The Australian Nonprofit Sector Legal and Accounting Almanac 2013

INTRODUCTION CASES For a number of years, Professor Myles McGregor-Lowndes, Frances Hannah and Anne Overell have compiled one to two page summaries of cases involving nonprofit organisations and published them on The Australian Centre for Philanthropy and Nonprofit Studies, Developing Your Organisation (DYO) website.1 You can be alerted of new case summaries as they are posted to the DYO website by subscribing to the ACPNS RSS feed or the ACPNS twitter service.2 There were some very significant cases during 2013, such as Commissioner of Taxation v Cancer & Bowel Research Association (see case notes 2.8.2 and 2.8.11), The Hunger Project case which is under appeal, but could change the face of PBI jurisprudence (see case note 2.8.7) while Home Health Pty Ltd retained the PBI status quo but might have been different if appealed (see case note 2.8.8). For sheer interest there is nothing better in my 30 odd years of reading tax and charity judgements than case involving The Study and Prevention of Psychological Diseases Foundation Incorporated (see case note 2.1.1). It even rivals some of the more bizarre cases from the US jurisdiction of which St Joseph Abbey v Castille (case note 2.10.9) is certainly ‘dead centre’. A set of cases which stand out for attention are those involving New Zealand’s Christchurch Cathedral which anyone with responsibility for heritage-listed buildings should study carefully, for implications in relation to their own circumstances. A number of cases summarised in this Almanac are working their way through the appeals process and care should be taken with their application. In addition, some of the cases are from jurisdictions outside Australia, and readers should exercise caution when considering the implications of these cases for Australian law. LEGISLATION The Almanac includes a review of major statutory amendments during 2013, which are relevant to the nonprofit sector in all Australian jurisdictions. Special thanks must go to Nathan MacDonald and the JusticeConnect team for providing legislative updates for Victoria. SPECIAL ISSUES DURING 2013 A number of legal practitioners have contributed articles on significant legal issues facing nonprofit organisations: charitable trusts giving to government entities (Alice Macdougall); workplace bullying (Tim Longwill); and privacy (James Tan and Nina Brewer). WORLD ROUND-UP Major developments from the UK and Ireland (Kerry O’Halloran), Canada (Peter Broder), New Zealand (Michael Gousmett and Susan Barker) and Jamaica (Frances Hannah) are all summarised in a review of a significant part of the common law charity jurisdictions. WHAT DOES 2014 HOLD The final section moves from looking in the rear view mirror to peering out the front windscreen to discern the reform agenda. The view from the windscreen in 2013 was of considerable reform traffic at the Commonwealth level jostling for a place in the parliamentary agenda. This year is quite different with a smaller number of vehicles ahead, but the potential for significant impact.

Crypto Topics and Applications I

In this chapter, we discuss four related areas of cryptology, namely, authentication, hashing, message authentication codes (MACs), and digital signatures. These topics represent active and growing research topics in cryptology. Space limitations allow us to concentrate only on the essential aspects of each topic. The bibliography is intended to supplement our survey. We have selected those items which providean overview of the current state of knowledge in the above areas. Authentication deals with the problem of providing assurance to a receiver that a communicated message originates from a particular transmitter, and that the received message has the same content as the transmitted message. A typical authentication scenario occurs in computer networks, where the identity of two communicating entities is established by means of authentication. Hashing is concerned with the problem of providing a relatively short digest–fingerprint of a much longer message or electronic document. A hashing function must satisfy (at least) the critical requirement that the fingerprints of two distinct messages are distinct. Hashing functions have numerous applications in cryptology. They are often used as primitives to construct other cryptographic functions. MACs are symmetric key primitives that provide message integrity against active spoofing by appending a cryptographic checksum to a message that is verifiable only by the intended recipient of the message. Message authentication is one of the most important ways of ensuring the integrity of information that is transferred by electronic means. Digital signatures provide electronic equivalents of handwritten signatures. They preserve the essential features of handwritten signatures and can be used to sign electronic documents. Digital signatures can potentially be used in legal contexts.

Crypto topics and applications II

In this chapter we continue the exposition of crypto topics that was begun in the previous chapter. This chapter covers secret sharing, threshold cryptography, signature schemes, and finally quantum key distribution and quantum cryptography. As in the previous chapter, we have focused only on the essentials of each topic. We have selected in the bibliography a list of representative items, which can be consulted for further details. First we give a synopsis of the topics that are discussed in this chapter. Secret sharing is concerned with the problem of how to distribute a secret among a group of participating individuals, or entities, so that only predesignated collections of individuals are able to recreate the secret by collectively combining the parts of the secret that were allocated to them. There are numerous applications of secret-sharing schemes in practice. One example of secret sharing occurs in banking. For instance, the combination to a vault may be distributed in such a way that only specified collections of employees can open the vault by pooling their portions of the combination. In this way the authority to initiate an action, e.g., the opening of a bank vault, is divided for the purposes of providing security and for added functionality, such as auditing, if required. Threshold cryptography is a relatively recently studied area of cryptography. It deals with situations where the authority to initiate or perform cryptographic operations is distributed among a group of individuals. Many of the standard operations of single-user cryptography have counterparts in threshold cryptography. Signature schemes deal with the problem of generating and verifying electronic) signatures for documents.Asubclass of signature schemes is concerned with the shared-generation and the sharedverification of signatures, where a collaborating group of individuals are required to perform these actions. A new paradigm of security has recently been introduced into cryptography with the emergence of the ideas of quantum key distribution and quantum cryptography. While classical cryptography employs various mathematical techniques to restrict eavesdroppers from learning the contents of encrypted messages, in quantum cryptography the information is protected by the laws of physics.

Defining and Accounting for Fundraising Income and Expenses : Executive Summary : ACPNS Current issues Information Sheet 2014/2

Executive summary of Report examining definitions of fundraising and formal Australian accounting standards to ascertain their impact on reporting fundraising transactions by not-for-profit entities.

Bank audit fees and asset securitization risks

Using the lens of audit pricing, we provide insights into auditors’ behaviors in relation to the risk of asset securitizations to bank holding companies in a period encompassing the Global Financial Crisis (GFC) and the introduction of the accounting standards FAS 166 and FAS 167. Using US bank holding company data from 2003 to 2011, we find significant and positive associations between asset securitization risks and audit fees. We find that auditors appear to focus on different aspects of asset securitization risks after the onset of the GFC, and increase their attention to the systemic risks facing bank holding companies in general. After the implementation of FAS 166 and FAS 167, which removed the discretion to treat asset securitizations as sales and required the consolidation of the accounts of special purpose entities, asset securitization risks no longer have a significant effect on audit fees.

RPAS integration within an Australian ATM system : what equipment and which airspace

The Australian Civil Aviation Safety Authority (CASA) currently lists more than 100 separate entities or organisations which maintain a UAS Operator Certificate (UOC) [1]. Approved operations are overwhelmingly a permutation of aerial photography, surveillance, survey or spotting and predominantly, are restricted to Visual Line of Sight (VLOS) operations, below 400 feet, and not within 3 NM of an aerodrome. However, demand is increasing for a Remote Piloted Aerial System (RPAS) regulatory regime which facilitates more expansive operations, in particular unsegregated, Beyond Visual Line of Sight (BVLOS) operations. Despite this demand, there is national and international apprehension regarding the necessary levels of airworthiness and operational regulation required to maintain safety and minimise the risk associated with unsegregated operations. Fundamental to addressing these legitimate concerns will be the mechanisms that underpin safe separation and collision avoidance. Whilst a large body of research has been dedicated to investigating on-board, Sense and Avoid (SAA) technology necessary to meet this challenge, this paper focuses on the contribution of the NAS to separation assurance, and how it will support, as well as complicate RPAS integration. The paper collates and presents key, but historically disparate, threads of Australian RPAS and NAS related information, and distils it with a filter focused on minimising RPAS collision risk. Our ongoing effort is motivated by the need to better understand the separation assurance contribution provided by the NAS layers, in the first instance, and subsequently employ this information to identify scenarios where the coincident collision risk is demonstrably low, providing legitimate substantiation for concessions on equipage and airworthiness standards.

Lower partial moment and information entropy-based dynamic electricity purchasing strategy

In the electricity market environment, load-serving entities (LSEs) will inevitably face risks in purchasing electricity because there are a plethora of uncertainties involved. To maximize profits and minimize risks, LSEs need to develop an optimal strategy to reasonably allocate the purchased electricity amount in different electricity markets such as the spot market, bilateral contract market, and options market. Because risks originate from uncertainties, an approach is presented to address the risk evaluation problem by the combined use of the lower partial moment and information entropy (LPME). The lower partial moment is used to measure the amount and probability of the loss, whereas the information entropy is used to represent the uncertainty of the loss. Electricity purchasing is a repeated procedure; therefore, the model presented represents a dynamic strategy. Under the chance-constrained programming framework, the developed optimization model minimizes the risk of the electricity purchasing portfolio in different markets because the actual profit of the LSE concerned is not less than the specified target under a required confidence level. Then, the particle swarm optimization (PSO) algorithm is employed to solve the optimization model. Finally, a sample example is used to illustrate the basic features of the developed model and method.

The game of clones and the Australia tax : divergent views about copyright business models and the willingness of Australian consumers to infringe

It is often said that Australia is a world leader in rates of copyright infringement for entertainment goods. In 2012, the hit television show, Game of Thrones, was the most downloaded television show over bitorrent, and estimates suggest that Australians accounted for a plurality of nearly 10% of the 3-4 million downloads each week. The season finale of 2013 was downloaded over a million times within 24 hours of its release, and again Australians were the largest block of illicit downloaders over BitTorrent, despite our relatively small population. This trend has led the former US Ambassador to Australia to implore Australians to stop 'stealing' digital content, and rightsholders to push for increasing sanctions on copyright infringers. The Australian Government is looking to respond by requiring Internet Service Providers to issue warnings and potentially punish consumers who are alleged by industry groups to have infringed copyright. This is the logical next step in deterring infringement, given that the operators of infringing networks (like The Pirate Bay, for example) are out of regulatory reach. This steady ratcheting up of the strength of copyright, however, comes at a significant cost to user privacy and autonomy, and while the decentralisation of enforcement reduces costs, it also reduces the due process safeguards provided by the judicial process. This article presents qualitative evidence that substantiates a common intuition: one of the major reasons that Australians seek out illicit downloads of content like Game of Thrones in such numbers is that it is more difficult to access legitimately in Australia. The geographically segmented way in which copyright is exploited at an international level has given rise to a ‘tyranny of digital distance’, where Australians have less access to copyright goods than consumers in other countries. Compared to consumers in the US and the EU, Australians pay more for digital goods, have less choice in distribution channels, are exposed to substantial delays in access, and are sometimes denied access completely. In this article we focus our analysis on premium film and television offerings, like Game of Thrones, and through semi-structured interviews, explore how choices in distribution impact on the willingness of Australian consumers to seek out infringing copies of copyright material. Game of Thrones provides an excellent case study through which to frame this analysis: it is both one of the least legally accessible television offerings and one of the most downloaded through filesharing networks of recent times. Our analysis shows that at the same time as rightsholder groups, particularly in the film and television industries, are lobbying for stronger laws to counter illicit distribution, the business practices of their member organisations are counter-productively increasing incentives for consumers to infringe. The lack of accessibility and high prices of copyright goods in Australia leads to substantial economic waste. The unmet consumer demand means that Australian consumers are harmed by lower access to information and entertainment goods than consumers in other jurisdictions. The higher rates of infringement that fulfils some of this unmet demand increases enforcement costs for copyright owners and imposes burdens either on our judicial system or on private entities – like ISPs – who may be tasked with enforcing the rights of third parties. Most worryingly, the lack of convenient and cheap legitimate digital distribution channels risks undermining public support for copyright law. Our research shows that consumers blame rightsholders for failing to meet market demand, and this encourages a social norm that infringing copyright, while illegal, is not morally wrongful. The implications are as simple as they are profound: Australia should not take steps to increase the strength of copyright law at this time. The interests of the public and those of rightsholders align better when there is effective competition in distribution channels and consumers can legitimately get access to content. While foreign rightsholders are seeking enhanced protection for their interests, increasing enforcement is likely to increase their ability to engage in lucrative geographical price-discrimination, particularly for premium content. This is only likely to increase the degree to which Australian consumers feel that their interests are not being met and, consequently, to further undermine the legitimacy of copyright law. If consumers are to respect copyright law, increasing sanctions for infringement without enhancing access and competition in legitimate distribution channels could be dangerously counter-productive. We suggest that rightsholders’ best strategy for addressing infringement in Australia at this time is to ensure that Australians can access copyright goods in a timely, affordable, convenient, and fair lawful manner.

Book Review : "Statutory Will Applications : A practical Guide by Richard Williams and Sam McCullough"

The jurisdiction of Australian courts to make wills for those lacking testamentary capacity is relatively new, having been granted by legislation progressively enacted across the various states and territories between 1996 and 2010. Given increasing numbers of statutory will applications since the legislative reform, and a growing body of law, the publication of the specialist work, Statutory Will Applications: A Practical Guide, by Richard Williams and Sam McCullough, is timely and valuable. This work will be of great interest to those who act for individual clients, especially wills and estates practitioners, but also personal injury practitioners acting for incapacitated persons who have been awarded substantial damages.

Relevance of the deletion polymorphisms of the glutathione S-transferases GSTT1 and GSTM1 in pharmacology and toxicology

Although cytosolic glutathione S-transferase (GST) enzymes occupy a key position in biological detoxification processes, two of the most relevant human isoenzymes, GSTT1-1 and GSTM1-1, are genetically deleted (non-functional alleles GSTT1*0 and GSTM1*0) in a high percentage of the human population, with major ethnic differences. The structures of the GSTT and GSTM gene areas explain the underlying genetic processes. GSTT1-1 is highly conserved during evolution and plays a major role in phase-II biotransformation of a number of drugs and industrial chemicals, e.g. cytostatic drugs, hydrocarbons and halogenated hydrocarbons. GSTM1-1 is particularly relevant in the deactivation of carcinogenic intermediates of polycyclic aromatic hydrocarbons. Several lines of evidence suggest that hGSTT1-1 and/or hGSTM1-1 play a role in the deactivation of reactive oxygen species that are likely to be involved in cellular processes of inflammation, ageing and degenerative diseases. There is cumulating evidence that combinations of the GSTM1*0 state with other genetic traits affecting the metabolism of carcinogens (CYP1A1, GSTP1) may predispose the aero-digestive tract and lung, especially in smokers, to a higher risk of cancer. The GSTM1*0 status appears also associated with a modest increase in the risk of bladder cancer, consistent with a GSTM1 interaction with carcinogenic tobacco smoke constituents. Both human GST deletions, although largely counterbalanced by overlapping substrate affinities within the GST superfamily, have consequences when the organism comes into contact with distinct man-made chemicals. This appears relevant in industrial toxicology and in drug metabolism.

Influence of polymorphisms of GSTM1 and GSTT1 for risk of renal cell cancer in workers with long-term high occupational exposure to trichloroethene

Suspected nephrocarcinogenic effects of trichloroethene (TRI) in humans are attributed to metabolites derived from the glutathione transferase (GST) pathway. The influence of polymorphisms of GSTM1 and GSTT1 isoenzymes on the risk of renal cell cancer in subjects having been exposed to high levels of TRI over many years was investigated. GSTM1 and GSTT1 genotypes were determined by internal standard controlled polymerase chain reaction. Fourty-five cases with histologically verified renal cell cancer and a history of long-term occupational exposure to high concentrations of TRI were studied. A reference group consisted of 48 workers from the same geographical region with similar histories of occupational exposures to TRI but not suffering from any cancer. Among the 45 renal cell cancer patients, 27 carried at least one functional GSTM1 (GSTM1 +) and 18 at least one functional GSTT1 (GSTT1 +). Among the 48 reference workers, 17 were GSTM1 + and 31 were GSTT1 +. Odds ratios for renal cell cancer were 2.7 for GSTM1 + individuals (95% CI, 1.18-6.33; P < 0.02) and 4.2 for GSTT1 + individuals (95% CI, 1.16-14.91; P < 0.05), respectively. The data support the present concept of the nephrocarcinogenicity of TRI.

Association of CYP1B1 codon 432 mutant allele in head and neck squamous cell cancer is reflected by somatic mutations of p53 in tumor tissue

Tobacco use is causally associated with head and neck squamous cell cancer (HNSCC). Here, we present the results of a case-control study that investigated the effects that the genetic variants of the cytochrome (CYP)1A1, CYP1B1, glutathione-S-transferase (GST)M1, GSTT1, and GSTP1 genes have on modifying the risk of smoking-related HNSCC. Allelisms of the CYP1A1, GSTT1, GSTM1, and GSTT1 genes alone were not associated with an increased risk. CYP1B1 codon 432 polymorphism was found to be a putative susceptibility factor in smoking-related HNSCC. The frequency of CYP1B1 polymorphism was significantly higher (P < 0.001) in the group of smoking cases when compared with smoking controls. Additionally, an odds ratio (OR) of 4.53 (2.62-7.98) was discovered when investigating smoking and nonsmoking cases for the susceptible genotype CYP1B1*2/*2, when compared with the presence of the genotype wild type. In combination with polymorphic variants of the GST genes, a synergistic-effect OR was observed. The calculated OR for the combined genotype CYP1B1*2/*2 and GSTM1*2/*2 was 12.8 (4.09-49.7). The calculated OR for the combined genotype was 13.4 (2.92-97.7) for CYP1B1*2/*2 and GSTT1*2/*2, and 24.1 (9.36-70.5) for the combination of CYP1B1*2/*2 and GSTT1-expressors. The impact of the polymorphic variants of the CYP1B1 gene on HNSCC risk is reflected by the strong association with the frequency of somatic mutations of the p53 gene. Smokers with susceptible genotype CYP1B1*2/*2 were 20 times more likely to show evidence of p53 mutations than were those with CYP1B1 wild type. Combined genotype analysis of CYP1B1 and GSTM1 or GSTT1 revealed interactive effects on the occurrence of p53 gene mutations. The results of the present study indicate that polymorphic variants of CYP1B1 relate significantly to the individual susceptibility of smokers to HNSCC.

Rapid analysis of GSTM1, GSTT1 and GSTP1 polymorphisms using real-time polymerase chain reaction

Polymorphisms of glutathione transferases (GST) are important genetic determinants of susceptibility to environmental carcinogens (Rebbeck, 1997). The GSTs are a multigene family of dimeric enzymes involved in detoxification, and, in a few cases, the bioactivation of a variety of xenobiotics (Hayes et al., 1995). The cytosolic GST enzyme family consists of four major classes of enzymes, referred to as alpha, mu, pi and theta. Several members of this family (for example, GSTM1, GSTT1 and GSTP1) are polymorphic in human populations (Wormhoudt et al., 1999). Molecular epidemiology studies have examined the role of GST polymorphisms as susceptibility factors for environmentally and/or occupationally induced cancers (Wormhoudt et al., 1999). In particular, case-control studies showed a relationship between the GSTM1 null genotype and the development of cancer in association with smoking habits, which has been shown for cancers of the respiratory and gastrointestinal tracts as well as other cancer types (Miller et al., 1997). Only a few molecular epidemiological studies addressed the role of GSTT1 and GSTP1 polymorphisms in cancer susceptibility. Since GSTP1 is a key player in biotransformation/bioactivation of benzo(a)pyrene, GSTP1 may be even more important than GSTM1 in the prevention of tobacco-induced cancers (Harries et al., 1997; Harris et al., 1998). To date, this relationship has not been sufficiently addressed in humans. Comprehensive molecular epidemiological studies may add to the current knowledge of the role of GST polymorphisms in cancer susceptibility and extent of the knowledge gained from approaches that used phenotyping, such as GSTM1 activity as it relates to trans-stilbene oxide, or polymerase chain reaction (PCR) based genotyping of polymorphic isoenzymes (Bell et al., 1993; Pemble et al., 1994; Harries et al., 1997).

Glutathione transferase isozyme genotypes in patients with prostate and bladder carcinoma

Genotype distributions for GSTP1, GSTM1, and GSTT1 were determined in 91 patients with prostatic carcinoma and 135 patients with bladder carcinoma and compared with those in 127 abdominal surgery patients without malignancies. None of the genotypes differed significantly with respect to age or sex among controls or cancer patients. In the group of prostatic carcinoma patients, GSTT1 null allele homozygotes were more prevalent (25% in carcinoma patients vs 13% in controls, Fisher P=0.02, χ2 P = 0.02, OR = 2.31, CI = 1.17-4.59) and the combined M1-/T1-null genotype was also more frequent (9% vs 3%, χ2 P= 0.02, Fisher P = 0.03). Homozygosity for the GSTM1 null allele was more frequent among bladder carcinoma patients (59% in bladder carcinoma patients vs 45% in controls, Fisher P = 0.03, χ2 P = 0.02, OR = 1.76, CI = 1.08-2.88). In contrast to a previous report, no significant increase in the frequency of the GSTP1b allele was found in the tumor patients. Except for the combined GSTM1-/T1-null genotype in prostatic carcinoma, none of the combined genotypes showed a significant association with either of the cancers. These findings suggest that specific single polymorphic GST genes, that is GSTM1 in the case of bladder cancer and GSTT1 in the case of prostatic carcinoma, are most relevant for the development of these urological malignancies among the general population in Central Europe.

Influence of polymorphisms of the human glutathione transferases and cytochrome P450 2E1 enzyme on the metabolism and toxicity of ethylene oxide and acrylonitrile

A cohort of 59 persons with industrial handling of low levels of acrylonitrile is being studied as part of a medical surveillance programme. Previously, an extended haemoglobin adduct monitoring (N-(cyanoethyl)valine and N-(hydroxyethyl)-valine) was performed regarding the glutathione transferases hGSTM1 and hGSTT1 polymorphisms but no influence of hGSTM1 or hGSTT1 polymorphisms on specific adduct levels was found. A compilation of case reports of human accidental poisonings had pointed to significant individual differences in human acrylonitrile metabolism and toxicity. Therefore, a re-evaluation of the industrial cohort included known polymorphisms of the glutathione transferases hGSTM3 and hGSTP1 as well as of the cytochrome P450 CYP2E1. A detailed statistical analysis revealed that exposed carriers of the allelic variants of hGSTP1, hGSTP1*B/hGSTP1*C, characterized by a single nucleotide polymorphism at nucleotide 313 which results in a change from Ile to Val at codon 104, had higher levels of the acrylonitrile-specific haemoglobin adduct N-(cyanoethyl)valine compared to the carriers of the codon 113 alleles hGSTP1*A and hGSTP1*D. The single nucleotide polymorphism at codon 113 of hGSTP1 (hGSTP1*A/hGSTP1*B versus hGSTP1*C/hGSTP1*D) did not show an effect, and also no influence was seen on specific haemoglobin adduct levels of the polymorphisms of hGSTM3 or CYP2E1. The data, therefore, point to a possible influence of a human enzyme polymorphism of the GSTP1 gene at codon 104 on the detoxication of acrylonitrile which calls for experimental toxicological investigation. The study also confirmed the impact of GSTT1 polymorphism on background N-(hydroxyethyl)-valine adduct levels in haemoglobin which are caused by endogenous ethylene oxide.