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The Department of Home Affairs has issued its draft guidance “Modern Slavery Act 2018: Draft Guidance for Reporting Entities” (Draft Guidance) for the new Modern Slavery Act 2018 (Cth) (the Act).
Welcome to Edition 42 of Boardroom Brief.
This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.
Turnbull Government delivers on key housing affordability measures. Recently, the Treasurer of Commonwealth of Australia, the Hon Scott Morrison in a joint media release with Assistant Minister to the Treasurer, the Hon. Michael Sukkar MP, regarding the passage of the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017, which implements an annual vacancy charge on foreign owners of residential real estate where property is not occupied or genuinely available on the rental market for at least six months in a 12 month period. The charge provides a financial incentive for the foreign owner to make their property available on the rental market, helping provide more homes for Australian families. The legislation also enacts better targeted deductions relating to residential investment properties, disallowing claims for travel expense deductions and limiting plant and equipment depreciation deductions to assets not previously used. Directors of companies exposed to the real estate cycle should continue to monitor the increasingly complex array of State and Commonwealth legal settings affecting the Australian housing market, which continues to get more than its fair share of the financial press. Although most of the key policy levers are the domain of the States, the Commonwealth continues to tinker around the edges. The next Federal election will almost certainly see negative gearing front and center of the debate on tax reform.
Australian dollar weakens further. Related to housing; since mid-October the Australian dollar has softened from around USD 0.7825 to just under USD 0.76. Australia’s reliance on foreign investors to fund our large accumulated overseas debt is dependent on offering an attractive yield or a cheaper currency. These factors will be exacerbated if there is some waning in investor confidence. Recent developments in the housing market and the near term risks to that market are unlikely to go unnoticed. With the continuing volatility of the Australian dollar, directors need to ensure they have appropriate strategies in place to manage the effect of currency on their operations.
Australian Accounting Standards Board releases discussion paper on financial reporting for charities. The Australian Accounting Standards Board (AASB) has released a discussion paper, Improving Financial Reporting for Australian Charities (Paper). The Paper sets out options for the improvement of the framework for financial reporting for charity stakeholders. Australian charities are currently covered by a minimum of 18 sets of regulations and 10 regulators. This framework is complex, inconsistent and results in duplication of reporting requirements. The options set out in the Paper are intended as talking points, not recommendations, with any discussion to be considered as part of the Australian Charities and Not-For-Profits Commission legislative review (Review). The Review commences after 3 December 2017 and will run for a period of 6 months. The AASB is conducting discussion review forums during the Review. The first forums are being held this month.
Rise in shareholder activism. As AGM season is well underway, topping the list of shareholder queries so far this year have been environmental issues, human rights, gambling and corporate ethics. Director independence, director elections, gender diversity and pay for senior management are further key issues in the spotlight. AGMs have seen an increase in shareholder activism and Solomon Lew, for instance, has formally “declared war” on the Myer board and announced it will vote its 10.8 per cent Myer shareholding against the three directors facing re-election, including the incoming chairman at the AGM on 24 November.