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.
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.
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.
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.
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.
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.
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.
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.
Please contact us for more detailed and tailored help.
Subscribe to our email updates and receive our articles directly in your inbox.
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:
Schools must have:
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.
As always, Moores is here to help schools navigate these issues.
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:
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”.
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.
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.
For expert advice or guidance regarding Estate Planning and self managed superannuation funds, please do not hesitate to contact us.
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.
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:
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:
We can assist with training, drafting new policies and procedures in relation to consultation and creating child safety posters to assist in empowering students.
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.
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.
Moores can help provide specific advice which assists in the:
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:
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.
MO 1359 offers a broader definition of school environment, clarifying the physical, online and virtual places included.
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:
Not only are schools and boarding premises required to make a record of those risks, but also of the:
Note that simply relying on supervision policies as a sufficient measure may not be sufficient, given recent case law.
Moores can:
Staff in education facilities will soon need to have received a ‘booster’ dose of a COVID-19 vaccine in order to be permitted to attend their workplace for the purpose of performing work (unless they hold a valid exception under the Order).
The due date for their booster shot depends on the date that a staff member became fully vaccinated. In order to meet the booster requirement, staff will need to have received their booster dose before:
If a staff member has not provided the education facility with evidence of their booster shot on or before their booster due date, they will not be permitted to enter, or remain on, the premises of the education facility after their booster due date.
The Order also provides a new temporary exception to the vaccination requirement if a staff member has tested positive for COVID-19 and completed their self-isolation period in the previous four months.There are three categories under this exception.
Under this category, a staff member who was diagnosed with COVID-19 by way of a positive PCR test is eligible for a temporary exception to the vaccination requirement for up to four months from the end of their self-isolation period.
Under Category 2, a staff member is eligible for a temporary exception if they have:
To be eligible for an exception under Category 3, a staff member must have:
If a staff member is eligible for one of the three categories for a temporary exception, they will not be required to provide a COVID-19 digital certificate issued by Services Victoria (which is required for a medical exception under the Order).
Once four months have passed following the end of the staff member’s self-isolation period, the staff member will no longer be permitted to enter, or remain on, the premises of the education facility for the purposes of work unless they have met the vaccination requirement (including the booster requirement, if the relevant booster due date referred to above has passed).
Need a hand navigating the never-ending COVID-19 updates? As education and employment law specialists, Moores can assist your school with implementing or updating your COVID-19 vaccination policy to ensure that it complies with the most recent health orders.
We can also assist you with finding your way through tricky situations with your staff members, including non-compliance with the vaccination requirement and discussing alternative arrangements.
Get in touch with Cecelia or Melissa below so we can help with getting you where you want to be!
The requirements of schools and school boarding premises to treat all students equally are embedded in two key clauses in the new Ministerial Order 1359 (MO 1359). These clauses of the MO 1359 align with the new 2022 Child Safe Standards (2022 CSS), but these standards apply directly to schools and school boarding premises.
MO 870 requires school governing authorities to implement a “principle of inclusion”, meaning school governing authorities must “take account” of the diversity of all children. Instead, MO 1359 requires schools pay “particular attention” to the needs of diverse students. This change in language reflects increasing obligations for schools to take proactive action to ensure diversity and equity is upheld for all students.
The new MO 1359 also more broadly defines diverse students as:
The above adds to the previous definitions of Aboriginal and Torres Strait Islander, cultural and linguistically diverse, students with disabilities and vulnerable students.
The explanatory note in MO 1359 provides guidance for how a school can identity vulnerable children and students. For example, a student may be deemed vulnerable by a government agency or external family violence service. Information may be shared between these organisations under the Child Information Sharing Scheme.
The new Ministerial Order 1359 requires schools and school boarding premises to create a culturally sensitive environment and implement specific considerations for any Aboriginal and Torres Strait Islander students.
Schools and boarding premises must specifically ensure their policies respect and value the diverse and unique identities and experiences of Aboriginal children, young people and students (clause 5).
It includes:
While MO 1359 focuses on Aboriginal and Torres Strait Islander peoples, school policies should be broad enough to cater for incidents of racism against any race.
This requirement applies to all schools and boarding premises, even those without any Aboriginal and Torres Strait Islander students currently attending.
Moores can provide training for staff and help amend existing policies to ensure relevant changes are made to comply with VRQA requirements.
On 12 November 2021, the Victorian Law Reform Commission (VLRC) released its report entitled “Improving the Response of the Justice System to Sexual Offences” (the Report). The VLRC has produced a comprehensive reform package to improve the way the justice system responds to sexual offences. Multiple recommendations were made in the report, many of which should be considered by organisations working with children and vulnerable people. Click here for an overview of the Report’s recommendations.
As part of the terms of reference, the VLRC was requested to look at barriers to reporting sexual offences, and recommendations to improve the justice system’s response to sexual offending. The VLRC found that approximately 87% of people who experience sexual abuse do not report to police, and only half disclose the abuse at all (usually to family or friends).
The Report also found some communities experience sexual violence at much higher rates than others. These communities included Aboriginal women and women with disabilities. The above-mentioned higher rates are connected with broad structures of discrimination and marginalisation.
The VLRC found that approximately 87% of people who experience sexual abuse do not report to police, and only half of those who have experienced sexual abuse disclose the abuse at all.
Unfortunately, this is not new information. The Final Report of the Royal Commission into Institutional Responses to Child Sexual Abuse (Royal Commission) contained concerning statistics regarding disclosure of child sexual abuse. The Royal Commission found that many victim-survivors did not disclose child sexual abuse until many years after the abuse occurred (on average, it was reported that it took victim-survivors that spoke to the Royal Commission 23.9 years to report), and that some victim-survivors do not disclose at all.
The Royal Commission also found that Aboriginal and Torres Strait Islander children, children with disabilities and children from culturally and linguistically diverse backgrounds were more likely to encounter circumstances that increased their risk of abuse in institutions, reduced their ability to disclose or report abuse and, if they did disclose or report, reduced their chances of receiving an adequate response.
This article focuses on what organisations can do to better promote a safe environment, encourage victim-survivors to disclose at an early stage, and why this is important.
In order to make organisations safer, we first need to understand what prevents victim-survivors from disclosing abuse. The VLRC found the reasons people do not report sexual abuse are complex. These reasons are examined in detail in Chapter 7 of the Report. Key barriers to reporting include:
In our professional experience, when working with adult survivors of historical child sexual abuse, the most common comment they make is “I thought I wouldn’t be believed”. Often this is because the perpetrator has told them this, after a period of grooming both the victim-survivor and the people around them, including the organisation. Survivors have also told us they felt the organisation wouldn’t take action and would focus on protecting the perpetrator over the victim. Historically, and even now, some organisations attempt to protect their reputation before ensuring the organisation is safe and survivors are properly supported. Some organisations have vastly improved their child safeguarding function. Some organisations are still evolving.
We know now, more than ever, how important it is for victim-survivors to disclose abuse at an early stage. Once victim-survivors disclose, they can be provided with the support they need to help them heal. Disclosure also ensures that perpetrators can be held accountable for their actions and prevents the perpetrator from abusing others. Early disclosure is also likely to aid in a criminal conviction as witness memory will be more accurate and a forensic disadvantage from delay is unlikely to be an issue in the prosecution. By ensuring there are proper processes in place to deal with the abuse, it can also deter other potential perpetrators from abusing children within the organisation.
There are a number of ways organisations can and should reduce barriers to reporting. These include:
The findings and recommendations of the Report have the capacity to assist organisations in preventing sexual offending and improving organisational responses to sexual offending to make the organisation safe.
The Moores’ Child Safety & Safeguarding team delivers seminars and training to staff, students and participants in the disability sector to educate them on important topics such as consent, respectful relationships, harassment and image-based abuse.
Moores can assist organisations in reviewing, auditing and improving complaints policies and procedures in order to reduce barriers to reporting. Moores can also assist in responding to complaints or disclosures of sexual offending and harassment to ensure a trauma-focused response which is procedurally fair, including by conducting independent investigations.
The clauses of the MO 1359 align with the new 2022 Child Safe Standards (2022 CSS), but apply these standards directly to schools and school boarding premises. Clause 7.1 of MO 1359 restates CSS 3: schools and school boarding premises must ensure that children, young people and students are empowered about their rights, participate in decisions affecting them and are taken seriously.
A specific example of the increased specificity of how schools must meet CSS 3 can be found in MO 1359 clause 7.5, which says: school governing authorities must develop curriculum planning documents or other documentation that detail the strategies and actions the school will take to implement 2022 CSS 3.
To assist you in understanding the new requirements regarding empowerment of students we have created a comparison table:
Some of the new changes include a specific obligation on schools and school boarding premises to provide age-appropriate sexual abuse prevention programs and the development of curriculum planning documents to implement the new standards.
Moores has previously provided advice on the changes between the old child safety standards and the new ones, to be introduced on 1 July 2022. You can read that advice here.
Moores is able to assist you with training and child empowerment policies, to embed a culture of child safety at your school and school boarding premises.