ASX releases guidance on transitioning to 4th Edition of ASX Recommendations. Last week, ASX released a step-by-step guide for ASX listed entities wishing to transition now to fully comply with the 4th Edition of the ASX Recommendations; noting this guide assumes full compliance with the current 3rd Edition. While the 4th Edition only takes effect for an entity’s first full financial year commencing on or after 1 January 2020, ASX has encouraged its earlier adoption and included an amended Appendix 4G for those wishing to do so. Directors should familiarise themselves with the 4th Edition. ASX listed companies should be workshopping: (i) how their corporate governance practices measure up against the 4th Edition (including what systems might need to put in place to comply with it or otherwise how departures will be explained); and (ii) whether to opt for earlier adoption (a decision likely to be informed by the extent of changes required). Directors are reminded that ASX is conducting a national roadshow on the 4th Edition during the week commencing 6 May 2019. Click here for information on venue and timings.   

ATO releases controversial draft ruling regarding demerger relief. On 21 March 2019, the ATO released a draft ruling on what constitutes “restructuring” for the purposes of the demerger relief provisions under the Income Assessment Act 1997. As expected, the ATO has taken a broad view of what would count as a “restructuring”, with the intention that the requirements to qualify for demerger relief are more difficult to satisfy. Submissions can be made on the draft ruling until 30 April 2019. Directors of companies undertaking or considering a demerger transaction should carefully consider the potential impact of this draft ruling, noting that the circumstances in which the ATO will consider demerger relief is available appear very limited. While the ruling remains under consultation, these proposals signal a change in approach being taken by the ATO to rulings on demerger issues. See G+T article “ATO sets the first goal post on demergers” for more commentary on these developments including the key takeaways.

Government commits $35 million to extend Federal Court’s jurisdiction to corporate crime. Last week, the Government announced that, for the first time, the jurisdiction of the Federal Court of Australia will expand to include corporate crime. The announcement was accompanied by an additional $35 million appropriation in the 2019-20 Budget. Directors should note that these moves are consistent with a trend towards more litigation, both civil and criminal – perhaps pre-empting increased workflow from referrals arising out of the Royal Commission and ASIC’s shift to a ‘why not litigate’ enforcement approach. There is a clear drive by Government to ensure increased enforcement activity by regulators is backed by appropriate capacity within the Australian court system — allowing matters to be heard and penalties handed out faster. Directors should ensure their companies’ compliance programmes are up to date and being enforced (including that those responsible for compliance are aware of the harsher penalties that, as of last month, now apply for corporate and financial sector misconduct). 

Government releases new procurement-connected policy. From 1 July 2019, businesses seeking to tender for Commonwealth Government procurement contracts over $4 million (inclusive of GST) must provide a statement from the ATO to show they have a satisfactory tax record. The new procurement-connected policy is designed to increase the integrity of supply chains and government procurement processes and forms part of the Government’s focus generally to tackle black economy practices and support businesses that ‘are doing the right thing’. See the Government’s media release.


RBA reviewing interest-rate setting tomorrow. Despite the RBA's official cash rate being held at a record low of 1.5% since August 2016 and calls for a cut to counter forecast sluggish economic growth, the drop in Australia’s unemployment rate to 4.9% (being the lowest level in eight years) will likely see rates kept steady for April.

Budget 2019-20 released at 7.30pm (AEDT) tomorrow. Among the ‘big picture’ predictions for the federal budget are a better than expected surplus for 2019/20, forecast 3% economic growth for 2019/20, forecast 5% unemployment rate for 2019/20, reduced migration cap, a $75 cash payment to ease power bill pain for consumers, and initiatives to create 1.25 million jobs over the next five years. With so many measures already leaked, little room remains for genuine surprises, although acceleration of previously legislated tax cuts is one possibility.

Brexit update. Following an unprecedented process of eight “indicative votes” by UK Parliamentarians last week on Brexit options (including a customs union with the EU and a second referendum), none secured clear backing. There remains therefore no consensus over how the UK will leave the EU, with the most likely scenario now being yet another round of indicative votes on various options before a fourth Parliamentary vote on a Brexit deal prior to the delayed Brexit deadline of 12 April. 

Daylight saving commences at 7:00am AEST this Sunday. Daylight saving is not observed in Queensland, WA or the Northern Territory. From next Monday 8 April 2019, Perth will only be two hours behind Sydney time and the Market Announcements Office will open at 7:00am AEST and close at 7:30pm AEST on each trading day.