Community & Associations Newsletter – March 2019
The year has started with a focus on the following matters that we discuss in this newsletter:
- Royal Commission into Aged Care and steps operators should be taking.
- Modern slavery legislation and its impact on your operations.
- GST on supplies by bare trustees and gift givers
- The decluttering phenomena and the strain it is placing on charities.
We trust you will enjoy this read.
Carroll & O’Dea Communities and Associations Team
Aged Care Royal Commission
The Royal Commission into Aged Care Quality and Safety (“the Royal Commission”) commenced its hearings in Adelaide on 11 February, 2019.
Modern Slavery Legislation: Commonwealth and NSW
On 29 November 2018 the Federal Parliament passed the Modern Slavery Act 2018 (“the Commonwealth Act”), which requires “entities” with annual turnover of over $100 million “to report on the risks of modern slavery in their operations and supply chains and actions” that the entity has taken to address “those risks, and for related purposes”.
The Commonwealth Act follows the similar legislation passed by the New South Wales parliament last year (which we covered in the April 2018 edition), which made NSW the first Australian jurisdiction to enact such legislation.
GST Supplies by a Bare Trust
A bare trustee acts on the instructions of the beneficiary.
Even in circumstances where a trustee holds the legal title to trust property on trust for a beneficiary, the trustee is still acting on behalf of and as directed by the beneficiary. This means that under the GST Act, the beneficiary, as opposed to the trustee, has the obligations in regards to supply or acquisition. The 2008/3 GST Ruling extends this to a taxable supply in circumstances where a trustee, as directed by the beneficiary, transfers legal title to a third party. As the beneficiary is causing the supply to be made during the course of its enterprise, the beneficiary is responsible for GST.
Notwithstanding this analysis of liability for payment of GST the trustee of a bare trust can satisfy tax invoice requirements relating to supply or acquisition in the course of an enterprise because the trustee is acting on behalf of the beneficiary. The trustee can also be the contracting party on behalf of the supplier where a supplier and recipient agree to apply the margin scheme or that a supply is a going concern, but it is the beneficiary and not the trustee carrying on the enterprise for the purposes of the taxable supply.
The Ruling also identifies the beneficiary as “carrying on a business” notwithstanding that that legal title to the assets of an enterprise be held by the entity carrying on the enterprise.
GST on Supplies of Gifts
Where an entity is registered for GST or required to be registered for GST and makes a taxable supply (eg transfers title to non-residential land) then that transfer is a taxable supply and GST is payable on one eleventh the value of the consideration paid.
The Konmarie Method: Minamilism Sweeping The Nation
Netflix’s new program, “Tidying Up”, hosted by Marie Kondo is taking Australia by storm. The ‘KonMarie method’ of culling household items, books and clothing is inspiring the public to de-clutter their homes of unwanted, items, with the end goal of achieving minimalism. Charities are being inundated with donations. Is this good or bad?
Carroll & O’Dea congratulates Anna Burke on being named on Australia Day as an Officer of the Order of Australia for 2019. Anna’s brother, Paul Burke, Special Counsel at Carroll & O’Dea, has expressed his pride for his well-deserving sister. He has commended her for the many years she has spent serving the Australian people as a dedicated federal Labor politician and as an advocate for charities and not-for-profit organisations, Paul says that Anna’s appointment is a testament to her ongoing commitment and support for her community.