Not-for-Profit Newsletter – May 2012
Published on May 18, 2012
Australian Charities and Not-for-profits Commission Update
As the Commission’s commencement date draws closer there continue to be amendments to how this important new scheme will operate. We will be watching for the legislation release to address any matters which we consider remain unacceptable, particularly if the drafting has not taken the Sector’s various submissions into account.
“In Australia” test
Accompanying the introduction of ACNC is a new “In Australia” test which an income tax exempt entity must satisfy if it wishes to retain exemption and concessions.
A new draft definition of “in Australia” states that such an entity must operate principally in Australia.
There is some provision for some funds which can be sent overseas, or donated to non charities, but overall the entity must have most activities here, be managed here, and incur expenditure here.
Funds from bequests, government grants or donations which did not receive a tax deduction, can be sent overseas provided strict governance is observed and the local entity can trace how the funds are used.
For a deductible gift recipient, the test is stricter: the DGR must:
Ø operate solely in Australia; and
Ø pursue its purposes solely in Australia.
Overseas aid funds and developed country relief funds are exempt from this test.
Fund entities on the Register of Environmental Organisations are also exempt.
We will continue to provide updates as changes occur.
ASIC’s National Business Names Registration Service commencing 28 May 2012
The proposed new National Business Names Registration Service to be administered by ASIC begins on 28 May 2012. The national service will replace current state and territory based services meaning all business names will be registered nationally and businesses will only need to register with one service to achieve registration of their business names Australia wide.
Existing business name registrations will automatically be transferred to the national register. Pre-existing identical registered business name registrations transferred from the state and territory registers will exist side by side on the new register.
We strongly recommend that all unregistered business names that your entity is using or proposes to use should be registered with your state or territory register before 28 May 2012 to avoid refusal on the grounds that a conflicting business name is already registered, albeit that it may have been registered in another jurisdiction and to avoid having to satisfy more stringent approval requirements that will be introduced with the new national system.
Registering a business name does not give you protection in, or ownership of that name. In order to protect intellectual property in your brand you could register it as a trade mark in Australia.
We can assist you with applications to register your business names, trade marks and the protection of your intellectual property rights in your brand.
Recent Decisions of Note
Sturt v Bishop of Newcastle
Many readers may be aware of the recent New South Wales Supreme Court decision of Sturt and Anor v the Right Reverend Dr Brian Farran, Bishop of Newcastle and Ors
(full decision available here http://www.caselaw.nsw.gov.au/action/PJUDG?jgmtid=158179
) which looked at disciplinary action taken against two priests by the Anglican Bishop of Newcastle acting on advice of the internal Professional Standards Board.
The case is important as it confirms a number of previously determined issues relevant to the Church sector, particularly that religious bodies are considered by Courts to be voluntary associations and that Priests and other religious can be viewed as employees at law in certain circumstances. The Court went on to say that the Defendants had acted appropriately in dismissing the Priests by relying upon their internal Professional Standards protocol.
ASIC v James Hardie Industries Ltd Directors
Last week the High Court determined that seven non-executive directors of James Hardie Industries Ltd had breached their duties as a director by approving an ASX press release which they knew, or should have known was incorrect (full decision available here http://www.austlii.edu.au/au/cases/cth/HCA/2012/17.html
This case builds upon last year’s Centro decision which highlighted the fact that directors must be actively involved in the affairs of the company and be asking questions if things don’t look right. The Court’s stance on this really highlights that it is important to appoint directors with the requisite skills and diligence. People considering incorporating a Not-For-Profit entity should be aware of these requirements before opting to incorporate under the Corporations Act and consider what alternatives there are for incorporation.
The Good News
Richard Branson’s not for profit branch of his eclectic Virgin Group has just announced a scholarship programme to assist young women through college and into space, yes aspiring young astronauts should contact the Galactic Unite STEM Scholarship Program.
Britain have had a big week in the not-for-profit sector with The Handmade Bakery, Britain’s first not-for-profit community bakery located in West Yorkshire ‘rising’ to prominence following a write up in the Times (let’s hope they can ‘prove’ themselves as an entity without relying on making on ‘dough’). Meanwhile Bradfield resident David Lodge has found success after the lambs which he hand reared on his not-for-profit small hold farm were allowed to once again (after a 100 year absence) roam the Irlams sea wall in Little Oakley, which apparently is good for biodiversity.
Still in England, congratulations to auto mechanic Lawrence Nichols from Auto Devotion in Norwich who was awarded a Courtesy Award by the not-for-profit organisation known as the National Campaign for Courtesy which, as you would imagine, recognises and awards examples of politeness by awarding them with a certificate. Nichols was nominated by a 76 year old Poringland local know as Miss Sherry who was chuffed to discover that her car service came in at 200 pounds when she expected the bill to be around the 400 pound mark. Rather British wouldn’t you say old chap?