Serious Consequences For Employers Who Dodge Superannuation Payments – Terry Robinson

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TLRbwEmployers failing to pay superannuation could be hit with Court ordered penalties and even 12 months prison stints under draft legislation released recently.

The legislation aims to protect workers superannuation entitlements, while modernising the way the super guarantee is enforced. The introduction of Single Touch Payroll for employers from 1 July 2019 will make it much easier for the Australian Taxation Office to monitor and identify employers who skip their superannuation obligations, rather than the current regime of self-reporting.

The Single Touch Payroll system allows employers to report salaries, wages, PAYG tax and super directly to the ATO from their payroll systems.

This will allow the ATO to access real-time compliance information regarding superannuation payments.

This will support earlier detection and proactive prevention of non-payment of superannuation that is due to employees.

The government has indicated that there will be serious consequences for employers who break the law.

There will be strengthened systems for Director Penalty Notices where directors can become personally liable for unpaid superannuation payments.

Further, the ATO will be able to apply for Court ordered penalties against the employers including up to 12 months imprisonment.

The ATO will also have the power to require employers to undertake compulsory training regarding their payment obligations.

The legislation will also close a loophole that allowed unscrupulous employers to short-change workers who salary sacrifice their salary into their super.

For all your legal needs, consult Everingham Solomons Solicitors, because Helping You is Our Business.

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Selling Residential Property – Terry Robinson

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TLRbwWhen deciding to sell residential property, whether you list with a Real Estate Agent or you intend to sell privately, the law requires that you have a copy of the proposed Contract for the sale of the property available for inspection by a prospective purchaser. The Contract must have prescribed documents as set out in the Conveyancing Act before it can be signed by a Purchaser.  If Contracts are signed and exchanged without the relevant prescribed documents being attached, the purchaser may have a right of rescission (able to get out of the Contract).

You should contact your Solicitor or Licensed Conveyancer who will assist in preparation of the proposed Contract. In addition to various prescribed documents additional documents may be required.

Things to consider:-

Is there a Swimming Pool? If so, you should ensure that the Swimming Pool is registered on the NSW State Government NSW Swimming Pool Register. You should also ensure that you have a current Swimming Pool Certificate of Compliance – these remain valid for 3 years so if you either haven’t obtained a Swimming Pool Certificate of Compliance or have one which is expired or close to expiry you should arrange for this to be obtained as soon as possible.

Has any residential building work as defined in the Home Building Act been carried out in the last 6 years?  If yes and the cost the building work is over $20,000.00 then a Home Building Compensation Fund (HBCF) Certificate of Insurance should be attached to the Contract.  If this is not attached to the Contract or subsequently provided to a Purchaser prior to settlement a Purchaser may have the right to get out of the Contract at any time prior to completion.

Where Council approval is required you should ensure that it has been obtained and an Occupation Certificate issued by Council or an Accredited Certifier which should also be attached to the Contract.

Anything you do now to prepare your property for sale, both from an appearance and contractual point of view, may ultimately save you time and effort when it comes to selling your property and may mean that Contracts are exchanged sooner rather than later.

There may be other issues that should be identified in a Contract. To avoid issues between exchange and settlement, see your Solicitor or Licensed Conveyancer without delay.

At Everingham Solomons, we have the expertise to assist you in all of your property transactions because, Helping You is Our Business.

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CAN REAL ESTATE AGENTS BE LIABLE FOR STATEMENTS MADE – Terry Robinson

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TLRbwIn a recent Supreme Court of Queensland decision, the Court held that the real estate agent was liable for the representations it had made to a purchaser which were found to be false.

The Court proceedings related to the sale of a shopping centre. The purchaser alleged that the information provided about the financial performance of the shopping centre was misleading and false

The purchaser requested information regarding the shopping centre. The agent sent a number of emails together with an Information Memorandum to the purchaser containing information about the net rentals for the centre, the rent payable under each lease and estimates of outgoings. The agent also made additional verbal representations to the purchaser during the sale process.

In reality the shopping centre was not performing well and this was not disclosed.

The purchaser claimed that it relied upon the information in the Information Memorandum and the additional representations made by the agent to induce it to purchase the shopping centre.

Interestingly, the Information Memorandum contained a formal disclaimer indicating that the information in the Information Memorandum had been provided by the seller and the agent had not independently checked the information and had merely passed it on and as a consequence the purchaser should rely on their own enquiries.

It was relevant that this disclaimer was at page 39 of the document.

The general rule is that an agent will not have engaged in misleading or deceptive conduct where it has merely passed on information from the seller without adopting or endorsing it.

In this recent Queensland decision, the Court found that the real estate agent had clearly adopted the information and represented it as its own and in this regard had displayed its logo on each and every page of the Information Memorandum.

Further in discussions with the purchaser, the real estate agent made statements which went well beyond the information in the documents and endorsed and amplified the financial information which was in fact false.

The Court found that the agent had made certain representations itself rather than simply passing on the information supplied by the seller.

The disclaimer clauses were not effective to alert a reasonable person in the purchaser’s position that the information in the document was simply being passed on.

Judgment was awarded against the agent for $1.6 million plus costs.

At Everingham Solomons we have the expertise to assist you in all of your property and commercial matters because Helping You is Our Business.

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Why Choose A Company? – Terry Robinson

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TLRbwCompanies are a common structure favoured by businesses, particularly where there are a number of unrelated parties involved. One of the main reasons for this is because the shares in the company provide for a clear definition of the interest or share held by each shareholder in the company and its assets and also because it facilitates with relative ease, the sale and purchase of shares and accordingly the change of shareholders’ interests in the company.

Another draw card prompting people to use a company structure, is the ability to lock in a flat corporate tax rate in the year in which the income is derived, with the potential for shareholders to claim franking credits when dividends are subsequently paid. Currently the corporate tax rate is in the range of 28.5 % to 30% and there may be small cuts to that tax rate in the future.

As a comparison, an individual will be paying at least 34.5% tax rate, including the Medicare levy for every dollar above $37,000 of income in a year.

From an asset protection perspective, the use of a company can provide a high level of protection, if the objective is to quarantine the risk to the company. This is because the company’s creditors will generally only have access to the company’s assets in the event of insolvency and will not have access to a shareholders personal assets.

Where however it can be shown that a company has been trading whilst insolvent or where there are unpaid company tax debts, directors may be held personally liable for the debts of the company.

A significant disadvantage of a company particular in relation to holding assets which are likely to increase in value, is that companies are ineligible for the 50% capital gains tax discount. Furthermore, the small business capital gains tax concessions are effectively negated by the use of a corporate entity.

The time to consider which entity you will commence or run your business is at the time you are considering commencing the business, as there are usually significant transactional costs and taxes associated with changing the structure after the business has commenced.

We can at Everingham Solomons, assist you with most business matters because Helping You is Our Business.

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What are the Advantages of a Family or Discretionary Trust? – Terry Robinson

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TLRbwA discretionary trust is an extremely popular choice for all types of investments as it provides great flexibility to make income and capital distributions to various family members and their related entities.

The ability to split the trust income in the most tax advantageous way each year is clearly an attractive trait of a discretionary trust.

This feature is further enhanced by the fact that amounts derived by the trust effectively retain their character when distributed to the beneficiaries.

Consequently, this allows for non-assessable amounts for example pre-capital gains tax, amounts arising from the capital gains tax 50% general discount, the small business concessions et cetera, to be distributed tax effectively to the beneficiaries, which cannot be achieved via a company or unit trust structure.

Another desirable feature of a discretionary trust is its potential asset protection qualities. A discretionary trust with a corporate trustee has traditionally been regarded as an effective structure for asset protection purposes on the basis that the corporate trustee only acts in its capacity as trustee of the trust and trust creditors generally only have recourse against the corporate trustee’s assets and the assets of the trust.

Creditors generally have no claim against the trust beneficiaries’ assets.

Accordingly it is prudent to ensure the corporate trustee does not have any assets of significant value.

As no one beneficiary has direct ownership of the trust assets, this allows for flexibility in making distributions to various beneficiaries each year in order to achieve the best tax outcome.

This structure, which has no clear ownership entitlements, is also one of its main drawbacks where unrelated parties for example business partners, want to be in business together.

In those circumstances the use of a partnership of discretionary trusts or a unit trust, could be more appropriate.

At Everingham Solomons, we have the expertise to advise you because Helping You is Our Business.

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Which entity should I use? – Terry Robinson

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TLRbwBefore you embark on a new business or venture, one of the most important decisions you will need to make is what type of structure should be set up for the venture.

Should your venture operate as a sole trader, partnership, company, discretionary trust, unit trust, a company with a discretionary trust as a shareholder or a of combinations of these?

To make this decision you need to work out what your priorities are.

The major drivers when choosing a structure include but are not limited to:

  • Asset protection – are your personal assets exposed to creditors and lawsuits?
  • Legal minimisation of income tax.
  • Minimisation of potential capital gains tax on future disposal.
  • The ability to utilise and carry forward losses.
  • Family considerations – is the business to be conducted by one family or a number of families. Is the business to be passed down the generations and is income to be distributed to family members?
  • Does the entity need to be flexible to allow parties to enter and exit the venture?
  • Do the owners of the entity understand the structure and what the cost of administering that structure is?
  • Will the business derive income from the provision of personal services of the principal? Generally, personal services income cannot be split, for example, with a spouse.
  • Will the business or investment have significant assets? Should the assets be held in one entity whilst the operating business utilises another entity?
  • Does the business venture have a high risk exposure from a legal suit?

A client needs to consider what their priorities are when considering what operating structure is to be utilised.

It may be that tax is not the main focus of a structure. In many cases, asset protection is more important for some clients.

The clients may have other priorities such as the provision for family members, the ability to increase their retirement savings.

Some structures expose the proprietors to personal liability whilst other structures provide insulation from personal suit.

Accordingly, the structure should be tailored to meet the client’s priorities as best as it can.

Unfortunately there is no one entity that satisfies all of the above considerations.

If you are thinking of establishing a business or new venture, we at Everingham Solomons have the expertise to assist you because

Helping You is Our Business.

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When Can an Executor Distribute the Assets of a Deceased Estate? – Terry Robinson

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TLRbwThis is one of the most common questions asked in relation to deceased estates.

Beneficiaries are, understandably, eager to receive their interest in the estate and executors are eager to finalise their duties.

Despite this often mutual desire to distribute the estate quickly, there are several requirements that must be met prior to any distribution.

Probate must be granted by the Supreme Court of New South Wales. Probate establishes the validity of the deceased Will.  Once probate is granted, the executors are legally entitled to administer the estate pursuant to the terms of the Will.

Prior to distribution, a Notice must be posted on the Supreme Court website alerting creditors and other interested parties that the executors intend to distribute the estate assets.

What happens if an executor distributes the entire estate leaving no money in the estate and a creditor or beneficiary or tax office or other party comes forward claiming that the estate owes money?

If the executor has complied with certain requirements for distribution of the estate, her/she will not face personal liability for any such claims made subsequent to a full distribution of estate assets.

The requirements are that the estate is distributed at least six months after the deceased date of death and the executor has published a 30 day notice of intention to distribute and that time period has expired.

An additional issue which must be considered prior to distribution, involves claims being made against the estate by a relative or dependant who is seeking a share or greater share of the estate.

Claimants have 12 months from the date of the death of the deceased to file a claim and any executor who distributes the estate prior to the expiration of that 12-month period may be held personally liable if he/she has distributed the estate knowing of a potential claim.

The timing of the distribution of deceased assets by the executor, in each case depends on the facts of the case and an assessment of the particular risk of a claim being made against the estate.

If you need assistance with the administration of the estate contact us at Everingham Solomons Solicitors because Helping You is Our Business.

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Pedal the Peel Cycling Challenge – 2nd April 2017 – Terry Robinson

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TLRbwEveringham Solomons is proud to be one of the major sponsors and organisers of the Pedal the Peel Cycling Challenge to be held at Moore Creek Tennis Club, Moore Creek Rd, Tamworth on Sunday, 2 April 2017.

The event is unique to Tamworth because it caters for all levels of rider fitness and experience.

You can choose from a flat 16 km or 24 km course or the more challenging 55 km or 115 km hilly courses.

The event is designed to encourage all levels of riders (minimum age 12 years) to become involved, have a great fun day and help raise money for local charities.

It is unique because we don’t ask you to raise thousands of dollars sponsorship to ride in the Challenge.

You only need to pay your registration fee of $50 per rider or $100 for a group of 4 riders.

Included in the registration fee is a steak sandwich and drink which will be provided on return to the start/finish location at Moore Creek Tennis Club. There will also be live music at the start/finish site, so you can enjoy some socialising on your return.

It’s unique because it supports lesser known and less well-supported community organisations.

This year the event will support Youth Insearch which is a grass roots, early intervention program which works with at risk youth and focuses on resolving adolescent issues at peer level. This organisation has had tremendous results in assisting at risk youth change their lives.

We are also supporting the Banksia Acute Mental Health Unit at the Tamworth Base Hospital and other mental health charities in the Tamworth region.

We all know that mental health has become a huge issue and this is our way of helping address mental health in our region.

You know the event will be well-run and costs kept to an absolute minimum because it is an event organised by the Rotary Clubs of Tamworth First Light and the Rotary Club of Sunrise.

I encourage you to get a team together, challenge your friends and work mates…remember 4 riders only costs $100 and the money goes to deserving local charities. Let’s help make this event a fantastic success.

You can register online at www.pedalthepeel.org.au

Everingham Solomons Solicitors supporting our community.

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Do I Need a Shareholders Agreement? – Terry Robinson

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Are you a shareholder of a private company?

Do you need a Shareholders Agreement?

When individuals enter into a business arrangement, it is common for those persons to enter into a partnership agreement which regulates the conduct of their relationship.

The same cannot be said for shareholders and directors in a proprietary limited company which conducts a business.

It is recommended that shareholders and their directors should enter into a Shareholders Agreement which will regulate their conduct and set out their duties and responsibilities, much like a partnership agreement.

Such agreements usually specify that each shareholder has the ability to hire and fire their own directors.

They also set out arrangements regarding the conduct of meetings of the board of directors and general meetings, voting rights as well as the requirement to prepare annual financial statements and to make such information available to all shareholders.

There will be provisions regarding distribution of profits, how working capital is to be contributed and/or raised and a dispute resolution procedure.

Most importantly there will be provisions indicating how a shareholders shares are to be dealt with in the event that a party wishes to sell their shares or is required to leave the company.

If a shareholder or director is guilty of misconduct or breach of the shareholders duties or is simply not fulfilling their duties, do the other shareholders have a right to exclude that person as a shareholder and to buy their shares?

If yes, how is the outgoing shareholder’s shares to be valued for the purposes of the share transfer to the continuing shareholders?

If a person is retiring because of illness or disability, how is that outgoing shareholder’s shares valued and who has the right to acquire those shares?

Generally it is the remaining shareholders who have the first option to purchase an outgoing shareholders shares.

Another perplexing question is whether a defaulting outgoing shareholder should receive the same value for their shares as a shareholder who is simply retiring and has not committed a breach of the terms of the Shareholder Agreement.

I encourage you to ascertain whether you have a Shareholders Agreement and if you would like any additional information regarding such agreements, please contact me or one of our business lawyers because at Everingham Solomons Helping You is Our Business.

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Are small business employers exempt from paying redundancy pay?

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TLRbwAs a general rule, a small business employer is not required to pay redundancy pay, as set out in the National Employment Standards however there are some circumstances where you may be legally required to make these payments.

A “small business employer” is defined under the Fair Work Act as an employer who employs fewer than 15 employees at the time of the redundancy. This includes all employees you employee, the employee who is being dismissed, and any other employee who is being dismissed or terminated.

A casual employee is not to be counted unless they are employed on a regular and systematic basis.

Notwithstanding the National Employment Standards, you may still be obliged to pay redundancy because of the specific terms of a modern award or an enterprise agreement. Examples of modern awards which prescribe redundancy pay for small business employers includes the Joinery and Building Trades Award, Timber Industry Award, Manufacturing and Associated Industries and Occupations Award.

In such circumstances the scale of redundancy pay is usually less than that prescribed by the National Employment Standards.

There are also other employees who are not entitled to redundancy payment, whether they are employed by a small or large business in the following circumstances:

  • an employee with less than 12 months continuous service;
  • a casual employee;
  • an employee who is terminated because of serious misconduct;
  • the employee is employed for a specific task or for a specified period of time or season and is terminated at the completion of the task or time period;
  • a training arrangement that applies for a specific period of time; and
  • the employee is an apprentice.

The bottom line is that the majority of small business employers are exempt from paying redundancy pay however there are certain modern awards where a small business employer is required to pay an employee redundancy pay.

At Everingham Solomons we have the expertise and skills to help you with all of your business’s legal needs and requirements, because Helping You is Our Business.

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