Many readers will be members of Self-Managed Superannuation Funds (SMSFs) and will understand in general terms the limits imposed on SMSFs with respect to the types of investments they can make.
Superannuation legislation prevents s SMSFs from investments in a related party. This is called the ‘in-house asset test’. There are some notable exceptions including that a SMSF can often purchase land and buildings (including farms) upon which the SMSF’s members can conduct their business.
Another prohibition insures that SMSFs cannot use retirement savings accumulated at favourable tax rates to acquire property, for example holiday houses or fast cars, that can be used beneficially by the SMSFs members or family before retirement. This is called the ‘sole purpose test’.
‘Aussiegolfa’ is a horribly aspirational name for the trustee of a SMSF that tested the limits of the sole purpose test in the Federal Court and on appeal.
Aussiegolfa as trustee of the SMSF purchased units in a widely held managed investment scheme called DomaCom. DomaCom purchased various property including student accommodation at Burwood.
Aussiegolfa then acquired a particular class of units in DomaCom, known as the Burwood sub-fund, which were specifically associated with the Burwood accommodation. Other parties related to Aussiegolfa acquired the balance of the majority interest in the Burwood sub-fund.
DomaCom rented out the Burwood accommodation firstly to two tenants unrelated to Aussiegolfa, but then to the daughter of Aussiegolfa’s members. Importantly the daughter paid market rates of rent on the Burwood accommodation, equal to the previous two unrelated tenants.
The primary judge and the Court of Appeal both found that the sub-fund was a distinct trust controlled by Aussiegolfa and its related parties in breach of the in-house asset test.
On appeal the Full Court found that as: the property had previously been tenanted to non-related parties; market rent had been paid by the member’s daughter; and the property was managed by an unrelated entity, the sole purpose test had not been infringed. Any benefit enjoyed by the member’s daughter was merely incidental.
Although it’s unlikely to be an approach widely adopted by advisors, Aussiegolfa supports the proposition that the sole purpose test can be met where a related party has the use of SMSFs assets when market rent is paid.
If you have any commercial law enquiries, contact Everingham Solomons because Helping You is Our Business.
As some of you may be aware, land transactions have been moving over to an electronic platform called PEXA. This involves the settlement and registration of a land transaction into the new owners and mortgagee’s name, instantaneously on settlement.
It is anticipated that by 1 July 2019, electronic settlements will be compulsory in NSW.
All paper titles of land held by about 150 banks were converted to electronic certificates of title called eCT’s in September this year. The conversion of the titles was undertaken by the banks and other financial institutions, the NSW Land Registry Services and the legal and conveyancing peak bodies with many people working behind the scenes for months.
As there are now over 2 million eCT’s and more solicitors and conveyancers becoming registered PEXA subscribers, there is a greater chance of your purchase or sale being settled through the PEXA system.
If you own a property and have a paper title, how do you deal with your land if you wish to sell it?
Currently in the paper world, if a person wanted to sell their land or give consent to their title being used, they would physically hand the title over to the party who wishes to use it, or produce the title at the Land Registry. In the world of eCT’s, there is no physical paper title to hand over.
Under the PEXA system, a registered proprietor is given the Control of the Right to Deal (“CoRD”) and this is where the registered owner has the authority to consent to the registration of a subsequent interest in land.
If land is mortgaged, the registered proprietor has the right to deal with their land but the control of that right to deal (CoRD) is held by the first registered mortgagee (the bank) or party in legitimate possession of the certificate of title. A mortgagee now provides a CoRD Holder consent electronically in transactions.
If land is not mortgaged, the registered proprietor has both the right to deal and the CoRD and provides CoRD holder consent to that transaction.
In order for a vendor to deal with a paper title and use the CoRD, they need to contact a PEXA subscriber.
Everingham Solomons is a registered PEXA subscriber and we are continuing to extensively invest in training our solicitors and staff to ensure a seamless transition.
At Everingham Solomons, we aim to provide expert advice and manage your transaction with due speed and minimum inconvenience to you, because Helping you is Our Business.
Click here for more information on Suzanne Hindmarsh.
A Will is a legal document which sets out who will receive your assets when you die. Taking the time to make a valid Will is an important first step but it is not the end of the story. A Will should be reviewed regularly and particularly when significant life events occur such as marriage, divorce, birth of a child, or if one or more of your beneficiaries die. Equally so, you should always keep your Will in a safe place and let the Executor(s) of your Will know where it can be located. This is because if a Will cannot be found at your death, it can lead to considerable uncertainty, distress and expense for your family as the following case illustrates.
The deceased committed suicide in 2013.The deceased had two adult children and a wife who survived him. The deceased had separated from his wife in 1991 but they never divorced. Following his death, no original Will could be located. In 2014, the deceased’s daughter applied for Letters of Administration on the basis that the deceased had not left a Will. Letters of Administration were granted to her in 2014. In 2015, the deceased’s son located an unexecuted copy of a 1991 Will of the deceased and made application to the Court for proof of the 1991 Will.
To be successful in this case, the deceased’s son had to prove to the Court that the lost Will had not been revoked. This is because under the law “If a will known to have existed and last known to have been in the possession of the deceased cannot be found after death, it is presumed that the deceased destroyed it with the intention of revoking it”. To rebut this presumption, “the evidence must show it is more probable that the Will was lost or stolen or, more generally, could not be produced for some reason other than that it was destroyed by the deceased with the intent to revoke it”. The strength of the presumption of revocation varies according to the facts of each case.
The Court found that in 1991 the deceased executed a Will but the original Will could not be found. On the evidence before the Court it was held that, by mid-2013, the deceased had destroyed the 1991 Will. As a consequence the Court found the deceased died intestate meaning his estate would be distributed according to the rules of intestacy.
The above case reinforces the importance of keeping your Will in a safe place and letting the Executor(s) of your Will know where it can be located. At Everingham Solomons we can help you both with making a Will and safely retaining your Will for the peace of mind of you and your loved ones because Helping You is Our Business.
Click here for more information on Lesley McDonnell
Many injured workers are faced with having their weekly payments stopped due to a change in workers compensation laws that was introduced in 2012, limiting the amount of weekly payments a worker could receive to 260 weeks (5 years) under section 39 of the Workers Compensation Act 1987. The section does not apply to an injured worker if their injury has been assessed as greater than 20% whole person impairment.
As part of the legislative changes there was a saving grace piece introduced to cover worker’s injured prior to the changes being implemented, so that the changes did not apply retrospectively. This meant that “existing recipient’s”, workers who were injured and made a claim prior to 1 October 2012 were firstly, permitted to have the number of weeks restart on 1 October 2012. Secondly, when their 260 week period was finished, and if they were not at maximum medical improvement, for example they had recently undergone surgery, then they were able to have an assessment made by an Approved Medical Specialist to state they had not reached maximum medical improvement. This assessment then allowed their weekly payments to continue until they had reached maximum medical improvement and could be assessed to see if they reached the required threshold of greater than 20% whole person impairment.
Where the law then becomes particularly strict is to qualify as an existing recipient the case of Zeljko Komljenovic v Facility Management Solutions Pty Ltd [2013] NSWWCC 69 states that you have to be receiving weekly payments at the time of 1 October 2012. For some workers they may have been injured and made a claim prior to 1 October 2012, been back at work on 1 October 2012, then required surgery after this date, therefore being unable to work. If multiple surgeries were required and during their recovery period they have used up their 260 weeks’ worth of weekly payments or had only returned to work part-time due to the injury, then they are not entitled to weekly payments after 260 weeks as they were not receiving weeklies at the exact date of 1 October 2012. These workers are further disadvantaged if further treatment is still required as they are not suitable to be assessed for whole person impairment to know if they have reached the greater than 20% whole person impairment threshold. If they do proceed to assessment of whole person impairment prematurely they may be extinguishing their valuable rights to further compensation in the future.
If you have, or know someone who has, received notice of their weekly payments ceasing due to section 39 then please contact our office to discuss your options because Helping You is Our Business.
Click here for more information on Libby Campbell.
Every business relies on cash flow to survive. It matters not whether you have the best prices, products and/or customer service: if you don’t learn how to properly maintain cash flow, your business will eventually fail. By taking a proactive approach to debtor control you can improve your business’s cash flow and enhance its profitability.
Preventing Bad Debts
Ensure you manage the risk of bad debts by implementing a clear payment and credit policy. Consider:
Performing a credit check on potential debtors:-
Consider having them sign a credit application form or credit agreement
Conduct a pre-credit data check or/and ask for trade references
Setting clear payment terms:-
e.g. payment within 7 or 14 days from the invoice date.
Try to set payment terms shorter than your supplier’s terms as this will also assist with cash flow.
Ask for payment on delivery initially until your business relationship is stronger
Making it easy for people to pay you:-
Offer credit card or EFTPOS and train staff to accept payment
Maintaining Your Payment and Credit Policy
It is important to be CONSISTENT in applying your payment and credit policy. This will help you to recover your outstanding debt whilst maintaining a good relationship with your customers.
Train staff as to the when and how’s of following up on outstanding debts
Ensure you act promptly and consistently to follow-up on any outstanding or owing payments by:
contacting your debtors quickly with regard to any overdue invoices e.g. when payment is 7 days overdue
Chasing overdue payments by sending clearly marked statements, reminders or final notices
phoning the debtor and asking them if there is an issue
If there is an issue try to arrange a payment plan that would suit you both
In the event payment is still outstanding consider reviewing your credit terms for that customer e.g. payment on delivery
Recovering Outstanding Debts
If payment remains outstanding you might consider using mediation to help resolve your issue. This can save time and your matter might be settled in a way that suits both you and your client/customer. A magistrate can always make the final decision if no agreement is reached.
The dispute resolution team at Everingham Solomons can assist you at every stage of the debt recovery process. They will work with you to find the appropriate course of action and help devise strategies suited to your circumstances to ensure outstanding debts are recovered as quickly and cost-effectively as possible.
Can your business afford to wait?
At Everingham Solomons, we have the expertise and experience to assist you because Helping You is Our Business.
I’m frequently asked what steps need to be taken when someone dies and how long will it take?
The usual steps are:-
Evidence of death is required. In most cases, this is a death/funeral notice published in the local newspaper.
The death certificate is required. This certificate takes about 4 – 6 weeks to be issued by Births Deaths Marriages and provided to the executor/Estate’s solicitor.
The funeral account can be paid from the deceased’s bank account if sufficient funds are available.
We advise the relevant asset/liability holders of the death and provide certified copies of the death certificate. They provide us with details of the deceased’s accounts and their requirements to release the assets/liabilities of the Estate. This usually takes 3 to 4 weeks and the relevant documents are prepared from this information.
If a deceased held land, shares and bank accounts jointly with his/her spouse, the required forms are completed, signed and provided to the relevant registries and bank to transfer these into the surviving joint holder’s name.
If a deceased held land, shares or bank accounts over the value of $50,000.00 in their sole name, probate is required to be obtained. Probate is the document granted by the Supreme Court of NSW to enable the executor the right to administer the Will and carry out the wishes of the deceased.
Once probate is obtained, letters are forwarded to asset holders with a certified copy of probate, the executor’s completed signed forms seeking closure of the accounts, sale/transfer of shares and land is processed and payment of any outstanding liabilities and taxes are completed. Subject to the assets involved, this can take up to a couple of months or so.
After all assets have been transferred/sold as required by the Will and the monies have been received into the Estate’s trust account, the Estate can be distributed in accordance with the Will and finalised.
Whilst all matters are different, the usual time frame to administer an Estate is between 6 and 12 months.
If you need assistance with the administration of an Estate, contact us at Everingham Solomons Solicitors because Helping You is Our Business.
Click here for more information on Suzanne Hindmarsh.
When married or de-facto parties with children separate they should try to enter into practical and child focused arrangements between themselves in regard to the care and welfare of their children.
The Family Law Act 1975 governs all family law matters in Australia.
The law states that parenting matters must always consider the best interests of the child as the paramount consideration. It must also ensure that children are protected from physical or psychological harm from being exposed to abuse, neglect or family violence.
Parents do not actually have rights over children, but rather they have “parental responsibilities”. This incorporates decision making by parents as to major long term decisions such as who children are to live with, what religion they may practice, and where they are to go to school for example.
Alternatively, children have “rights”. In other words, children have a right to a meaningful relationship with both parents so long as there are no factors which places the child at risk of harm.
It is always advisable to have parenting arrangements documented. Parties can enter into a parenting plan or consent orders. A parenting plan can include details on where children live, how they will communicate with the non-resident parent, and arrangements for birthdays and holidays. There may also be a review date built into the parenting plan which allows the parties to revisit the parenting arrangements at a later date to assess what is working well or whether something need to be changed.
Consent orders can also incorporate these arrangements but unlike a parenting plan, court orders are legally enforceable. Orders should be followed carefully. There are serious penalties for contravening parenting orders which may include a significant fine or a period of imprisonment for example.
Family lawyers can prepare parenting plans and consent orders.
For some parents, where there is a disagreement in respect to parenting arrangements, the law requires them to attend compulsory family dispute resolution, which is also known as “mediation” before embarking on making an application in court for parenting orders. In Tamworth mediation takes place at “Centacare” located in Marius Street.
There are some situations where mediation is unsuitable. For example, where children relocate without the other parent’s knowledge or where they are withheld by a parent for an extended period of time without a valid reason, if there is entrenched conflict, or if there are significant safety concerns about children being exposed to family violence, abuse or neglect when they are in the care of the other parent.
Legal advice should be sought as to whether an application to the court should be made these circumstances.
As mentioned previously, all parenting arrangements, whether detailed in a parenting plan or in court orders, must regard the child’s best interests as the paramount consideration. Parents should always enter into negotiations with the other parent with this principle firmly in mind.
At Everingham Solomons we have the expertise and experience to assist you with all parenting matters because Helping You is Our Business.
There are many terms which might sound quite foreign when you sell or purchase real estate property. For instance, you will often hear the terms “latent defect” and “patent defect”. For many, this may be the first time you have heard these terms. So, what do these terms actually mean and how should they impact your decision making when selling or purchasing property?
A “latent defect “is one which a purchaser is unable to reasonably discover upon an inspection of the property. A “patent defect” is one which a purchaser, who inspects a property with reasonable care, ought to see or discover.
A defect may be either a title or a quality defect. A defect in title is an interference in the vendor’s ability to perform their obligation to transfer the title under the Contract, being the subject matter of the sale (including the improvements). A defect in quality affects the quality of the land and/or improvements. Whilst a defect in quality may affect the value of the land, or the use to which the land or improvements on the land may be put, it does not interfere with the vendor’s ability to transfer the title. For example, use or zoning of the land, physical defects in the land or improvements (i.e. structural defects, pest infestation, land contamination, etc.).
A vendor is only obliged to disclose to a purchaser latent defects in title. In respect of all other defects, being patent defects in title and quality, and latent defects in quality, the rule is caveat emptor or “let the buyer beware”.
A vendor’s failure to disclose a latent defect in title may entitle the purchaser to terminate the Contract, if sufficiently serious. Accordingly, it is important that defects are classified correctly. However, such distinction is not always easy to make. It may be prudent for a vendor to disclose the defect in the Contract with an acknowledgment by the purchaser that the disclosure has been made. This not only assists the purchaser with their inspections of the property and decision making, but also provides more certainty to the vendor by limiting the purchaser’s right to object or assert other rights regarding the defect.
You should discuss any potential defects in the property with your solicitor. Feeling overwhelmed by the terminology used in conveyancing transactions? Contact the friendly and experienced team at Everingham Solomons because, Helping You is Our Business.
Click here for more information on Jessica Wadwell
On 19 June 2012 the Workers Compensation Act 1987 was substantially amended, one of those amendments was to greatly limit workers and their ability to claim benefits under the Workers Compensation Act for injuries sustained whilst on a journey to and from work.
In the case of Smith v Woolworths Limited (2017) NSW WCC 290 Ms Smith was employed by Woolworths and on the day of injury she drove her vehicle within the staff carpark. After parking her vehicle in the staff allocated carpark, she then walked along a walkway and just prior to going through the automatic doors, Ms Smith was attacked by a bird and she suffered a serious right eye injury.
The question was whether Ms Smith was still on a journey and if not, whether her injury arose during the course of her employment.
Arbitrator Harris decided that as Ms Smith had finished her journey as ‘She crossed the boundary of the land on which her place of employment was situated‘. It should be noted that the staff carpark and the complex are all under the one deposited plan.
It was held that Ms Smith was no longer on a journey, with the next question being whether the injury arose out of the course of her employment. It was held that Ms Smith was attacked by a bird in circumstances where the employment bought her to the very point where the injury occurred and hence on that basis the injury arose out of the course of her employment.
This case is a timely reminder as we enter the season of swooping magpies and the risk these native birds may pose to workers entering and leaving the workplace, as well as the entitlements available to workers if they are injured as a result of a swoop.
If we can be of any assistance please contact us at Everingham Solomons because Helping You is Our Business.
With the ongoing drought, many farmers are facing situations where their creditors are seeking resolution of issues involving farm debts. Under the Farm Mediation Act 1994, creditors and farmers are required to engage in mediation prior to any enforcement actions being taken under a farm mortgage. As your solicitor, we can help prepare and advise for the mediation and to consider options realistically. Farmers are also entitled to have their solicitor represent them at the mediation. Mediation is a structured negotiation process where a neutral and independent mediator assists the parties to communicate effectively with one another and reach an agreement on the issues.
Under the Act, if the farmer’s mortgage is in default, the creditor must invite a farmer in writing to mediate. The farmer then has 20 days to respond to a creditor’s invitation. However, a farmer may also initiate a mediation under the Act, whether or not they are in default. If the farmer’s loan is in default and the creditor refuses to agree to mediate, this may result in the issue of a certificate of exemption from enforcement action.
It is recommended that farmers facing financial problems seek legal assistance early as this will enable efficient identification of the problems. Our professional services can help to advise on aspects of the process, help in succession planning and negotiating a business restructure if the informal mediation does not resolve the issues.
If your mediation is unsuccessful and you believe that your creditor has not followed the correct procedure, then we can assist in lodging a complaint directly with your creditor. If the issue is not resolved, we can assist in identifying the most appropriate forum for resolving the complaint, such as the Financial Ombudsman Service Australia, or from 1 November 2018, the Australian Financial Complaints Authority.
Under the NSW Government’s Farm Household Allowance, an Activity Supplement payment of up to $3,000.00, payable to both you and your partner (total of $6,000.00) may be used to fund our professional legal advice on the above matters.
If you require assistance with your farm debt, please contact Everingham Solomons to have a discussion with a legal practitioner today because Helping You is Our Business.
Many readers will be members of Self-Managed Superannuation Funds (SMSFs) and will understand in general terms the limits imposed on SMSFs with respect to the types of investments they can make.
Many injured workers are faced with having their weekly payments stopped due to a change in workers compensation laws that was introduced in 2012, limiting the amount of weekly payments a worker could receive to 260 weeks (5 years) under section 39 of the Workers Compensation Act 1987. The section does not apply to an injured worker if their injury has been assessed as greater than 20% whole person impairment.
