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

Crowdfunding has become a very popular method of online fundraising for charities and not‑for‑profits.

It generally involves an organisation setting a fundraising target online and then asking those on the internet (the crowd) for donations to reach that target.

The ACNC has issued some information for charities and donors about the use of crowdfunding.  In particular, they advise charities and not-for-profits to:

  • do their homework
  • carefully consider the terms, conditions and fees
  • be aware of the law in relation to fundraising which is different in each State and Territory
  • remember that charities cannot outsource their responsibilities

In addition, ACNC provides the following advice for intending donors:

  • not all crowdfunding campaigns come from registered charities
  • give wisely

We recommend that you review the ACNC’s Charities and Crowdfunding Guide in the event that you intend to be involved in setting up a campaign or making a significant donation to a charity through crowdfunding sources.  The Australian Taxation Office has also issued some guidance on the tax implications of crowdfunding.

If you have any questions please do not hesitate to contact our office.

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

 

A reminder to check your School Building Funds’ compliance with the ATO requirements.coinjar

School and College Building Funds may attract the attention of the ATO’s compliance program this year.  The ATO develops and implements its compliance program annually, which identifies key areas for its compliance activities for the financial year.  The compliance program targets areas of risk of non-compliance with taxation laws, which will be subject to greater ATO scrutiny for the year, to encourage greater compliance with taxation laws within the community.  School and College Building Funds have been identified as a potential area of focus for the 2016-2017 ATO compliance program.

In 2013, the ATO, on behalf of the Commissioner of Taxation, released Taxation Ruling 2013/2 which made significant changes to the ATO’s assessment of School Building Funds.  Managers of School Building Funds are encouraged to review their School Building Funds in light of the taxation ruling, and the possible ATO compliance focus this year, to ensure that their funds are complying with the ATO requirements.

Please do not hesitate to contact Bill d’Apice if you would like a review of your School Building Fund and its compliance with TR2013/2.

Click here to read our previous article on the Taxation Ruling and School Building Funds.

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

The ATO and ACNC are reminding charities and ancillary funds that the annual reporting period is fast approaching.

Charities

Charities registered with the ACNC (that have an annual year end of 30 June) have less than a week to submit their Annual Information Statement (AIS) to the ACNC. The AIS should be lodged via the online charity portal no later than 31 January 2017. We remind charities that the date their AIS is lodged will be displayed on the ACNC Register and a late AIS lodgement will be listed in red, to encourage charities to report on time.

Should you require any assistance with the preparation of your AIS or, if you would just like a review to double check the information that will be provided, please do not hesitate to contact us.

Ancillary Funds

Ancillary Funds registered with the ACNC

Charitable Ancillary funds were previously required to lodge annual reports with both the ATO and ACNC. However, recent changes to the reporting requirements of charitable ancillary funds have removed these dual reporting requirements. Accordingly, ancillary funds registered with the ACNC are now only required to lodge an AIS with the ACNC. This removes the separate reporting requirement to the ATO. Charitable Ancillary Funds have until 28 February 2017 to lodge their AIS with the ACNC.

Ancillary Funds not registered with the ACNC

Ancillary funds which are not registered with the ACNC must lodge an Annual Information Return with the ATO by 28 February 2017. Funds that are not able to lodge by the due date should contact the ATO on 1300 130 248 to seek an extension of time, as penalties will apply for applications lodged late without an extension.

Please do not hesitate to contact a member of our team if you require assistance with your charity or ancillary fund reporting.

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

Anna Lewis, Associate | +61 2 9233 9031 | alewis@makdap.com.au

The ACNC Commissioner has just released the ACNC’s Interpretation Statement on Public Benevolent Institutions. The Interpretation Statement provides guidance on the ACNC’s interpretation of the law pertaining to Public Benevolent Institutions (PBI) and insight into how the ACNC and its staff will assess a charitable organisation’s entitlement for endorsement as a PBI. The Interpretation Statement will be binding on the ACNC staff in making their determinations for endorsement of charitable organisations as PBIs and replaces the out of date, ATO tax ruling TR2003/5.

What is a PBI?

A PBI is a non-profit institution organised for the relief of poverty, sickness, suffering, distress, misfortune, disability, destitution or helplessness that arouses compassion in the community. Charitable organisations which are endorsed as PBIs, and continue to remain entitled to endorsement, enjoy endorsement as a Deductible Gift Recipient (DGR). DGR status is highly sought because it allows donors of the charity to receive a tax deduction for their donation. As a result of DGR status and the other tax concessions available to PBIs (such as FBT exemption), a PBI is a sought after registration for subtype charities.

Not for Profit, for the Public Benefit, and Providing Benevolent Relief

A PBI must be able to demonstrate to the ACNC that it is an institution established and carried on for public benefit, is subject to accountability and public control, and provides benevolent relief to persons afflicted by certain types of hardship recognised at law. The ACNC will consider the breadth of individuals the charity provides with benevolent relief within the identified areas of need. A charity which is broadly understood to assist the community (rather than persons in need) will not meet the threshold for endorsement as a PBI.

The ACNC will also consider whether the charity is accountable and subject to public control.  In its determination the ACNC will consider the number of unrelated responsible persons overseeing the charity’s activities. Whilst the Interpretation Statement is not prescriptive as to how many unrelated responsible persons  are required to satisfy the ‘public control’ element, the guidance provided indicates 3 or more responsible persons can often help substantiate compliance with the public control requirement of a PBI.

The Interpretation Statement indicates that a charity must also provide ‘benevolent relief’ to persons afflicted by hardship, however the charity need not itself directly give or provide the relief. The Commissioner’s Interpretation in this way, confirms the application of law in Commissioner of Taxation v Hunger Project Australia [2014] FCAFC 69 that organisations that provide relief via or in consultation with other organisations or associated entities (which also meet the PBI threshold), including organisations that primarily fundraise for other entities, may qualify for endorsement as a PBI. The provision of benevolent relief must, however, be the dominant objective of the charity. At law, ‘benevolent relief’ is considered relief to persons that would engender community compassion and support for the relief of the hardship or distress. A charity seeking PBI endorsement must be able to demonstrate a causal link between the activities of the charity for providing or coordinating the actual relief of the hardship (e.g. poverty) to the persons assisted by the charity. For more information regarding the Hunger Project case click here.

The ACNC further draws a distinction between PBIs and other charitable organisations which may provide meaningful support to persons who are suffering from ‘ordinary human experiences’.  Appendix A to the Interpretation Statement provides a number of practical examples of charitable activities of organisations, and may assist a number of charities seeking PBI endorsement understand why their meaningful work in the not for profit sector may not meet the specific threshold for PBI endorsement.

If you have any questions about this news item or need assistance with determining whether your charity should seek endorsement as a PBI please do not hesitate to contact a member of our team.

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

Anna Lewis, Associate | +61 2 9233 9031 | alewis@makdap.com.au

Last week, the ACNC launched a “Registered Charity Tick”. The tick may be used by charities registered on the ACNC Charity Register which are up to date with ACNC financial reporting requirements and meet the regulator’s governance standards. The tick will allow donors to easily identify registered charitable organisations complying with these requirements.

Ms Susan Pascoe, ACNC Commissioner, described the tick as a “visible badge of credibility” for charitable organisations. It is hoped that the tick will encourage public confidence in the charities and not for profit sector, by reminding donors that registered charitable organisations are subject to independent government regulation. The tick may also incentivise charitable organisations to meet ACNC requirements in a timely manner in order to access and maintain entitlement to the tick.

Charitable organisations registered with the ACNC are encouraged to log in to the Charity Portal and download their Tick.

acnctick

The ACNC Registered Charity Tick. Photo: ACNC

Should you have any questions in relation to the ACNC or any other matters please do not hesitate to contact a member of our team.

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