From 1 July 2015, provisions in the Duties Act 2000 (Vic) have imposed additional duty on foreign purchasers of Australian residential property. Since 1 July 2019, the rate of additional duty has been 8%.
Foreign trusts are within the category of foreign purchasers targeted by the Act, and include a trust where:
has a beneficial interest in more than 50% of the capital of the trust.
Typically, a discretionary trust (or family trust) is set up with a couple of key people as the “specified beneficiaries” and a broad range of other beneficiaries – from the immediate family to unnamed long-lost descendants of the grandparents of the specified beneficiaries.
Yes, that even includes the specified beneficiary’s long lost cousin who lives overseas and is not an Australian citizen.
Until now, the State Revenue Office (“SRO”) has taken a practical approach to the application of the foreign duty provisions in relation to discretionary trusts.
The SRO’s approach has been to treat a trust with foreign beneficiaries who have not and who are, based on the information available, unlikely to receive any distributions from the trust in the future, as not falling within the definition of foreign trust.
However, from 1 March 2020 the SRO will no longer be applying this practical approach. Instead, any discretionary trust that has within its beneficiary class a foreign natural person or a foreign corporation which is eligible to receive 50% of the capital of the trust will be considered to be a foreign trust purchaser for the purposes of transfer duty – attracting an additional 8% of duty.
By way of example, if a Victorian residential property is purchased for $2,000,000 on 1 March 2020 by a discretionary trust which has the overseas cousin who is not an Australian citizen as one of its beneficiaries, then the duty on the purchase will be $270,000, rather than $110,000 if the cousin was not a beneficiary of the trust.
If you are considering purchasing residential property in your family trust, it is extremely important to consider how you may be able to avoid foreign purchaser additional duty on the purchase.
This may be possible by amending the trust deed prior to settlement of the purchase. Obviously, there are many issues to consider before determining whether this is an appropriate strategy for you, including whether the amendment is permitted and advisable in your circumstances, and consideration of the risk of resettlement.
It is not clear whether the SRO will accept that excluding beneficiaries pursuant to an existing power in the trust deed will be sufficient. Setting up a new trust with no foreign beneficiaries may be a preferable way to go.
For more information on how we can assist you in considering the best way to proceed in your own circumstances, please do not hesitate to contact us.
Originally featured on Our Community’s website. Click here to access the ‘Code of Conduct’ webinar recording.
The recent public and controversial case of Australian Rugby player Israel Folau has raised questions about the rights of freedom of religion and freedom of expression in the context of employment and Employer Codes of Conduct. Folau faced disciplinary action for breaches of the player Code of Conduct over controversial religious social media posts, and was ultimately terminated by Rugby Australia. While this case was settled and left us without a ‘test case’ for the impacts of freedom of religious expression in the workplace, it has:
Here are some of our top tips for organisations to consider for an effective Code of Conduct:
If your workers engage in behaviour that breaches your Code of Conduct, disciplinary action (including dismissal) may be appropriate. Moores provides assistance with drafting contracts and policies, legal advice on the proper process to address misconduct, and representation if a claim arises.
For more information, please do not hesitate to contact us.
Click here to access the ‘Code of Conduct’ webinar recording, created in partnership with Our Community
A recent survey found that 31 January is the most popular day for employees to quit their jobs. The New Year is a time for reflection: New Year, new career!
When an employee wants to move on and you’re asked to provide a reference, it’s not always easy to work out how honest you should be. You may be able to provide a glowing reference for a star performer with a clean record, but what should you say about a poor performer or an employee accused of misconduct? What about employees who required extensive leave for family or health reasons, or those who raised complaints? Legally and morally, where’s the line?
This article explores the legal, moral and practical considerations of providing a reference.
Organisations that are bound by the Privacy Act 1988 (Cth) (the Act) will be bound by the obligations it imposes, including the Australian Privacy Principles (APPs). In general terms, this requires organisations to collect, handle and disclose personal information (including sensitive information) in accordance with the Act.
While an individual’s employment record will contain personal information, and sensitive information, there is an exemption under the Act for “employee records”.
This means that employers can disclose an employee record “in the scope of an employment relationship”. An employee record is defined by the Act as a record of personal information relating to the employment of a current or former employee.
The exemption will only apply to acts that are directly related to a current or former employment relationship, not prospective employees.
This has some important ramifications:
As a result of the exemption above, organisations can provide the following personal information when providing a reference check for an individual:
Avoid overly personal or discriminatory statements and any griping. If you can’t provide an employee with a favourable reference, consider letting them know.
Where a person feels that their reputation has been damaged by a reference check, they may seek damages for defamation. The recent case of Bowden v KSMC Holdings Pty Ltd t/a Hubba Bubba Childcare on Haig & Chapman [2019] NSWDC 98 demonstrated the potentially costly consequences of making disparaging comments about former employees. In that case, the director of the organisation made comments alleging that the staff member was not truthful about his studies and not suitable to work in childcare. The Court found the comments to be false and rather, the organisation was simply dissatisfied that the employee was taking longer than the organisation expected to finish his course. The employee was awarded $237,970 in damages.
Keep in mind that employees are entitled to take leave for personal and family reasons, and to raise grievances and complaints. Avoid any disparaging comments about the employee’s personal leave, requests for flexibility or complaints, as this may expose you to a claim of adverse action or victimisation.
We recommend that employers limit the information they provide in reference checks to the facts. While opinion about a person could be personal information (and therefore fall into the exemption), inability to substantiate such an opinion may create risks of defamation or workers’ compensation claims. It is also preferable for reference checks to be provided verbally to ensure that information is not taken out of context.
There is no requirement that an employer provide an employee with a reference check beyond confirming the key details (e.g. length of time with the organisation, role, and responsibilities).
There may be difficult situations where employers choose to stay silent in their response to a question rather than say anything. For example, where there were unsubstantiated allegations against an employee. Similarly, personality differences or grievances between employees can be difficult to explain when it is matter of opinion. In these situations, it is open to you to say nothing when asked direct questions such as “would you hire this person again?” or “do you have any concerns about this person’s ability to work with vulnerable persons?” If you choose to elaborate, qualify your comments carefully.
Some organisations may be concerned that they owe a duty to advise a prospective employer about an employee where they have concerns about the employee posing a risk to, for example, children. If you are asked for a reference for an employee moving into a child facing role, you should be honest regarding any child safety concerns, especially if asked a direct question about the person’s suitability to work with children. However, it’s extremely important to:
Employers need to be mindful of their responses to reference checks, keeping in mind an environment of increased litigation regarding defamation.
We recommend that organisations mitigate their risk by taking the following actions.
For further information or guidance, please do not hesitate to contact us.
If you suspect a data or privacy breach, you need to act quickly to stem that damage and respond to affected parties.
Many organisations also grapple with the question of whether they need to report any privacy or data breach to the regulator.
Based on our work with clients who have suffered a suspected privacy breach and conducted internal investigations, here are our top 10 tips to guarantee that you’re ticking all the right boxes:
Our privacy team here at Moores can assist by providing guidance and advice on the likely implications of a data breach, reviewing policies and procedures and providing your organisation with privacy training. We want to ensure that you feel empowered to run an effective and useful privacy investigation internally, keeping any potential risk and liability minimised. For advice or guidance, please do not hesitate to contact us.
Privacy Training
When was the last time your staff did privacy training? Moores privacy training is informative, engaging and entertaining and regularly receives excellent participant feedback and learning outcomes.
Simulated Data Breach Workshop – Expressions of interest
We’re also taking Expressions of Interest for our Simulated Data Breach Workshop. If you’ve wanted to test your own policies, systems and responses against a breach, but without the risk, this session is for you. Aimed at privacy officers, this Workshop takes participants through a simulated data breach, from containment, through investigation, to writing a press release.
The outbreak of the Coronavirus has presented significant challenges for employers, schools and universities balancing their duty of care with their occupational health and safety and anti-discrimination obligations. Perhaps unsurprisingly, requests for individuals who have recently visited China (and in some cases, any country where there has been cases of coronavirus) to remain home for 14 days, has led to an increase in complaints of racism and discrimination.
This article explores the relevant obligations for employers and educational organisations, and sets out our practical tips for balancing competing obligations.
What is coronavirus?
Coronavirus (2019-nCOV or novel coronavirus) is a new strain of coronavirus that had previously not been identified in humans. Coronaviruses are a large family of viruses that cause a range of illnesses from the common cold to more severe diseases such as MERS and SARS.
The outbreak of the novel coronavirus is reported to have originated in Wuhan, China in December 2019. It is suspected to have been transmitted from animals. It causes cold like symptoms such as fever and cough but can progress into pneumonia, kidney failure and breathing difficulties.
As of 10 February 2020, the Federal Government reported that there have been 37,562 confirmed cases of coronavirus and 813 reported deaths. The fatality rate is currently 2.16%. In Australia, the Federal Government reported 15 confirmed cases as of 7 February 2020 (no deaths).
Previously, the Australian government was requiring that individuals who had visited Wuhan or had been in contact with individuals who had a confirmed case of novel coronavirus isolate themselves for 14 days. On 1 February 2020, this was expanded given an increasing risk.
As of 10 February 2020, the Australian Government issued an alert with the following requirements:
These requirements apply to students attending childcare, school or higher education. There are also travel restrictions for individuals who have left mainland China only on or after 1 February 2020.
As at 10 February 2020, isolation is not required yourself if you:
Employers and educational authorities have a duty of care to students and staff, and legal obligations to maintain a safe learning and working environment. This is also reflected in common law and generally seen to be an implied term of the employment contract.
However, organisations need to be careful that any safeguards put in place are reasonable and necessary to mitigate the risks, and do not breach of anti-discrimination laws. For example, blanket bans on individuals from mainland China or affected countries attending work or school are unlikely to be reasonable, and create a risk of discrimination claims.
Organisations need to be aware of several risks other than health and safety including discrimination, underpayment and failure to educate claims.
Organisations should only impose health and safety restrictions consistent with departmental guidelines, as the failure to do so could lead to discrimination claims. For example, a NSW school is facing scrutiny for asking a year 10 student from South Korea to leave her dorm at a boarding school. The international student had not travelled to China but was asked to leave as the school decided to ask all students who had recently travelled to “other affected areas” to not attend the school for 14 days.
It is also important to note that the governmental restrictions only apply to individuals who have transited through mainland China on or after 1 February 2020. For schools, this quarantine may have little effect since most students should have returned to Australia before 1 February 2020.
If an employee or student is required to quarantine themselves for 14 days (in accordance with governmental guidelines), organisations will still need to comply with their other obligations. For employers, support should be provided in terms of allowing the employee to work from home if possible or providing them with different leave options. Personal leave is available not just when an employee is unwell, but when the employee is caring for a family or household member who is affected by an unexpected emergency.
For schools, the student should be given homework or remote learning opportunities to avoid failure to educate claims. For international boarders, schools will need to assist in organising alternative accommodation if they are unable to stay in the boarding house.
Australia has close ties with China and several other countries affected by the coronavirus. Many organisations and schools will have employees or students who have been personally affected by the coronavirus or have family members who are. Care and sensitivity is crucial to supporting those affected.
At a minimum, we recommend that organisations take the following steps.
For more information or guidance regarding your obligations please do not hesitate to contact us.
The unfortunate complications encountered by Celeste Barber’s Bushfire Fundraiser are an example of good intentions colliding with the legal concept of charitable purpose. Here are two lessons that all charities can learn from the saga.
Celeste Barber’s extraordinarily successful Bushfire Fundraiser through Facebook broke records, raising more than $51 million. The fundraiser was accompanied by the following text:
“Want to join me in supporting a good cause? I’m raising money for The Trustee for NSW Rural Fire Service & Brigades Donations Fund and your contribution will make an impact, whether you donate a lot or a little. Anything helps. Thank you for your support.”
As with all Facebook fundraisers, donations went to the Paypal Giving Fund, a public ancillary fund set up to receive and distribute funds to deductible gift recipients.
Given the large amount of funds raised and the relatively limited purpose of the NSW Rural Fire Service & Brigades Donation Fund (the RFS Fund) donors and media then began asking how the money was going to be distributed and to whom. There were suggestions (including from Ms Barber) that the funds would be distributed across a range of different organisations and states/territories.
At this point Barber learned (through some “pretty long and pretty boring conversations”) that things were not so simple – amongst other things, the RFS Fund trust deed prevents money raised from going to anyone other than the RFS. Once the funds go to the RFS, they can’t (easily) be distributed by the RFS to bushfire relief organisations, such as those providing housing or services to affected families.
Others have proposed solutions for a broader distribution of funds. Below, we focus on the principles at play and key lessons charities can take away.
The first lesson is for charities (and individuals and organisations) who fundraise – be careful when articulating the purpose you are fundraising for, and how you intend to spend the money.
Some donors have asked why PayPal doesn’t simply distribute the funds raised to a number of different organisations. Unfortunately, PayPal can’t do so without potentially breaching the law. The accompanying text for the Celeste Barber Fundraiser clearly said funds would go to the RFS Fund. The Facebook page also listed the RFS Fund as the charity the fundraiser was “benefitting”. There are terms on PayPal’s website that state that it retains exclusive control over how funds are distributed, but overall it was very clear to donors who read the page that money was going to the RFS Fund and not to other organisations or funds.
This constrains how the funds can be distributed. If PayPal distributed the funds in a manner contrary to the clear purpose of the fundraiser, it could be in breach of fundraising, consumer and trust law:
These are sensible restrictions, but may have unintended consequences for charities that are not careful with their fundraising materials. For example, a health care charity might say in its fundraising materials that “100% of your donation goes to free hearing tests”. This fairly innocuous statement could breach the above laws if the health care charity used some of the money for unrelated admin costs, or a different program (such as eye-sight tests).
Charities can avoid this through clear, careful fundraising communication. Instead of “100% of donations” charities could say “Your donation will help us provide free services like hearing tests”. This is makes the charity’s intended use for the donation clear but still gives that charity flexibility if circumstances change.
The second lesson is for charities who have received funds– you can only spend funds to further your charity’s purpose.
The RFS Fund Trust Deed states that its Trustees must use its funds:
“to or for the Brigades in order to enable or assist [RFS] to meet the costs of purchasing and maintaining fire-fighting equipment and facilities, providing training and resources and/or to otherwise meet the administrative expense of the brigade which are associated with their volunteer-based service activities.”
Supporting Brigades is important for bushfire preparedness, but given the amount raised donors (including Ms Barber) wanted to provide broader relief – including to wildlife and affected families. The restrictions of the RFS Fund will make this very difficult to achieve.
This is not a failure of charity law. Being purpose-driven (rather than profit-driven) is what separates charities from the for-profit sector. Purpose helps donors know what they are supporting. It also provides charity Boards with a framework to guide their decisions. There a good reasons why charities can’t stray outside their purpose.
For charities, this is a reminder to be familiar with your purpose (usually set out in your governing document), and make sure your resources are directed towards it. We often engage with charities with good intentions that want to support a cause or project outside their usual activities. All too often the charity’s focus is on the value of the cause or project without first establishing whether it is consistent with the purpose of the charity.
The Celeste Barber fundraiser is a heartening example of generosity in the face of disaster, but it also highlights the importance of careful fundraising communications and awareness of charitable purpose. Charities should ensure they understand these principles.
If you need help, have a conversation with our For Purpose team at Moores. It won’t be long or boring, and it might be just what you need to ensure your fundraising efforts don’t go awry. For more informaiton, please do not hesitate to contact us.
The Education and Training Reform Regulations 2017 have now passed as amended with effect from 20 January 2020.
Schools which operate an early learning centre now have capacity to operate their ELCs without automatically breaching the not-for-profit regulations.
Firstly, the operation of an ELC is not automatically compliant, irrespective of its structure and operations.
ELCs must still, under the regs:
Only services in the (now) three years before prep (draft regs said two) will meet the exemption in the regs (ie, 3 and 4 year old kinder years, and the year before). Services akin to daycare which accept babies up to the year before 3 year old kinder are not recognised as exempt. This has important implications for their structure (whether it needs to be separate from school and other “kinder” ELC for example) and registration for funding and registration as a charity -we can advise.
The issue of “feeder” also remains. This is restrictive and may pose challenges for schools where many ELC students do not go onto prep, or where they go on to attend another school in the school system, but not the school which operates the ELC. Legal and policy documentation, including within school systems, becomes important here. We can assist.
Broadly, our advice remains consistent and is now further confirmed that independent and Catholic schools still:
For further guidance or if you have any queries about this new regulation, please do not hesitate to contact us.
It’s common for a house, car or other item to be gifted to a beneficiary via a Will. However, there could be unintended consequences if that property is sold prior to death, or can’t be found.
Everyone owns something that has particular sentimental value. It could be anything, an item of jewellery, the family home, or an investment that has withstood the test of time. It’s only natural that when we die we might want these items to be passed directly to a loved one, rather than put into the general ‘pot’ of assets to be sold.
The key question is: What happens to a gift of specific property in a Will, if you no longer own the gifted item at the time of your death?
Amendments to the Powers of Attorney Act 2014 (Vic) and Administration and Probate Act 1958 (Vic) which commenced on 1 November 2017 have helped to clarify the answer to this question, but also raise new potential issues.
The general principle is that the gift of a specific item under a Will fails, if the item is not owned at time of death. This is called ‘ademption’ and it results in the Will being read as if the specific gift was never made. This can cause problems in a number of scenarios, for example:
In the Will, son Max is left the family home and daughter Maxine is left the residue of the estate. The Will-maker sells the family home before their death. What happens?
The answer is that Max misses out and Maxine gets the whole estate. The rationale for this rule is simple: in selling the property, the Will-maker ought to have been aware of their own Will, and must have intended that result.
But what if the Will-maker didn’t deliberately sell the property? What if the property was sold by an attorney who may not have known what the Will said? Worse still, what if the Will-maker lacked capacity and had no chance to update their Will accordingly?
Historically, it was bad luck for Max. In more recent years, however, the courts have attempted to address this issue by recognising a potential exception to the ademption rule.
In Simpson v Cunning [2011] VSC 466, the Court recognised an exception to the ademption rule in the case of property intended to be gifted via a Will being sold by an attorney.
However, this exception could only apply if the Will-maker lacked capacity when the property was sold and the Court was satisfied the Will-maker would have intended the beneficiary (Max in the above example) to have a share of the remaining proceeds. Further, as this is not binding legislation, it is difficult for Will executors to rely on this exception without a costly application to the court seeking guidance to confirm that the exception applies.
A legislative exception has also existed under the Guardianship and Administration Act 1958 (Vic) but only applied where specifically gifted property had been sold or disposed of by administrators appointed by VCAT to act for disabled or incapacitated persons. This exception continues.
Since 2017, Section 83A of the Powers of Attorney Act 2014 (Vic) introduced an exception to the ademption principle for any property gifted by a Will which is sold by an attorney. This section provides that a beneficiary under a Will has the same interest in any money or other property arising from a sale, mortgage, exchange, partition or other disposition of gifted property that they would have had if the disposition had not occurred.
Unlike the court recognised exemption, this legislative exception applies regardless of whether the Will-maker knew that the property was being sold and had the capacity to change their Will.
There is no requirement for the attorney (who may not even know what the Will says) to keep the proceeds of sale from a gifted item separate to the Will-maker’s other assets. However, if the sale proceeds are intermingled with other assets, it can be difficult at the time of death to trace the proceeds. Accordingly, it would be preferable for the Will to specify a backup or alternate provision for a beneficiary if the gifted asset (eg property) is sold during the Will-maker’s lifetime.
Where this exception causes unintended consequences, then a further new Section 50 of the Administration and Probate Act 1958 (Vic) allows a beneficiary of a Will to apply to the court to rectify this. This requires that a beneficiary under a Will gains an ‘unjust advantage’ or suffers and ‘unjust disadvantage’. We are yet to see exactly what this means but perhaps, using the initial example above:
The family home is sold and the proceeds paid towards a refundable accommodation deposit (RAD), while all other assets are used to cover the Will-maker’s daily living costs. Then it could be that Max would get the full proceeds of the RAD (applying Section 83A), while Maxine is left empty handed.
Perhaps the court would consider that an ‘unjust advantage’ and step in to rectify the distributions?
The new provisions impact on strategy and drafting for both Wills and Powers of Attorney. In particular:
For more information, please do not hesitate to contact us .
All registered schools must have a Bushfire Preparedness Plan which complies with the minimum standards.
The VRQA prompted schools to review these last October. We recommend they be reviewed now in light of the devastating bushfires, with particular regard to:
Schools on the Bushfire At Risk Register are required to close on days which are declared Code Red. The Register is available online at the Victorian Department of Education website. Many schools, even those which are not considered “bushy” and which are in the middle of suburbs, are on the register, in addition to regional schools.
Schools should review the Victorian Department of Education’s Air Quality and activity guide, noting that bushfire smoke may require cancellation of all outdoor activities and re-calibration of air-conditioning systems. Staff should also be reminded on imminent PD days of students who have an asthma management plan.
If your school is looking to kick off the year with a bushfire fundraiser, non-government schools in NSW must comply with the Department’s Not for Profit guidelines, including the requirement that any fundraising must benefit students at the school and therefore be connected to curriculum.
Moores can assist Schools with ensuring their bushfire management plans are up to date and all policies compliant. We can also assist with any specific queries about the extent of regulatory compliance and duty of care, as well as critical incident plans and responses.
For further information, please do not hesitate to contact us.
The Commission for Children and Young People (CCYP) has released data from the Reportable Conduct Scheme’s (the Scheme) second year of operation in 2018/19. The data has provided a helpful insight into the mandatory reports made under the Scheme and provides lessons to organisations on priorities moving forward.
In 2018/19, the CCYP received a total of 805 mandatory notifications. This is similar to the 806 notifications received in 2017/18 and demonstrates a steady number of notifications over the first two years of the Scheme. However, the CCYP has indicated that they expect this number to increase, especially in the religious bodies and health and disability sectors, which has had a surprisingly low number of notifications.
Some other key statistics include:
As the Scheme progresses through its third year, we recommend that organisations:
Moores has experience working with organisations in determining if a mandatory notification needs to be made, providing training on the Scheme and assisting in investigations.
For further information or guidance please do not hesitate to contact us.