Following on from Part 1, we continue to summarise the key duties of a NFP director based on the standards in Victoria. Directors should ensure they are familiar with the rules in their states, which may vary.
Tax and Superannuation:
Directors should always take reasonable care to ensure that the tax affairs of the organisation are in order. While NFPs do not generally pay income tax, there are other tax obligations that may apply.
In particular, directors should ensure that the organisation is meeting its obligation to pay superannuation and pay as you go withholding tax (PAYGW). In certain circumstances, the ATO can require a director to pay for outstanding superannuation and PAYGW liabilities.
Directors may also be liable where the organisation is found to have committed a tax offence (such as making false or misleading statements to the ATO). This will generally only occur where the director was involved in the offence, including by aiding, abetting, counselling or procuring the act or omission that led to the offence.
Occupational Health and Safety Laws (OH&S Laws):
Broadly, the organisation, as an employer, has obligations to eliminate or minimise the risk of harm to the health and safety of workers.
Directors should take steps to make sure that the organisation is complying with its OH&S obligations. For example, by understanding the risks and hazards associated with the organisation’s operations and making sure that it is properly resourced to eliminate or minimise those risks.
If the organisation breaches that duty because a director failed to take reasonable care, the director may be guilty of an offence.
Breaches of OH&S laws can lead to civil or criminal penalties as well as personal liability for any loss suffered and imprisonment in very serious cases.
Directors should be aware of laws regarding the responsibilities of employers and the rights of employees.
The Fair Work Act 2009 (Cth) covers a range of employment issues, including unfair dismissal, the National Employment Standards, adverse action and redundancy.
Generally, a board is not directly involved in the daily considerations of work conditions and pay. However personal liability may arise where a director is involved in a contravention (e.g. by aiding, abetting, inducing or being knowingly concerned with the contravention).
Child Safety Laws:
In Victoria, organisations that exercise care, supervision or authority over children have a responsibility to reduce the risk of child abuse. Broadly, if a person knew of a substantial risk of child abuse by someone associated with the organisation; and had the power or responsibility to reduce or remove the risk, but negligently failed to do so, that person may be charged with a criminal ‘failure to protect’ offence.
Competition and Consumer Laws:
There are various protections for consumers under Australian consumer laws including prohibitions on price fixing, cartel conduct or engaging in false or misleading conduct.
A director may be liable where they were in some way involved in the contravention (for example, if they aided or abetted, induced or were knowingly involved in the contravention).
To read more…
Click here for Part 1 – Introduction and Duties and liabilities of directors
Click here for Part 3 – How can directors protect themselves?
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