giving of a notice or within 14 days after the breach occurred if the breach occurred after the giving of that notice, in accordance with the relevant legislation. This is something worth considering in the lead up to an option term and certainly something worth seeking legal advice on.
  4. Acknowledgement of Notice and New Rent: It is important that you provide written acknowledgement to the tenant if you agree to grant the further term. You will then need to determine the new rent payable at the commencement of the option term, in accordance with the rent review terms. If, however, you decide that you do not wish to grant the further term to the tenant, then we would strongly suggest you seek legal advice, to ensure that the grounds for refusal are in line with the terms of the lease and any relevant legislation. This could potentially save you from any legal action by the tenant.
  5. Preparation of the Option Lease: It is essential that you engage your solicitor to prepare the lease for the new term, to ensure that the option lease terms are properly documented. Unless otherwise agreed to between the parties, the terms will be essentially the same as the existing lease.

In summary, the process for option leases can be a delicate and quite complex task for landlords. Ensure you are aware of all your legal rights and obligations by seeking legal advice prior to delving into the option lease process.

In the latest issue of the F&P (Fundraising & Philanthropy) magazine, Joanne Grant, Partner at Makinson d’Apice takes a look at the legislative and compliance requirements that will impact the charity and not-for-profit sector in the next 12 months.

Click on the image to read the article.

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.

Two notable developments in the NSW retirement villages sector have recently taken place – the first being the passage of new retirement village amendment legislation in November 2018 and the second being the appointment of a retirement village ambassador in December 2018.

Retirement Village Reforms

The Retirement Villages Amendment Act 2018 was assented to on 28 November 2018 following the completion of the Inquiry into the NSW Retirement Village Sector in 2017.

The Amendment Act will amend the Retirement Villages Act 1999 and its associated regulations. Below is a summary of the main changes:

  • Emergency plans and safety inspections – an operator of a retirement village must ensure that an emergency plan is prepared and maintained and that residents and staff are made familiar with the plan. Furthermore, the operator is required to undertake a safety inspection at least once a year and report on such findings to residents.
  • Annual emergency evacuation exercises – an operator of a retirement village must ensure that an evacuation exercise for residents is carried out at least once a year. Key safety information must also be displayed and provided to residents.
  • Meeting to explain village contract information to residents – a resident may request, once a year, a meeting with the operator for an explanation of certain information about the resident’s village contract. The operator must provide the resident with a written summary at the meeting of the explanation.
  • Rules of conduct for operators – the regulations associated with the Act may be amended to prescribe rules of conduct for operators with respect to professionalism, training, competencies, performance and behaviour of management.
  • Asset management plans – operators will be required to prepare and maintain an asset management plan for the items of capital within the village.
  • Other – other changes relate to the appointment of auditors and enabling the regulations to make provisions for mediations of disputes and what information about the retirement village might be required to be made available to the Office of Fair Trading and other government agencies.

The provisions of the Amendment Act are not yet in force at the date of this article and there is no current set date for when the changes will commence. However, the Office of Fair Trading has suggested that the changes will commence on 1 July 2019.

Many of the above mentioned provisions come with significant penalties should an operator fail to comply with them. We recommend that operators start preparing for the enactment of the changes sooner rather than later. The Amendment Act should be carefully reviewed and further advice may need to be obtained by operators to ensure that compliance can be achieved.

Retirement Village Ambassador

On 10 December 2018, the Department of Finance, Services & Innovation announced the appointment of Kathryn Greiner AO as the NSW Retirement Village Ambassador. Ms Greiner had led the Inquiry into the NSW Retirement Village Sector in 2017.

According to the Office of Fair Trading, the Ambassador role will involve informing residents about the changes to the retirement village laws, listening to and advocating for residents and monitoring and reporting on issues facing the sector. The terms of reference for the NSW Retirement Village Ambassador Program are now available for consideration.

Part of the Ambassador’s role is the conduct of a “Retirement Village Roadshow” that will involve visiting retirement villages and speaking to residents. The Roadshow will also involve talks and information sessions at retirement villages, RSL clubs and local centres around NSW. Members of the public can contact the Office of Fair Trading to request a visit from the Retirement Village Ambassador.







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.