The Australian Taxation Office (ATO) has commenced targeted consultation in relation to the upcoming changes for not-for-profit (NFP) entities that self-assess as eligible for income tax exemption (ITE). From 1 July 2023, NFP entities with an active Australian Business Number that self-assess as eligible for ITE will be required to lodge an annual self-review form along with supporting documentation with the ATO. Failure to lodge may result in loss of ITE and penalties may apply.

These reforms were announced by the Australian Government on 11 May 2021 as part of the 2021-22 Federal Budget. The reforms are intended to ensure that only eligible NFP entities access ITE resulting in the increased trust, transparency and integrity of NFP entities within the sector. The additional administrative burden will likely diminish in subsequent years as the ATO is funded to develop an online portal providing NFP entities with the ability to either confirm or amend a pre-filled self-review form.

Affected NFP entities

The changes will affect NFP entities that are not registered charities with the Australian Charities and Not-for-profits Commission (ACNC) and self-assess as ITE. Approximately 125,000 NFP entities[1] will be affected, many of which will be reporting to the ATO for the first time.

These entities fall into eight categories (the ITE categories):

• Community service organisations including playgroup associations, community service clubs and senior citizens associations.
• Cultural organisations established for the encouragement of art, literature or music.
• Public educational institutions that are open to the public or a section of the public and whose sole purpose is providing education. This includes universities, grammar schools, primary and secondary schools and NFP business colleges.
• Health organisations, being public hospitals or hospitals operated by NFP societies or associations and NFP private health insurers.
• Employment organisations, being employee associations, employer associations or trade unions. Employee associations and employer associations must be registered or recognised under the Fair Work (Registered Organisations) Act 2009 or an Australian law relating to the settlement of industrial disputes.
• Resource development organisations established to promote the development of aviation, tourism or specific Australian resources (being agricultural, aquacultural, fishing, horticultural, industrial, manufacturing, pastoral, viticultural and ICT resources). This includes promoting development through research, provision of facilities, training, marketing and facilitating cooperation.
• Scientific organisations including scientific institutions, NFP entities established for the encouragement of science and funds established to enable scientific research to be conducted by or with a public university or public hospital.
• Sporting organisations, being NFP entities established for the encouragement of a game, sport or animal racing.

Relevant considerations for all NFP entities seeking to self-assess as ITE are set out below.

Is the entity entitled to self-assess as income tax exempt?

Does the entity fall within one of the ITE categories?

All entities should confirm which of the ITE categories listed above (if any) they fall within. Entities should then review specific requirements that apply to their particular ITE category (as set out in the links above).

Should the entity be a registered charity?

Generally, the ATO requirement is that an entity that can be registered as a charity with the ACNC must be registered as a charity. This means that an entity that could be a registered charity is not entitled to self-assess as ITE – it must register with the ACNC as a charity to access ITE.

There is a significant overlap between the ITE categories listed above and those organisations that may be entitled to be registered as charities, particularly (but not exclusively) in the cultural, educational and health ITE categories.

A registered charity must report to the ACNC and comply with the ACNC Governance Standards. Registered charities also benefit from charity tax concessions, which are broader than those available to ‘mere’ NFP entities that are not registered charities.

Is the entity complying with the substantive requirements of its governing rules?

An often-overlooked requirement for all entities seeking ITE is the requirement to comply with the substantive requirements of the entity’s governing rules. This includes[2] the rules that:

• give effect to the object or purpose of the entity (this is considered further below);
• relate to the non-profit status of the entity (this is considered further below);
• set out the powers and duties of directors and officers of the entity – directors and officers must take care to ensure that their decisions do not exceed the powers conferred on them by the rules. They must also take care to comply with their duties;
• require financial statements to be prepared and retained;
• set out the criteria for admission as a member of an entity – the entity should ensure that it is not inappropriately excluding individuals entitled to seek admission (or conversely, admitting individuals that are not entitled to membership);
• require an entity to maintain a register of members – the entity should ensure that its member register is up to date and that individuals are added to and removed from the register in accordance with the requirements of the rules; and
• relate to the winding-up of the entity.

Is the entity acting consistently with its purpose?

The entity must ensure it is acting consistently with the purpose or objects statement set out in its governing rules (which must be aligned with any requisite purpose for its ITE category). Generally, any other purpose of the organisation must be incidental, ancillary or secondary to the required purpose.

The ATO will look at an entity’s governing rules, activities, use of funds and history when considering its ‘true’ purpose. Entities whose activities have changed significantly over time should consider whether those activities are still directed towards the achievement of their purpose. Entities should also consider whether their secondary materials (such as the entity’s annual report, strategic plan, website and key policies) appropriately communicate their purpose.

Is the entity not-for-profit?

While a NFP entity can make a profit, that profit must be used for its purposes. This means that the entity must ensure that it is not making payments to members in their capacity as members. The entity must also ensure that it is not making other payments that could be characterised as conferring an inappropriate private benefit (such as excessive payments to employees or directors or payments to directors that are prohibited by the governing rules).

Does the entity need to meet one of the ‘three tests’?

Most ITE categories (with the exception of NFP private health insurers, employment organisations, scientific research funds and resource development organisations) require entities to meet one of three tests:

• the entity has a physical presence in Australia (and to the extent it has a physical presence in Australia, pursues its objectives and incurs its expenditure principally in Australia);
• the entity is named in the income tax law as a deductible gift recipient or has been endorsed as a deductible gift recipient; or
• the entity is named in the Income Tax Assessment (1997 Act) Regulations 2021 (regulation 50.50.1, 50.50.02 or 50.50.01).

Even if the entity is not required to meet one of the three tests:

• employment organisations must be located in Australia or incur expenditure principally in Australia; and
• scientific research funds must be deductible gift recipients or be located in Australia or incur expenditure principally in Australia.

An ITE entity that has a significant presence outside Australia should carefully reviews these requirements to ensure it is complaint.

Has the entity reviewed the ATO self-assessment tools?

The ATO has produced the following self-assessment tools. These tools will assist entities to prepare the supporting documentation that is likely to be required for submission to the ATO:

• a self-governance checklist for all NFP entities – complete Section B (for self-assessing NF entities) and Part 2 (which works through a range of tax related questions); and
• an ITE self-assessing worksheet:
  • for sporting organisations; or
  • for all other ITE categories.

How we can help

Moores can advise on what these proposed changes mean for your entity and work with you to confirm that the entity is entitled to self-assess as ITE.

Contact us

Please contact us for more detailed and tailored help.

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[1] Not-for-profit Sector Tax Concession Working Group: Fairer, simpler and more effective tax concessions for the not-for-profit sector (May 2013)
[2] Taxation Ruling TR 2015/1

On 10 February 2022, the Senate passed the Corporations Amendment (Meetings and Documents) Bill 2001 (the Bill). The Bill has amended the Corporations Act 2001 (Cth) (the Act), permanently enacting previously temporary changes that had been introduced to provide companies with the flexibility to use technology to meet their obligations in relation to meetings, notices and documents.

What are the changes?

Amongst other things, the changes allow companies (including not-for-profit and charitable companies limited by guarantee) to use technology or electronic means to:

• Sign documents (i.e. minutes of meetings and resolutions and deeds).
• Hold directors’ and members’ meetings (including hybrid meetings) provided:
  • the entity’s constitution provides for it; and
  • the individuals entitled to attend had a reasonable opportunity to participate, including to hear and be heard.
• Provide (and receive from members or directors) notices and certain meeting related documents.
  Note: members must be notified of their right ‘at least once each year’ to elect to receive a document electronically or in physical form or not to receive documents from a company.
• Record and retain minute books.

What do the changes mean for my company?

We recommend that you:

• review your charity’s governing document to ensure it is consistent with the new provisions;
• consider whether it is appropriate to take advantage of the flexibility to provide documents to members:
  • electronically (i.e. notice of meeting, a notice of resolution, proxy forms, minutes); or
  • by posting on a website (i.e. an annual report).
• consider how meetings are held (i.e. in person, hybrid or virtual only). Although the changes do not mandate the ‘format’ of the meeting, technology must provide the ‘members as a whole’ a reasonable opportunity to participate. It is important to ensure that technology is selected and used in a way that provides this ‘reasonable opportunity’ to all members. For example, the Act makes it clear that giving members access to the ‘chat’ function but no opportunity to speak will not be sufficient. Companies should also consider whether there is appropriate evidence (such as a record of any questions and the corresponding responses provided during the meeting) that members were given this ‘reasonable opportunity’.
• when accepting electronically signed documents, consider whether your charity has reliable processes in place to identity the person and confirm the person’s intention to sign the document. If not using a software such as Docusign which authenticates signatures, it is good practice to retain an email or separate document that amongst other things:
  • identifies the person signing the document;
  • indicates the person’s intention in respect of the information recorded; and
  • authorises the use of an electronic signature.
• consider the appropriateness of information being recorded electronically in a minute book rather than a physical record.

How we can help?

Moores can review your governing document or assist with any questions that you may have about the changes.

Contact us

Please contact us for more detailed and tailored help.

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Since we published our recent article Land tax on your home? 6 ways you might get caught out, one particular risk area which we identified seems to have come to the fore – contiguous land.

You may have received a letter from the State Revenue Office (SRO) in recent months warning that you may be at risk of receiving a land tax assessment on “contiguous land” which you own. Unfortunately, these letters are worded vaguely, leaving people wondering what they need to do.

Wonder no more.

What is contiguous land?

In a nutshell, contiguous land means land which is adjacent to your home, but contained in a separate title.

Such land was historically considered part of a person’s principal place of residence or “PPR”, and treated under the Land Tax Act 2005 as exempt from land tax on that basis.

From 1 January 2020, that position changed – now, land contiguous to a PPR will only be exempt from land tax if it is:

• located in regional Victoria; or
• a car space or a storage cage associated with an apartment in metropolitan Melbourne.

This means that if your garden, tennis court or outbuildings are on a separate title, that land will be subject to land tax.

I received a letter from the SRO – what should I do?

If you’ve received a letter from the SRO stating that you own contiguous land, the first step is to work out whether your property is actually caught by the contiguous land provisions in the Land Tax Act.

This requires an examination of your title plans, and may require a surveyor to conduct a “check survey” to ascertain where the home is located relative to the title boundaries.

If there is more than one title but your home sits over all of them, this is not “contiguous land” – in these circumstances, all titles qualify for the PPR exemption and the SRO should be advised of that.

If your home doesn’t extend over all titles (for example, the home is contained within the boundaries of one title and the second title contains only garden and garage), then you have a contiguous title. In these circumstances, you have a choice to either consolidate the titles into a single title, or keep them separate and accept that you will pay land tax on the contiguous title.

What’s involved in consolidation?

Consolidation involves three key steps:

• Preparation of a plan of consolidation – you’ll need to engage a surveyor to do this.
• Obtaining consent from the local council to consolidate the titles – this will usually be handled by the surveyor.
• Registering the plan of consolidation at the Land Titles Office – this is handled by a lawyer.

If you want to ensure that the PPR exemption is applied to all of your land from 2023 onwards, you’ll need to ensure that the consolidation process is completed by no later than 31 December 2022.

Should I consolidate my titles?

When deciding to consolidate, the first thing to consider is your future intentions for the land.

If you’re considering the possibility of developing a second dwelling on the contiguous title, whether for sale or retention, then consolidating the land may not be recommended – you’d likely need to re-subdivide the land in the future to proceed with the development.

To decide whether consolidation is appropriate, you’ll need to weigh a number of different considerations, including:

• how long until you’re planning to develop the land and what your land tax liability would be during that period
• what costs would be associated with re-subdivision
• whether you’re likely to experience any difficulties getting council consent for a subdivision

It’s important that the tax consequences of consolidation are also considered – a tax accountant or lawyer with tax expertise can assist in that regard.

How we can help

If you’ve received a letter from the State Revenue Office about contiguous land or are worried that you may have a potential liability in this regard, get in touch with us. We’ll guide you through the specifics of how the new rules affect your land and ensure that you avoid any nasty surprises in the next round of land tax assessments.

Contact us

Please contact us for more detailed and tailored help.

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As a nation, Australians have been horrified to read of the many stories of substandard care and abuse in our aged care system, which have been amplified during the COVID-19 pandemic.

On 18 October 2018, the Royal Commission into Aged Care Quality and Safety (Royal Commission) was established. In 2021, the final report titled Care, Dignity and Respect (Final Report) was released. Royal Commissioners Tony Pagone QC and Lynelle Briggs AO identified systemic problems, and called for fundamental reform of the aged care system in Australia. The Final Report made 148 recommendations stating, “…the extent of substandard care in the current aged care system is deeply concerning, and has been known for many years.”

Substandard care and abuse pervades the Australian aged care system

Final Report

From 1 July 2019, as part of the recommended reforms, organisations providing Commonwealth subsidised aged care services are required to comply with the Aged Care Quality Standards, the Charter of Aged Care Rights, and the National Aged Care Mandatory Quality Indicator Program. Further, in 2021, the federal government introduced the Serious Incident Response Scheme (the Scheme) to reduce the risk of neglect and abuse of people living or staying in residential aged care providers.

The Serious Incident Response Scheme

The Hon. Pagone stated in the Final Report, “Frequently I heard evidence of failure where those who were failing would not have seen themselves at fault when frustrations, lack of understanding, competing demands and human failings resulted in an older person being treated badly.” The introduction of the Scheme ensures independent oversight of reportable incidents and holds organisations accountable for any failures.

The Scheme requires residential aged care providers to put an effective incident management system in place and report certain types of incidents to the Aged Care Quality and Safety Commission (Commission), which is the national regulator of aged care services and oversees the Scheme.

What is a reportable incident?

Reportable incidents includes those which occur or are alleged or suspected to have occurred. There are eight categories of reportable incidents under the Scheme:

1. unreasonable use of force;
2. unlawful sexual contact or inappropriate sexual conduct;
3. neglect of a consumer;
4. psychological or emotional abuse;
5. unexpected death;
6. stealing or financial coercion by a staff member;
7. inappropriate use of restrictive practices; and
8. unexplained absence of care.

Different reporting obligations attach to incidents depending on whether they are categorised as Priority 1 or Priority 2 incidents.

• Priority 1 incidents are reportable incidents:
  • that have caused or could reasonably have been expected to cause, a consumer physical or psychological injury or discomfort that requires medical or psychological treatment to resolve, or
  • that constitute reasonable grounds to contact the police, or
  • that involve the unexpected death of a consumer or a consumer’s unexplained absence from the service.
• Priority 2 incidents are reportable incidents that do not meet the criteria for a Priority 1 reportable incident.

What does my organisation need to do to comply with the Scheme?

The Scheme has been introduced in two stages:

• Stage 1 came into effect on 1 April 2021 and requires that Priority 1 incidents be reported to the Commission within 24 hours of the provider becoming aware of the incident. Those incidents may also need to be reported to police.
• Stage 2 came into effect on 1 October 2021 and requires that Priority 2 incidents be reported to the Commission within 30 days of becoming aware of the incident.

From 1 July 2022, the Scheme will be expanded from residential care to include in-home aged care services.

Reports need to be lodged via the My Aged Care Service Provider Portal within the relevant timeframe. An organisation will be required to document the incident, conduct an investigation into reportable incidents where appropriate, and ensure that actions are taken to avoid similar incidents from being repeated.

As with most new laws, the Commission is likely to take a more educative approach to implementing the Scheme in the early stages of the roll out, however we expect that enforcement action will commence for non-compliant providers now the Scheme is operational. Compliance action can include serving non-compliance notices and infringement notices, publishing notices of non-compliance on a publicly available non-compliance checker, and civil penalties, which can have highly detrimental reputational and operational consequences for an organisation. Organisations must act now to ensure they are compliant with the Scheme.

How Moores can help

Moores can help your organisation comply with the requirements of the Scheme by assisting with the development of compliant policies and procedures that are tailored to the unique environment of your organisation. We can also provide you with support to implement the training needed to equip your staff with the necessary knowledge to implement your policies and procedures in a practical and informative way.

Our team are experts in providing organisations with guidance and advice to ensure that any internal investigations are conducted thoroughly and in compliance with the necessary requirements. We also help by conducting independent safeguarding investigations into reportable incidents when an internal investigation is not appropriate.

Who to contact

If you have any questions about what support we can provide you, please get in touch with our safeguarding experts Skye Rose and Patrice Fitzgerald.

Contact us

Please contact us for more detailed and tailored help.

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The Australian Tax Office (ATO) expects that in 2022 there will be over one million trusts in operation in Australia. There is good reason for this. Trusts can provide significant tax, estate planning and asset protection benefits. Trust deeds can be obtained quickly and cheaply online, so why bother involving your financial, tax or legal advisor in the trust creation process?

This article outlines some of the considerations relevant to the decision to establish a trust, as well as the benefits to seeking financial, tax and legal advice to ensure you end up with a structure that actually achieves your objectives.

Make sure it makes financial sense

If tax minimisation is the driver of the decision to create a trust, then an essential preliminary step is a cost/benefit analysis.

In addition to the creation costs, trusts have ongoing management costs including ASIC fees for any corporate trustee and annual tax returns. While these costs are usually relatively minor compared to the tax saving they can generate, there does need to be an analysis conducted by your financial or tax advisor to ensure the structure will at least cover its own costs. The cost of contributions to the trust (if any), level of income expected to be generated in the trust and availability of individuals or other entities for income splitting will be relevant.

Your advisor may also consider alternatives such as investing via a self-managed superannuation fund or direct investment.

Get the type of trust and structure correct

There are multiple types of trusts, the most common being discretionary and unit trusts, with each serving a different purpose.

Additionally, a structure may simply involve one trust, or there may be benefit in operating multiple trusts. For example, if you are running a business within a trust then it is often good practice to separate this from investment assets so that they do not go ‘down with the ship’ in the event of a business failure.

Asset protection considerations

Trusts can provide excellent asset protection from creditors or bankruptcy. However, improperly structuring or managing the trust can undo this benefit so they provide little, if any, asset protection.

Care needs to be taken in managing initial contributions to the trust (ie/ a loan or gift) and managing ongoing loan accounts or unpaid entitlements. These can otherwise unintentionally operate to shift equity back to an at risk individual where it is subject to their asset protection risks.

Thought should also be given to the key controllers of the trust (appointors, trustee directors and shareholders) to ensure the bankruptcy of an at risk individual will not adversely affect the trust.

Succession considerations

A Will is not generally effective to deal with the assets of a trust and specific planning must be undertaken to ensure this structure passes in the manner intended on the event of the death or incapacity of a key individual.

This is particularly important as the terms of a standard discretionary trust will invariably provide that the trustee of the trust can do whatever they want with trust assets and benefit whomever they want within a broad class of potential beneficiaries (usually including themselves). Careful planning is therefore required when there are multiple parties you intend to benefit in the future and achieving these objectives may require bespoke trust terms or bespoke trustee constitutions.

Stamp duty and land tax

An intention to acquire real estate via a trust is a significant red flag to seek advice prior to the trust creation or acquisition. Many states in Australia now have surcharge stamp duty and land tax rates applicable to foreign purchasers. These surcharges can also capture trusts that are not necessarily foreign operated, but have not been adequately drafted to fully exclude the potential for a foreign person to benefit.

Likewise, if there is an intention for a trust to transact on real estate in the future, then structuring the trust in a particular manner can increase the prospect that stamp duties concessions will be available. For example, if the trust may receive farming land in the future, then appropriate capital beneficiary restrictions can ensure the farm duty exemptions under Section 56 of the Duties Act 2000 (Victoria) are available.

Key Takeaway

Your financial and/or tax advisor must be involved in the initial decision to create a trust and to determine the appropriate structure. Once the decision to create a trust is made, legal assistance in preparing the trust and considering its impact on your overall estate planning objectives can ensure the trust deed is drafted fit for purpose.

Mistakes in the setup can be costly to rectify after the fact.

How We Can Help

For expert advice or guidance regarding Trusts or Estate Planning, contact us.

Moores also works with a number of quality financial and tax advisors and can assist to connect you to a suitable advisor.

Contact us

Please contact us for more detailed and tailored help.

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Following hot on the heels of the new Ministerial Order 1359 (which will replace Ministerial Order 870 from July 2022), the VRQA has just released updated Guidelines to the Minimum Standards.

The VRQA has also released the School and School Boarding Premises Financial Capability Assessment Guideline which sets out the regulator’s graduated approach to information requests in this key area of registration.

The new Guidelines – and the Financial Capability Assessment Guideline – are already in effect, being backdated to January 2022.

Here are the highlights of the updated Guidelines to the Minimum Standards:

Boarding Houses

1. Building on the new Minimum Standards for school boarding premises, schools which operate a boarding house using the same entity as a school must ensure the school documents cover the boarding house (including constitution, risk management framework, delegations, risk register and governance charter).
2. Operating a boarding house is not – for clarity – a prohibited arrangement, provided it meets the requirements of the Guidelines (similar to the ELCs).

Third party providers

1. Those offering senior secondary courses and VET must themselves be registered (noting the new Ministerial Order 1359 also imposes child safety obligations on schools to ensure students with third party providers are safe in what is regarded as part of the school environment).
2. These providers must follow their own new set of Guidelines to Minimum Standards for registration.

Governance

1. Evidence now includes a diagram of the structure, including identifying the proprietor, the school governing body, committees of the Board, and any related entities (as appropriate).
2. DMI information is required – and the business plan still needs to be validated by an independent accountant.
3. The not-for-profit requirements (except those applying to senior secondary schools) have been relaxed to clarify that written agreements are required only where the agreement is with a related entity.
4. The school must for the avoidance of doubt, comply with other requirements in the Education and Training Reform Act 2006 (Vic), including publishing an annual report.

Curriculum

1. Additional evidence is now required regarding teaching hours and timetables in order to demonstrate the eight key learning areas.

Care Safety and Welfare

Schools must have:

• a COVIDSafe Plan; and
• policies and procedures to enable it to comply with mandatory vaccination requirements, including policies and procedures:
  • to ensure all education workers are fully vaccinated against coronavirus (COVID-19) by the specified date(s) or hold a valid exemption; and
  • for maintaining records in accordance with the information gathering and record keeping requirements. 

Please note it appears schools may need to hold vaccination information to meet this standard – not just sight it – which also brings into play the strict requirements of the Health Records Act.

Given the new Guidelines are already in effect, schools may need to consider updating their key governance documents now, rather than waiting to pass them at their AGM in May/June.

How we can help

As always, Moores is here to help schools navigate these issues.

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Binding death benefit nominations & SMSFs

When a member of a super fund dies, including of a self managed superannuation fund (SMSF), their benefits need to be dealt with. Those benefits (called “death benefits”) can be paid to a range of persons and do not necessarily get paid to the estate of the member such that their Will may have no relevance to how the death benefits are dealt with. Eligible recipients include the spouse, child, financial dependant of the member or their estate.

Binding death benefit nominations (BDBNs) are a tool used in estate planning designed to give certainty to a member by directing the trustee of a superannuation fund as to the payment of a member’s death benefits after the member’s death. Without a BDBN or other form of binding direction, the trustee has discretion as to where the death benefits are paid amongst eligible recipients.

For most retail and industry superannuation funds, the rule set out in regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994 (SISR) applies regarding the requirements for a binding death benefit nomination, including:

1. That the nomination must be signed and dated by the member in the presence of two independent, adult witnesses (who also sign and date the nomination declaring that it was signed by the member in their presence).
2. That after a period of three years has elapsed from the member signing or confirming the nomination, it will cease to have effect.

Despite all of that, it has been widely accepted that regulation 6.17A of the SISR does not apply to SMSFs. This has been accepted in various court decisions and also in SMSFD 2008/3 by the Australian Tax Office (ATO) which provides:

“… the governing rules of an SMSF may permit members to make death benefit nominations that are binding on the trustee, whether or not in circumstances that accord with the rules in regulation 6.17A of the SISR”.

So, does regulation 6.17A of the SISR apply to SMSFs?

The question of whether or not a self managed superannuation fund’s governing rules can circumvent regulation 6.17A of the SISR is a live issue at the moment as we await the High Court of Australia providing its decision in an appeal from the decisions in Hill v Zuda Pty Ltd [2020] WASC 89 (and [2021] WASCA 59).

In Hill v Zuda Pty Ltd, the Supreme Court of Western Australian first heard that the deceased died in 2016, and was survived by his de facto partner, and his only child.

In 2011 – importantly more than three years prior to his death – the deceased signed a document stated to be a binding death benefit nomination in favour of his partner.

Following his death, the deceased’s daughter brought an action in the Supreme Court of Western Australia claiming the nomination had ceased to have effect under regulation 6.17A of the SISR, given more than three years had elapsed since it was signed.

The Supreme Court of Western Australia in the first instance confirmed the position that regulation 6.17A of the SISR does not apply to SMSFs. The Court of Appeal confirmed the same, citing case law from South Australia as the basis for its decision.

There is no specific case law on this point here in Victoria. The High Court appeal for Hill v Zuda Pty Ltd will provide certainty across all jurisdictions in Australia as to application of regulation 6.17A to SMSF. This will directly impact the ability of a member in an SMSF to make a non-lapsing BDBN but may also restrict BDBNs to strict compliance with regulation 6.17A. That could mean the ability to build in rules into SMSF deeds in relation to permitting directions to the trustee around death benefits is curtailed, and result in members who had relied on the law to date having to reconsider their position.

Key takeaway

The decision of the High Court is not expected before March 2022.

If the decision of the Western Australian Court of Appeal is not upheld, this will likely be cause for members of self managed superannuation funds to review their existing nominations and ensure they are compliant, and potentially require a reconsideration of estate planning strategies.

For those members who have lost capacity, there will be additional complications.

How we can help

For expert advice or guidance regarding Estate Planning and self managed superannuation funds, please do not hesitate to contact us.

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MO 1359 imposes new obligations on schools to ensure families and school communities are informed and involved in the school’s efforts to keep children and young people safe (clause 8.1, MO 1359). Family engagement obligations apply equally to school governing authorities and school boarding premises governing authorities.

What does this involve?

This involves the school governing authority or school boarding premises governing authority to develop a policy, statement or other documentation that details the strategies and actions the school or school boarding premises will take to implement clauses 8.1 and 8.2 (clause 8.3).

The school governing authority or school boarding premises governing authority must, at a minimum, ensure:

• families participate in decisions related to child safety and wellbeing which affect their child.
  
  Schools will be familiar with involving families in individual welfare plans and wellbeing plans. MO 1359 arguably widens this obligation to any decision related to child safety and wellbeing. Schools must now ensure all decisions allow for family participation.
  
• the school or school boarding premises engages and openly communicates with families and the community about its child safe approach and relevant information is accessible.
  
  Schools often post child safety policies and procedures on their website.
  
• families and the community have a say in the development and review of policies and practices of the school or provider of school boarding services related to child safety and wellbeing.
  
  Schools may need to consider prior consultation with families and the school community before amending their existing policies or introducing new child safety and wellbeing policies.
  
• families, carers and the school community or school boarding premises community are informed about the operations and governance of the school or school boarding premises related to child safety and wellbeing.
  
  Schools must provide clear, easy-to-understand information about its operations and governance as it relates to child safety and wellbeing. This might prompts schools to consider how they can communicate in a more accessible, and streamlined manner.

MO 1359 Summary

This Part 5 ends our suite of articles in relation to MO 1359 (published on 10 February 2022, and will come into operation on 1 July 2022 with the new Child Safe Standards). We hope you have enjoyed our snapshot of the key changes, as outlined in our earlier articles, which you may link to here:

• More expansive and prescriptive Ministerial Order for Victorian schools
• MO 1359 Part 1: The definition of “school environment”
• MO 1359 Part 2: Empowerment of Students
• MO 1359 Part 3: Broader diversity, equity and culturally sensitive requirements
• MO 1359 Part 4: What are risk controls and risk treatments under MO 1359?

How we can help

We can assist with training, drafting new policies and procedures in relation to consultation and creating child safety posters to assist in empowering students.

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A perennial question educators and schools are always asking: How far does the duty of care extend?

The lawyer’s answer: Schools owe a duty of care to students to prevent reasonably foreseeable harm occurring.

Victoria’s Ministerial Order 870 (MO 870), which will be replaced with Ministerial Order 1359 in July 2022, sets out the fact that ‘school environment’ means any physical, online or virtual places made available or authorised by the school governing authority for use by a child during or outside school hours.

This means the duty of care extends to out-of-hours activities and off-campus activities such as school campsites, excursions and other events, and to the digital environment made available by the school.

Ministerial Order 1359 makes this stronger again by specifically incorporating into the school environment, the following: homestay, TAFEs, registered training organisations and non-school senior secondary providers as well as retaining previously included locations from MO 870 such as camps, excursions, sporting events, competitions or other events.

A recent decision, PCB v Geelong College [2021] VSC 633, considered whether a school was liable for an activity run by community members after school hours in an historical sexual abuse claim. In that case, the abuser knew the student from the school connection and then went on to abuse the student outside of school. The Supreme Court of Victoria found there was a foreseeable risk of child sexual abuse where the school facilitated contact between students and members of the public at an after-hours craft guild house – a building on school grounds. The foreseeable risk is the connection to the activity makes the school legally responsible, even when it wasn’t involved in the actual delivery of the activity.

Reliance on the general system of supervision by Geelong College was not a reasonable response. The school’s non-delegable duty of care was not discharged by its system of supervision, partly because the school had specific warning of the risks posed to students in the after-hours craft activity program – this was not disputed at trial.

The abuse occurred at the hands of a non-employee of the school at a building both at the building on school grounds and at a number of locations off school grounds. The Court found the school vicariously liable for the actions of the abuser, regardless of location of the abuse and awarded the plaintiff over $2.6 million in damages.

What should schools do?

Schools should be aware their non-delegable duty of care towards students may extend to external recreational activities where the school facilitates contact between the student and members of the public, as well as specifically listed activities as per MO 1359, for example outdoor education, external sports coaches or external training providers.

Schools need to remember they can be responsible for the acts of third parties, who are volunteers, or members of community groups.

How can we help?

Moores can help provide specific advice which assists in the:

• preparation of risk assessments, risk controls and risk treatments;
• review of supervision and child safety policies;
• making necessary changes to your contracts with external providers, or leases for use of school property; and
• providing training on how to identify potential risks for the children at your school, and how to respond in a manner that meets the school’s non-delegable duty of care.

Contact us

Please contact us for more detailed and tailored help.

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The new Ministerial Order 1359, effective on 1 July 2022, provides guidance to schools and school boarding premises governing authorities in relation to how to reduce or eliminate the risk of child abuse occurring. Processes to identify and mitigate risk are covered in various clauses in MO 1359 (see clauses 6.2c, 6.2d, 6.2e, 10.2e, 11.3g, 12.2a and 13.2a).

By way of reminder, some of the key changes introduced by the 11 new Child Safe Standards, to take effect on 1 July 2022 include:

• involving families and communities in organisations’ efforts to keep children and young people safe;
• a greater focus on safety for Aboriginal children and young people; and
• to manage the risk of child abuse in online environments,

with greater clarity on the governance, systems and processes needed to keep children and young people safe, as identified by the Commission for Children and Young People in 2021. More detail about the new 2022 Child Safe Standards is here.

School Environment

MO 1359 offers a broader definition of school environment, clarifying the physical, online and virtual places included.

Risk responses (clause 6, 2022 CSS 2)

Schools are familiar with risk registers as a tool to record risks of child abuse in the school environment. MO 1359 goes further and requires schools to:

• outline the actions taken to ensure a child safe culture is championed and modelled at all levels; and
• develop and implement risk management strategies that:
  • focus on preventing, identifying and mitigating risks related to child safety and wellbeing; and
  • take into account the nature of the school environment or school boarding environment, the activities expected to be conducted in those environments (including the provision of services by contractors or outside organisations), and the characteristics and needs of all children and students expected to be present in those environments.

What if a risk of child abuse is identified?

Not only are schools and boarding premises required to make a record of those risks, but also of the:

• risk controls: actions that are taken to remove the risks; or
• risk treatments: actions that will be taken to reduce or remove the risks.

Note that simply relying on supervision policies as a sufficient measure may not be sufficient, given recent case law.

How we can help

Moores can:

• provide training for child safety committees;
• update your policies and procedures; and
• assist you in ensuring you have sufficient risk controls and risk treatments in place.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.