Many District Health Boards (or their predecessors) have acted as settlors or trustees of trust funds. Many may also hold the power to appoint or remove the trustees of trust funds. The trust funds themselves have probably arisen as a result of gifts or bequests or, in some cases, may have been established by the hospital to carry out fundraising activities.
In most cases the predecessor's role as settlor, trustee or appointor will have vested in the DHB as a result of the vesting provisions of the Health Sector (Transfers) Act.
There are a number of issues that DHBs need to be aware of. These include:
each annual report of the DHB must set out the names of the trusts of which the DHB is a settlor, trustee or holds the power to appoint trusteesDHBs are not permitted to continue in the role as settlor, trustee or continue to hold the power to appoint trustees for existing trusts beyond 30 December 2001 unless they have obtained the consent of the Minister under section 28 of the New Zealand Public Health and Disability Act 2000 (NAPHD Act)DHBs must not act as settlor, trustee or hold the power to appoint trustees of any new trust unless the DHB has first obtained the consent of the Minister as required by section 28.In practice this means that DHBs, if they have not done so already, should:
identify all trusts of which the DHB or its predecessor is the settlor, the trustee or holds the power to appoint a trusteein regard to each of these trusts the DHB should confirm that DHB's role as settlor, trustee or appointor has vested in the DHB pursuant to the Health Sector (Transfers) Actconfirm that the trusts have been disclosed correctly in the DHB's annual report in some cases it may be appropriate to review the ongoing appropriateness of the particular trust funds and consider whether changes should be made. The NZPHD Act sets out provisions to allow the terms of trusts to be modifiedensure that it is holding all trust funds in accordance with the NZPHD Act by obtaining the Minister's consent to the DHB continuing in its role as settlor, trustee or appointor.Fundraising activityWith increasing pressure on the health dollar, DHBs will be looking to charitable trusts to assist in fundraising from the public. DHBs who do not have existing foundations or fundraising entities may wish to consider establishing new charitable trusts to assist in their fundraising activities. If a DHB has multiple fundraising needs for clinical equipment or needs benefitting a specific group in the community, consideration should be given as to how to manage the approach to the public in order to co-ordinate any fundraising activity. If a DHB finds it has a number of existing charitable trusts or foundations that each intend to fundraise in different areas, consideration can be given to putting in place new structures to allow fundraising to be co-ordinated to ensure maximum benefit is obtained by the variety of requirements competing for a limited pool of funding.
Charitable TrustsDHBs also need to be aware of the proposed changes to the law in regard to charities. Many DHBs may be the settlor, trustee or hold the power of appointment of trustees of charitable trusts.
The Government is working on a reform package which is likely to result in the introduction of new registration, reporting and monitoring requirements for charities claiming tax free status.
The Government is currently consulting with the charitable sector on the design details. Other signalled changes include:
the law will be clarified so that non profit organisations can claim GST refunds on all their activities, except exempt suppliesthe maximum rebate for individuals making donations to charities will be raised from $500 to around $600company deduction rules will be simplified to allow more companies to claim deductions for their donations.This is a general summary only and should not be taken as a substitute for specific advice.
For further information contact Linda Going, partner
linda.going@phillipsfox.com
Web site:
Phillips Fox