This story focuses on the work we did for a frail and elderly woman in her early 90s who wanted to recover money from a loan to a nephew.

Background

Our client approached Moores to prepare a new will and powers of attorney. Our client was in her early 90s and her only brother had passed away in recent years. She never married or had children and was feisty and independent. During our initial meeting, she mentioned that she was worried that her nephew was accessing her bank accounts via online access and withdrawing money. Our client also said she had transferred a large sum of money to him some years prior, and she wanted the money back.

The Problem

Our client wasn’t able to give us specific details about the transfer of money to her nephew, or particular transactions of concern. While our client had some documents at home that she had brought in, it was a considerable task for her to provide us with what we needed given her advanced age.

The Solution

We needed to understand what had happened – if anything – before we could recommend a strategy. Our first step was to obtain copies of our client’s bank account statements, the terms and conditions for those accounts and any authority to operate forms. We identified that the money our client recalled transferring to her nephew had actually been transferred to his family trust, so we also obtained copies of the trust deed and other trust related documents. We mostly worked with our client by phone, and used post and courier (in the absence of email) – on occasion she would attend our office by taxi. The use of Excel to analyse the financial data over a decade allowed us to see a large number of transactions that seemed out of place.

The Outcome

We obtained instructions to write to and meet with our client’s nephew. At that meeting, our client’s nephew provided further documents and explained a number of transactions, and asked us to continue discussions with his lawyer.

There were a number of factual and legal issues in dispute such as:

• Were the funds transferred to his family trust a gift or a loan or something else?
• What were the explanations for the many bank account transactions?
• And what was the nephew’s role and legal obligations? 

The family trust was fully flexible, which meant there was no simple legal mechanism to compel repayment of the funds to our client. By working through the issues constructively with his lawyer, we were able to neutralise or resolve a large number of matters.

The outcome we achieved for our client was that the nephew paid to her over 80% of what we had sought on her behalf without the need to resort to any legal action or a protracted process.

How we can help

Moores is one of the few law firms in Australia that has a practice and is expert in elder financial abuse and elder law. For more information or guidance, please do not hesitate to contact us.

Melbourne has cemented itself as one of Australia’s fastest growing cities over the last five years. With an ever expanding population, it is to be expected that property growth corridors emerge and properties previously owned in a rural or environmental zone are rezoned into urban land creating an increase in value.

In determining a property settlement, the Family Law Act 1975 (Cth) requires the Court to consider the initial contributions of each party as well as the financial and non-financial contributions during the marriage.

The recent case of Jabour & Jabour [2019] FamCAFC 78 (“Jabour”) considered how an initial contribution of land which significantly increased in value due to the land being rezoned should be treated in the context of a separation.

The Facts

1. The Husband acquired a part interest in two blocks of land at 12 years of age from his father.
2. The Husband and Wife married in 1991 and separated on a final basis in May 2015. 
3. During the marriage, the Husband sold his half interest in one of the blocks of land which was subdivided. He utilised the proceeds of sale to buy out the other party’s interest in the other large block of land which was not yet subdivided (“Property A”).  The parties made no further financial or exceptional non-financial contributions to Property A throughout the marriage.
4. In 2010, the property was rezoned from non-urban land into an urban growth zone which permitted the property to be used for residential purposes. At the time of the Court hearing, Property A was valued in excess of $10,000,000.

Primary Decision

The primary issue for determination before the Court was whether the increase in value of Property A could be attributed to the Husband alone given he brought both properties into the relationship, or should it be considered as a joint contribution of both the Husband and Wife.

Of note, at the time of the Hearing, the parties had three adult children. The main asset in the property pool available for distribution was property A. Neither of the parties were high income earners. The parties agreed that their other contributions throughout the marriage were equal.

The Wife’s position was the property pool should be divided on an equal basis.  The Husband sought the property pool be divided 70/ 30 to him on the basis that he should receive a significant adjustment in respect of his financial contribution..

The primary judge held that the Husband should receive 66% of the property pool and the Wife 44% on the basis that “the Husband in bringing property A into the relationship has made a significant financial contribution which needs to be appropriately recognised.”

The Wife appealed the decision to the Full Court of the Family Court.

Decision on Appeal

On Appeal, the Full Court overturned the decision of the Trial Judge so that the Wife should receive 47% and the Husband 53%. 

The Full Court considered the following in reaching their decision:

1. The weight attached to an initial contribution, being Property A, must be assessed against the myriad of other contributions made by the Husband and Wife.
2. The rapid acceded value of Property A was the result of fortunate rezoning rather than the efforts of either one of the parties. The increase in value does not favour one party over another.
3. The parties decided not to sell Property A at an earlier stage and continued to live a modest lifestyle. This was considered to be a significant contribution on behalf of both parties which allowed them to enjoy the benefit of the increase in the land value.

Key Lesson

Jabour emphasises that careful consideration needs to be given to all contributions made throughout a relationship in determining how those contributions are to be treated in the event of separation. 

How we can help

For more information or guidance from our expert Family Law team regarding property settlement, please do not hesitate to contact us.

Right now, church properties across the country are underutilised as a result of the government directions to slow the spread of Coronavirus. But churches (particularly those constructed in the last 30-40 years) typically have great car parking and large level spaces which can be easily adapted.

As the need arises (which is starting to happen now), church properties should be made available for COVID-19 testing stations. Apart from places of worship, there are not many properties that are better placed for this kind of activity. 

Why would churches want to do this?

• It is a way to serve the community and the nation, at a time of crisis.
• It is a way for churches to be good stewards of real estate which may not be fully used for quite some time.

Reasons why churches might not want to do this:

• It would disrupt the ‘broadcast’ of online church; and/or
• Some churches might want to maintain access to church offices or gathering spaces (for those weddings and funerals, which can still happen in cut-down size).

Is it charitable?

Absolutely. Charities are required by law to use their assets solely to further their stated charitable purposes. It might seem that this use is not sufficiently ‘on purpose’ for a religious organisation. However, many various activities are an expression of faith. Churches hold car boot sales to connect with their communities. Plenty of other ancillary activities happen within religious organisations as part of its overall activities. This kind of activity is easily characterised as an expression of religious observance (eg, “love thy neighbour”).

Even if it was not strictly ‘religious’ in nature, it falls easily into the category of “other purposes beneficial to the community”. In our view no church would compromise any property tax exemptions by engaging in this kind of temporary use. Moores has been able to obtain confirmation from some revenue authorities that confirm this view.

What happens now?

Many church congregations are autonomous in relation to the day-to-day use of church property. Take steps to make connection between congregations and your relevant church property trust. And although Moores is not a broker for finding COVID-19 testing station sites, we are willing to help in any way we can.

Please get in touch if your church is in a position to “love thy neighbour” in this way. Do not hesitate to contact us here.

Holding Board, Committee and member meetings in the COVID-19 environment.

Much of the business of For Purpose organisations is necessarily conducted through meetings – both regular meetings of your responsible persons (your Board or Committee) throughout the year and a meeting (typically annual) of your members.

New social distancing measures will be in place for at least six months, with the possibility of enhanced restrictions. Current restrictions limit non-essential gatherings to less than 100 people with no more than one person per four square meters. For organisations with a significant number of members, in-person annual general meetings will no longer be feasible. Even if your annual general meeting or Board or Committee meeting might be compliant with social distancing, many organisations and individuals are likely to prefer not to meet in person at this time.

Here’s what you need to know before you schedule that video conference.

Play by your rules…

Your governing document (a constitution for companies or rules for associations) sets out how decisions are made by your responsible persons or members. A well-drafted governing document will provide for meetings to be held by technology and confirm that decisions made at those meetings are legally effective. For example, the ACNC template constitution for a charitable company limited by guarantee reads:

The company may hold a general meeting at two or more venues using any technology that gives the members as a whole a reasonable opportunity to participate, including to hear and be heard.

Unfortunately, many governing documents are silent on the use of technology or were prepared long before technology existed to facilitate voice or video conferencing (this is one of many reasons why you should dust off your governing document and make sure it is still fit for purpose). In this case, the legislation that applies to your organisation may help.

… as well as the legislation

You also need to be aware of the requirements of your governing legislation.

Corporations

The requirements for companies limited by guarantee differ depending on whether or not your organisation is a registered charity.

If your organisation is not a registered charity, you may benefit from the “no-action” position taken by the Australian Securities and Investments Commission (ASIC). ASIC has advised that it will not take action against companies that breach their constitution by holding a hybrid (online and in person) or online only AGM. ASIC will also allow companies to defer AGMs due to be held on 31 May to the end of July. ‘No-action’ means you may still be in breach of your constitution or the Corporations Act, but ASIC will not act on the breach. Be aware that a vexatious member might not overlook the breach. There is detailed information here (albeit targeted at larger companies) about the position of companies limited by guarantee that are not registered charities.

The ‘no-action’ position for companies limited by guarantee applies to members meetings only. It does not apply to meetings of directors. The replaceable rules permit directors’ meetings by technology (if your constitution does not expressly exclude the replaceable rules or include a contrary provision).

If your organisation is a registered charity, its principal regulator is the Australian Charities and Not-for-profits Commission (ACNC), not ASIC. Although registered charities are exempt from the Corporations Act provisions which regulate meetings, they must comply with the Governance Standards. Among other things, the ACNC Governance Standards require you to be accountable to your members. This includes holding members’ meetings and complying with the provisions of your constitution that regulate meetings.

The ACNC has been proactive about relaxing requirements in the past for charities that have legitimate compliance challenges. For example, reporting deadlines were extended for charities affected by the bushfires. However, the current ACNC guidance falls well short of providing reassurance to registered charities that propose to extend their AGM date or hold a hybrid or online-only AGM in breach of their constitution due to coronavirus concerns.

Registered charities must also comply with the provisions of their constitution that regulate directors’ meetings. Your constitution may permit the use of technology or circular resolutions. If you’re unsure, seek advice to make sure that your directors’ resolutions are valid.

Associations

In some cases (such as all Victorian associations meetings and Queensland associations Committee meetings) the legislation permits associations to hold a meeting by technology even if the rules don’t expressly allow it. In other cases, you can seek an extension to your AGM date. 

Again, associations would benefit from additional guidance from their State regulator and/or the ACNC (in the case of charitable associations).

Make sure you meet other legal requirements

A meeting held using technology must still meet the other requirements of your governing document. Don’t forget to:

• issue the proper notices (the ASIC ‘no-action’ provisions may assist sending supplementary notices);
• make sure the technology gives members as a whole a reasonable opportunity to participate (Can they ask questions of the Board or Committee and any auditor? Consider accepting additional questions in advance of the meeting.);
• consider whether your governing document allows proxy voting or voting by postal ballot;
• observe quorum requirements;
• ensure participants can be identified and are entitled to be in the meeting; and
• properly minute the meeting and any resolution passed.

Use great meeting etiquette

If your organisation hasn’t used video conferencing to hold its meetings before, make sure you:

• test the proposed facility beforehand, ensuring that the chair in particular understands how to use the technology and that it is appropriate for the proposed number of attendees;
• provide clear instructions on how to access the meeting room and website together with your meeting notice;
• establish and circulate a written meeting protocol to assist members to communicate effectively – this might include, for example:
  • muting mics when individuals are not speaking;
  • providing designated times for questions;
  • waiting until the chair calls on you to speak; and
  • asking people to raise their hands if they would like to speak.

It is helpful to remind participants of the protocol before the session commences.

Why wrestle with an outdated document?

This is an issue that may last from some time, or could recur in the future. Having the flexibility to hold an online Board, Committee or members’ meeting without compliance concerns is always valuable. Additionally, if your governing document predates technology or is silent as to the use of technology, there’s a good chance it may not include other important provisions too.

How we can help

If you’d like advice about the provisions in your current governing document or how they might be updated, get in touch with the For Purpose team at Moores. Please do not hesitate to contact us here.

Closure of the school gates may have brought relief from some concerns, but moving to online learning and keeping the school afloat bring continuing obligations.

School boards need to continue to meet and govern the school, even when students are not on campus.

These challenging times are also a test of the Board’s effectives. It’s easy to be a leader when everything is going well. But, in the words of a fellow cancer survivor, Mary Tyler Moore, You can’t be brave if you’ve only had wonderful things happen to you.

Here are our top tips for Boards and the leadership team of key considerations to keep in mind as schools move online.

Child Safety

This does not stop. The requirements of Ministerial Order 870 include that the Board (or other governing authority) develop strategies for embedding a culture of child safety at the school. The Board needs to (among other things) develop risk management strategies pertinent to the online environment, and still vet teachers, still have reporting channels for reports of suspected child abuse and deliver education to children about standards of behaviour. 

Some immediate tips to consider:

• Are teachers allowed to separately tutor students one-on-one?
• Is there a protocol about students and staff creating chat rooms or study groups (potentially on unsecure platforms) and/or creating separate Zoom groups within a current Zoom virtual classroom?
• Do your policies, procedures and codes of conduct need to be updated to reflect an online teaching environment?
• Do your staff need training on how to maintain a child safe environment and their continuing obligations?

Privacy

Zoom-hosted and other virtual classrooms raise issues of privacy. Parents should not participate or conduct conversations in virtual classrooms, even if present to supervise. Similarly, educators should not refer to ill students or family members other than “they are away from school today”.

Risk Management

Groups of children online need to be reminded about cyber-bullying.  The usual rules need to be emphasised, as does parent control over devices.  They should be inaccessible at night, despite the changes. Consider if teachers are able to monitor conversations between students that occur on school sanctioned online platforms, recognising that it is likely that the school’s duty of care will extend to any cyber-bullying or inappropriate messaging that occurs on school platforms.

Cancellation Fees & Refunds

Check all provider contracts and their cancellation clauses. Do not assume a refund is available.  Earlier termination may be considered better, but beware fixed term contracts – you may have to pay them out in full, unless you can point to “frustration” or external factors.

Building Projects

Many contracts will allow the builders to walk offsite and make this the school’s problem. Check the force majeure clause to see whether the school has rights to terminate and/or receive back deposits paid.

Leases

Check lease terms to understand the implications of non-payment of rent. Re-negotiate rent holidays early.

Enrolments, behaviour and payment terms

Consider what you will do if an enrolment agreement allows the school to terminate, particularly around behaviour. Will the duty of care mean you have to find another school for any students that the school terminates? If terminating for non-payment, what is the school’s credit policy? Does this need to be reviewed? Will the school prefer to keep enrolments, and the funding? Note you will need a sufficient number of non-parent board members to vote on any changes to fee or credit policies, because parent board members will need to declare a conflict of interest.

Holding board meetings electronically

Does your constitution actually allow this? Many are too old and were drafted before emails and telemeetings existed. You may need to amend the constitution to ensure your resolutions are valid in online meetings (query if you can hold a members’ meeting). Furthermore, given the need for fast decision making during these critical times, consider if your constitution allows resolutions to be made by circulation and ensure you are complying with the requisite notice requirements before voting on resolutions.

Solvency and Deeds of Indemnity

Directors must ensure the school is solvent – this is a directors’ duty. Even though the law has been temporarily changed to allow insolvent trading in the ordinary course of business for a period of 6 months, the usual rules of good decision making apply. The laws have been relaxed, not repealed, so directors are still required to exercise sound judgment and not breach other directors’ duties. For example, causing school insolvency by entering into a prohibited arrangement would still be an issue. Entering into a modelled temporary insolvency to pay staff who are still working and who will be needed after the crisis, in the context of considered and suitable cost cutting, would be much less problematic.

Workplace Relations

Flexibility and workforce restructuring need to be considered.

What measures do you need to ensure wellbeing and connectedness? Will children be in uniform/complying with dress code? (Some schools say uniform only required on the visible top half). How will distressed students access school counsellors?

How we can help

Moores is still working and available 24/7 to support you. For more information or guidance, please do not hesitate contact us.

We wanted to reach out in these challenging times. As the COVID-19 pandemic unfolds, we know that many people are experiencing insecurity and uncertainty about what their future looks like. 

Please rest assured that we are equipped to continue to help and support you. Whilst the client experience of working with Moores and the service excellence that you are used to will not change, the way you do business with Moores might change over these coming months.  

We are confident that we have the infrastructure in place to continue to support our people and our clients. Working remotely is not new to our business and we and our clients, have already enjoyed the benefits of this model, such as increased employee engagement levels, early adoption of innovative solutions and creative problem solving.  

Health and Safety

Our number one priority is the health and safety of our staff, clients, referrers and their families. In order to minimise any risks to health and safety, we have put in place internal preventative measures including

• Restricting client facing meetings, opting for telephone or video meetings wherever possible. As face to face meetings are sometimes required, particularly in relation to the witnessing of documents, we have put in place systems to minimise close contact as far as possible and look to other signing options where appropriate.
• Replacing all in house seminars with webinars
• Enabling our staff to work remotely

Business Continuity

We are equipped to run business as usual and will continue to provide our clients the same high level of service we know they love.

Private Clients – Our team are fully functional and will continue supporting clients and referrers with matters of estate planning and structuring, will disputes, family and relationship law, elder law and property transactions.

Organisational Clients – We are continuing to support organisational clients in our specialist sectors and areas of expertise including workplace relations, education, privacy, child safety, not-for-profit and charity, property, construction and infrastructure.

We are here to help

We recognise that these unprecedented times may present new challenges and legal issues for you. We are here to help, please do not hesitate to contact us if you need any support.

As you know, a focus on community and connection are hallmarks of how Moores does business. It is our hope that as a community, we can continue to show compassion and care to one another and, importantly, patience.   

Our thoughts are with you and your families. We will continue to keep you updated throughout this period.

Take care and best wishes,

Tessa van Duyn
CEO and Practice Leader

The Commission for Children and Young People (CCYP) has announced that the Reportable Conduct Scheme (Scheme) has been extended to include youth organisations that provide overnight camps for children as part of its primary activity. This includes organisations such as the Scouts and Girl Guides and may also include sporting, recreational and summer camp organisations. The changes will take place from 1 May 2020 and youth organisations that may be captured should begin preparations.

What is the Scheme?

The Scheme began on 1 July 2017 and is administered by the CCYP. It aims to ensure allegations of misconduct involving children in relevant organisations that exercise care, supervision and authority over children are properly investigated. The Scheme includes reportable allegation involving an employee, volunteer, minister of religion, contractor or other person associated with the organisation.

A reportable allegation means any information that leads a person to form a reasonable belief that an individual associated with the organisation has committed:

• reportable conduct; or
• misconduct that may involve reportable conduct,

whether or not the conduct or misconduct is alleged to have occurred within the course of the person’s employment. This is a wide scope and captures conduct before the individual became an employee (such as historical allegations) and conduct by the employee in their personal lives outside of work.

Reportable conduct means:

• a sexual offence, sexual misconduct or physical violence committed against, with or in the presence of, a child;
• any behaviour that causes significant emotional or psychological harm to a child; or
• significant neglect of a child;

Is my organisation captured?

The Scheme was rolled out in three initial phases. It captures a wide range of organisations including schools, religious bodies, disability service providers, education and care services and children’s services.

The new changes are set out in the Child Wellbeing and Safety Amendment Regulations 2019. It states that “a youth organisation that provides overnight camps for children as part of its primary activity” will be captured by the Scheme from 1 May 2020.

A youth organisation is defined as a youth organisation:

• in which children participate; and
• that provides activities in which children participate.

What does it mean if my organisation is captured?

If your organisation is captured by the Scheme, significant amendments need to be made to your policies, procedures and operations.

The Scheme imposes obligations on the head of organisations to:

• have in place systems to prevent child abuse and, if child abuse is alleged, to ensure allegations can be brought to the attention of appropriate persons for investigation and response;
• ensure that the Commission is notified and given updates on the organisation’s response to an allegation within strict timeframes including a:
  • 3 day notification;
  • 30 day update report;
  • investigation and outcome report; and
• investigate the allegation while managing risks to children.

Organisations need to ensure that they have the proper policies and procedures in place to comply with the above requirements. It is important to note that the CCYP has begun to take compliance action against organisations that fail to comply with their obligations under the Scheme.

Next steps

Youth organisations that are now captured by the Scheme need to prioritise preparation to ensure they are compliant by 1 May 2020. We recommend that organisations captured by the Scheme take the following steps.

1. Assess the application of the Scheme – organisations should assess the application of the Scheme to confirm if it is captured. It is important to note that if one branch of your organisation is captured by the Scheme, your organisation as a whole will need to comply with the requirements of the Scheme.
2. Amend your policies and procedures – organisations captured by the Scheme will need to amend their documents including their child safety policy, child safety reporting procedure and child safety code of conduct. These documents will need to align with the requirements under the Scheme and capture your investigation obligations.
3. Train your staff – in particular, organisations will need to train their child safety officers to understand how they assess child safety allegations under the Scheme. Staff will also need to understand when allegations need to be escalated to the head of the entity to allow reports to be made to the CCYP.
4. Investigation strategy – one of the most significant requirements under the Scheme is the requirement for organisations to investigate reportable allegations. Organisations need to consider how they will manage these investigations, whether they will be done internally or externally and how they can best manage any child safety risks. We recommend organisations review our tips on running a child safety investigation.

For more information or guidance regarding the Reportable Conduct Scheme, please do not hesitate to contact us.

The Office of the Australian Information Commissioner (OAIC) just released the following latest notifiable data breach statistics from 1 July to December 2019:

• 537 notifications (increased from 460 between 1 January and 30 June 2019)
• 32% of these due to human error (down from 34% in the last reporting period)
• 64% of these due to malicious or criminal attacks – this remains the leading cause of data breaches across Australia.
• 4% of these are system faults.

Whilst not the largest reporting sector, private education providers were responsible for 9% of all breaches, which is arguably an over-representation from the sector. Of these breaches, 61% were due to a malicious or criminal attack. Four percent of all breaches were committed by entities in the “personal services” sector, which includes community services and childcare centres. The highest reporting sector was the health sector, notifying 22% of all breaches.

What is an eligible data breach?

Under the Notifiable Data Breach Scheme, a data breach is ‘eligible’ where:

1. there is unauthorised access or an unauthorised disclosure of personal information;
2. a reasonable person would conclude that it is likely to result in serious harm to any of the individuals whose personal information is involved in the data breach; and
3. the entity has not been able to prevent the likelihood of serious harm through remedial action.

Where do organisations need to be the most careful?

• The report emphasised that there is a huge risk relating to the transmission of sensitive data via email, including the risk of harm to individuals whose personal information is emailed to the wrong recipient. The OAIC has therefore recommended that organisations consider additional security controls when emailing sensitive and other personal information, for example, putting password protection on these files.
• Organisations should be careful to ensure that their privacy, information handling and security practices are watertight, up to date and consistent with relevant regulations and best practice.
• Policies should be clear on what kind of information should be stored and shared via email, including how this information will be protected. in an attempt to ensure that information is contained.

How Moores can help

Moores can assist with drafting or reviewing current policies and procedures to ensure that they are tailored to your organisation’s needs and consistent with best practice to minimise risk and liability. For more information, please do not hesitate to contact us.

Commencing 1 July 2020, the ACNC will review selected charities’ eligibility for Deductible Gift Recipient (DGR) endorsement and charity registration. These reviews are part of DGR reforms announced in 2017, most of which have not yet been implemented. The purpose of the reviews is to ascertain whether charities remain entitled to registration as a charity. If a charity is not meeting its obligations, the ACNC may take action in accordance with its regulatory approach. In very serious cases, this can include loss of charity registration.

Who is being reviewed?

The ACNC has said it proposes to review approximately 500 charities per year, starting with Public Benevolent Institutions (PBIs). PBIs are charities that provide relief to people in need and include hospitals, welfare services, legal services and charities working with marginalised and disadvantaged communities.

PBIs will be prioritised for review if they:

• do not have a governing document uploaded to the ACNC Charity Register;
• have one or no Responsible Persons listed on the ACNC Charity Register;
• received endorsement as a PBI before the establishment of the ACNC (3 December 2012); and
• are not ORIC regulated entities (i.e Indigenous Corporations).

The ACNC will also continue their usual practice of reviewing PBI eligibility for charities in response to concerns raised by third parties including the public, employees, beneficiaries, other regulators or the media.

How will the reviews be conducted?

The ACNC has not provided details of how the assessment will be carried out, other than to note that:

• reviews will commence using publicly available information;
• charities will not be notified that they are under review unless there is a problem; and
• charities should self-assess against the Charity Registration Self-Assessment Tool.

How your PBI can prepare

Understand your obligations

DGR charities are required to comply with the ACNC Governance Standards and ACNC External Conduct Standards (if they have overseas operations). They must also meet the eligibility requirements for their particular DGR category. In the case of PBIs, the ACNC has released a Commissioner’s Interpretation Statement on Public Benevolent Institutions setting out the ACNC’s interpretation of the law that applies to PBIs. Although the Commissioner’s Interpretation Statement is fairly technical, it provides context and background to the questions in the self-assessment tool.

Many charities were automatically transferred to the ACNC Charity Register when the ACNC was established in late 2012. These charities have most likely never been assessed for compliance by the ACNC. It is important that these charities in particular take the time to review and understand their obligations, as they will be prioritised for review. 

Involve your Responsible Persons

Your charity’s Responsible Persons (the board, committee or trustees, depending on your structure) are responsible for compliance with the Governance Standards and External Conduct Standards. This is a governance issue, not an operational issue. The charity self-assessment should be carried out or at least overseen by your Responsible Persons.

Some key issues to consider

The public guidance the ACNC has released and our experience registering new PBIs suggests that the review may look at matters including:

• Whether your charity’s stated purpose in your governing document is appropriate for a PBI. Does your purpose involve providing benevolent relief to people in need?
• Are your charity’s activities directed towards its purpose?
• Who does your charity assist? Do they have a need that “arouses community compassion”?
• How does your charity assist those individuals? Are your activities directed towards relieving that need?
• If you have activities that do not involve providing benevolent relief to people in need, are they merely incidental or minor compared to your benevolent activities?
• Does your organisation have a religious motive (which is permissible) or does it have a religious purpose (which is not permissible under the Commissioner’s Interpretation Statement). This is not an easy distinction to make!

What if my charity is not a PBI?

All charities should regularly self-assess to ensure that they are complying with their obligations. Good governance is a requirement of your ongoing entitlement to charity registration. DGRs in particular should be aware that the ACNC is likely to assess additional DGR categories when the PBI assessments are complete.

Next steps

If you have concerns about your charity’s eligibility, our expert For Purpose team at Moores can assist with your queries. Please do not hesitate to contact us.

The federal Government has just released its response to the Australian Charities and Not-for-profits Commission (ACNC) legislation review. The ACNC legislation provided for a mandatory review of the ACNC’s objects, functions, powers, regulatory framework, and sector red tape. The review report was released in 2018 and made 30 recommendations. The Government response supports 18 of the recommendations.

Many of the proposed changes will require legislative amendment or are subject to consultation. We’ll keep you up to date as they progress. Our comments on the key recommendations supported by the Government – and some that were not supported – are set out below.

Financial reporting – a big win for small charities

The revenue thresholds that determine charities’ reporting obligations will be raised (based on average revenue over a rolling three-year period). The revenue thresholds will be subject to consultation – those recommended in the report were:

• Small entity – less than $1 million;
• Medium entity – $1 million to $5 million; and
• Large entity – $5 million or more.

This will mean fewer charities are required to provide financial reports, a welcome reduction in red tape for small charities.

Other supported changes to financial reporting include:

• amending the Annual Information Statement (AIS) requirements for small charities so that they can provide a simplified balance sheet or statement of resources; and
• requiring large charities to disclose how much they pay their responsible persons and senior executives on an aggregated basis. Charities with only one remunerated responsible person or senior executive will be exempt from this requirement.

Widening Related Party Transactions obligations

The Government supports all charities being required to disclose related party transactions in their financial reports – a requirement that currently only applies to charities preparing general purpose financial reports. Related party transactions are contracts, sales, loans and other agreements between a charity and a “related party” – a defined term that includes the Board and their family members, subsidiaries, management and their family and other associates.

Small charities will be permitted to make simplified disclosure. These changes will align with changes to financial reporting thresholds.

Keeping responsible persons responsible

A number of recommendations supported by the Government will enhance the ACNC’s ability to monitor and regulate the conduct of responsible persons, including:

• authorising the ACNC to request details on the criminal records of responsible persons; and
• disqualifying individuals from being a responsible person if they have a terrorism, money laundering, fraud, illegal drug importation/distribution, or child sexual offence conviction.

The Government also proposed to release a consultation paper in response to a recommendation that directors’ duties under the Corporations Act be switched back on for the responsible persons of charitable companies.

Importantly, the Government did not support the recommendation to remove the Commissioner’s power to remove or replace a responsible person. However, the Government indicated it would “mandate additional criteria” and “broaden the power of appeal” to introduce safeguards to the process.

Rejection of #FixFundraising

Many in the sector will be disappointed by the Government’s rejection of recommendations stemming from the #FixFundraising campaign. These included calls for the Australian Consumer Law to be amended to clarify its application to charitable and not-for-profit fundraising as well as for the development of a mandatory Code of Conduct for fundraising activities.

Instead, the Government says it will continue to support efforts by states and territories to harmonise fundraising laws.

Loosening of secrecy provisions

Since its inception, the ACNC has been bound by secrecy provisions that prevent it from publicising the details of its compliance activities (except in very limited circumstances). The Government has supported a recommendation to give discretion to the ACNC Commissioner to release public interest information about compliance activities.

The Government will consult on details – including triggers and boundaries to the Commissioner’s discretion. Additional information about compliance activities may give helpful guidance to the sector about how the ACNC applies the Governance Standards and External Conduct Standards in practice. 

No change for Basic Religious Charities

Finally, the Government did not support a recommendation to review the exemptions for Basic Religious Charities from financial reporting and from the ACNC Governance Standards.

Next steps

Moores will continue to provide updates on the proposed reforms as they are implemented and as any consultation takes place. If you’d like further information, please do not hesitate to contact us.