Is Your Home Subject to Land Tax?

RHGLand Tax is a tax levied by the NSW Government on owners of land. Generally your home or “principal place of residence” is exempt from Land Tax.

Whilst “principal place of residence” appears to be a fairly straightforward concept, arguments often arise in relation to the term, particularly when the Office of State Revenue is chasing Land Tax payments.

Essentially Land Tax is not payable on land that is a “principal place of residence” – that is, residential land that is used and occupied by the owner as their principal place of residence and for no other purpose (with limited home business exceptions).

When determining whether a property is a “principal place of residence”, the following factors are taken into consideration:

  • the architectural design and physical character of the property (such that a sleeping place or presence of a bed does not necessarily make the property a “residence”)
  • matching the owner’s tax returns, utility bills and drivers licence to the address claimed as the principal place of residence
  • the legal right to occupy the property (for example, living in a shed whilst a house is constructed)
  • whether the residence is habitable
  • whether the utility consumption for the property (for example water, electricity and gas) indicates the owner is living in the residence

With the Chief Commissioner of State Revenue always on the lookout for landowners trying to avoid Land Tax, it is important that the property claimed as your “principal place of residence” is actually that – falsely describing your property as a principal place of residence attracts interest and steep penalties.

It is also necessary for landowners with multiple properties to register for Land Tax so as to receive annual assessments. The Land Tax threshold for 2013 is $406,000 – meaning if the combined unimproved land value of all land owned is greater than this threshold, Land Tax will be payable.

If you are considering purchasing land, contact the experienced conveyancing team at Everingham Solomons who can assist you in determining whether you will be liable for Land Tax because Helping You is Our Business.

Click here for more information on Rebecca Greenland.

Extension to the First Home Owner Grant (New Homes)

Lesley McDonnellRecently, the Office of State Revenue announced that the First Home Owner Grant (New Homes) of $15,000 is being extended for a further two years from 31 December 2013 to 31 December 2015. On 1 January 2016 it will reduce to $10,000.

The First Home Owner Grant (New Homes) applies to the purchase of a new home only. It does not apply to the purchase of an established home, vacant land, business premises or a holiday home.  A new home is a home that has not been previously occupied or sold as a place of residence.

To be eligible to apply for the Grant, you must be able to meet at least the following conditions:

  • You must be over 18 years of age;
  • The property must be purchased in your name and not in the name of a company or trust;
  • If there are two people buying together, one person must be a permanent resident or an Australian citizen;
  • All applicants and/or their spouse/de facto must not have previously owned a residential property, jointly, separately or with some other person in any State or Territory before 1 July 2000;
  • The purchase price must not exceed $650,000;
  • The applicant and/or their spouse must have not previously received a first home owner grant in any State or Territory; and
  • At least one applicant must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of purchasing the new home.

Like most applications, conditions apply and penalities will be imposed on any person who knowlingly supplies false or misleading information at the time of making an application for the grant. An assessment as to whether you are eligible to apply must be determined based on your individual circumstances at the time you are seeking to purchase a new home.

If you are a first home buyer and you are considering buying a new home, you should come and see our experienced property team who can help answer all of your questions and put you on the path towards owning your new home, because Helping You is Our Business.

Click here for more information on Lesley McDonnell

Who Should Bear the Costs of Travel

saraIn situations where one of the parties lives a considerable distance from where the children reside, the question may arise as to which parent or carer is to pay the costs of travel to spend time with the children?

This question was raised in the appeal case of Lorreck & Watts [2013] FamCAFC. In June 2012, the Full Court of the Family Court allowed the children to move from Canberra to Cairns with the mother and the father was to spend seven block periods within every two years with the children. The father had remained living in Canberra.

The mother, who was reliant on Child Support and Government Benefits at the time, argued that she should only pay for one return flight per two years until she was earning $1,300 per week. The father’s position was that the mother should pay 2 of every 3 trips considering that she had moved away.

The court made orders that from July 2013, the mother and the father should bear the costs of the travel equally. The mother appealed this decision.

Her Honour, on appeal, found that the court at first instance did not provide sufficient reasons for why he made the orders for the joint payment of the travel expenses.

Her Honour looked at whether the mother would be willing and able to actually earn $1,300 per week.  Whilst not demeaning the mother or her ability, the court found on appeal that it would be more prudent for there to be a start date on the mother’s payment of the costs of travel as it may have potentially been disadvantageous to the father in the future if the mother never earned that allocated amount of money per week.

For the above and other reasons, Her Honour made orders that from 1 January 2014, being the start of the two year period for the father to spend time with the children, the mother shall pay for three of the seven return trips. Prior to that, the mother only had to pay for one trip due to her financial circumstances.

We have the experience and expertise to assist you with all your Family Law needs because Helping You is Our Business.

Click here for more information on Sara Burnheim.

Dodgy Building Work Does Not Need to be Tolerated

CCThe Home Building Act 1989 (‘the act’) is a set of laws designed specifically to help residential homeowners who have received sub-standard building work.

 

The act can help almost any homeowner from almost any form of bad building related work

The act provides protection to homeowners who have constructed a new home, including cases where the home was built with structural defects, with poor quality materials or in a way that departed from the building plans.  However, the act is not limited to new buildings and also applies to renovations and home additions as well as any isolated specialist work, like plumbing, electrical work, tiling and cabinet or kitchen making.  Basically any work related to building or altering a residential dwelling will be covered under the act.

In certain circumstances, the act even helps the purchaser of a used home to rectify poor building work supplied to the home’s previous owner.

The act helps homeowners in two main ways.

Firstly, it ensures that all tradesmen are insured.  This means that if a tradesman is ultimately found to be liable for a building problem, and becomes insolvent or disappears, that there will be an insurer in the background who can pay for the inadequate work to be rectified.

Secondly, the act gives each homeowner a warranty as to the quality of the building work that they receive from the tradesman.  The warranties are very broad but basically mandate that:

  1. the work will be of good tradesman quality;
  2. the work will be done in accordance with the plans;
  3. the materials used will be good, new and suitable;
  4. the work will be done on time; and
  5. the work will be fit for the purpose that it was designed for.

The majority of claims made under the act are heard in the Consumer Trade and Tenancy Tribunal (‘CTTT’).   This is a real benefit for homeowners.  The process is much cheaper and is informal.  Applying to the CTTT is not as slow, expensive or as intimidating as going to court.

Just like with most legislation, time limits and warranty periods apply.  If those periods lapse before the homeowner makes a claim, the homeowner can lose the right to recover their money or have the work rectified.

If you have any questions about the quality of building or construction work, contact Everingham Solomons, because Helping You is Our Business.

Click here for more information on Clint Coles.

Changes to Superannuation

jmhMost people will probably be aware of the changes to superannuation guarantee contributions but what do these changes mean for employers?

All employers need to be aware that the changes to the superannuation regime will increase employers’ superannuation obligations. Starting from 1 July 2013 the compulsory contributions rate will increase from 9% to 9.25%.

Superannuation regime

The changes introduced by way of the Superannuation Guarantee (Administration) Amendment Act 2012 means that compulsory superannuation guarantee contributions will increase over a seven year period, from the current rate of 9% to 12%.

The increases will be gradual, as follows:

Income year                           Charge percentage

Starting 1 July 2013-2014          9.25%

Starting 1 July 2014-2015          9.5%

Starting 1 July 2015-2016          10%

Starting 1 July 2016-2017          10.5%

Starting 1 July 2017-2018          11%

Starting 1 July 2018-2019          11.5%

Starting 1 July 2019-2020          12%

Removal of the Upper Age Limit

The Act also has an impact for employers when it comes to paying superannuation guarantee contributions to employees over the age of 70. Currently, employers are not obliged to make payments in respect of employees who are age 70 and over. However, from 1 July 2013 employers will be obliged to make superannuation contributions for all their employees. The changes will also ensure that employers will be able to claim income tax deductions for superannuation guarantee contributions made to employees aged 70 and over from 1 July 2013.

The Employment Law team at Everingham Solomons is well equipped to assist you with all your workplace relations issues because Helping You is Our Business.

Click here for more information on Jessica Simmonds.

The Transition to Retirement Living

Lesley McDonnellThe transition to retirement living can be a rewarding one. Along the way some important decisions need to be made.  One of those decisions may include moving into a retirement village. In an effort to help make that decision process easier for prospective residents, new laws come into effect on 1 October this year. It is timely to look at those changes and retirement living more generally.

Under the law, a retirement village is defined as being a complex containing residential premises that are predominantly or exclusively occupied by retired persons who have entered into a village contract with an operator of the complex. A retired person “means a person who has reached the age of 55 years or has retired from full-time employment”.

Up until this point in time there have been various forms of retirement village contracts.

From October there will be three main changes. Firstly, village operators will be required to use a new standardised village contract. Secondly, prospective residents will receive a general enquiry document that explains the services and facilities available to them in the village. Thirdly, a new simplified disclosure statement will be given to prospective residents before they sign a village contract.

According to the Minister for Fair Trading Anthony Roberts: “These reforms will make the move into a village easier and less stressful for retirees and their families”. The new standardised contract “will allow prospective residents to compare apples with apples when making the important choice of which retirement village to move into”.

After making an initial enquiry with an Operator of a retirement village, a prospective resident will be provided with a two page general inquiry document. The document provides general information about the village including the village type, costs to enter the village and village facilities.

The new version of the disclosure statement provides more detailed and specific information including financial arrangements particular to the village and unit.

The new standard contract covers matters such as what residence rights are involved, entry costs, the settling-in period, recurrent charges, services and facilities, alterations and additions, repairs and maintenance, sharing of capital gains, and departure fees.

As an added measure of protection for residents and their families, the legislation still provides for a settling in period and cooling off period.

Making the move into a retirement village has significant financial and legal implications.  Taking the time to properly know and understand the village contract is essential to ensuring that the choice of retirement village is the right one for you. The experienced team at Everingham Solomons can help guide you through the process because Helping You is Our Business.

Click here for more information on Lesley McDonnell

Jurisdiction of the Family Courts in International Property Cases

SKNProperty proceedings under family law which concern assets held overseas may be subject to Australian law regardless of property rights acquired under the foreign law where the property is located.

Whether an Australian court has the jurisdiction to make orders concerning international assets arises from section 31(2) of the Family Law Act (1975).  It states that the jurisdiction of the Family Court “may be exercised in relation to persons or things outside Australia and the territories”.

The first step the Australian court must take is to apply the legal test known as “forum non conveniens” which requires it to ask whether the proceedings before it are clearly inappropriate, and whether they are oppressive or vexatious to the parties involved.  The court considers the general circumstances of the case and takes into account the true nature and full extent of the issues involved.

For example, the court considers whether the foreign court will recognise the Australian court’s eventual orders; costs incurred; the connection of the parties to either jurisdiction; as well as the parties ability to understand and participate in the proceedings locally or overseas.

In the case of Vaden v Vaden [2007] FMCAfam 744, the parties were British citizens recently residents in Australia but whom had been married in the United Kingdom and owned a property there registered in the wife’s sole name.  The wife wished to return to live in the former matrimonial home but the husband wanted to be declared a trustee owner of the UK property in order to obtain a rental income.  The court held that the proceedings commenced in the Federal Magistrates Court of Australia should be stayed as any judgment made here may not be enforced by a British court.

Although in Vaden v Vaden the court declined to deal with the UK property, parties must be aware that assets located overseas will not necessarily fall outside the jurisdiction of the family law courts in Australia.  Hence, the unique circumstances of each case and the appropriateness of the Australian court to hear the matter, will ultimately determine which jurisdiction – either local or international – has the power to make the final decision regarding the property in dispute.

At Everingham Solomons we have the expertise and experience to assist you with all legal matters associated with Family Law because Helping You is Our Business.

Click here to learn more about Sophie Newham.

Liens

MKG-newGenerally speaking, a lien allows a person to retain possession of another person’s property until the costs or monies have been paid for it.

There can be a statutory lien which gives a person the right to hold the goods until the seller’s monies are paid.

Under the common law there can be a general or particular lien.  A particular lien which is more common refers to a person holding goods for work done on those goods until accounts have been paid.  Examples of this are a mechanic holding a car until a bill is paid or a solicitor holding a file until their account is paid.

A general lien however allows the person to hold the goods until all sums payable are satisfied.  Again to use the prior analogy, mechanics holding a car for bills paid for that car as well as another car, or a solicitor holding a file regarding family law for work done on that file and a conveyance file.

An interesting case on this topic is Stapley v Towing Masters Pty Limited (trading a Dynamic Towing) [2009] NSW CA 382.  This involved a tow truck driver claiming a lien over a vehicle.  The case was bought by an insurer who argued that a tow truck driver did not have lien over the vehicle.

The facts in short are that the truck driver picked up a vehicle and was asked by the driver’s insurer to drop it to a service centre so that the insurer could assess the damage.  When they went to deliver it the insurer refused to pay their account, so the tow truck driver took the car back to its depot and claimed a lien over it.

At first instance the court held that the tow truck driver was entitled to exercise a lien over the car as he was a common carrier.

The Court of Appeal however held that the tow truck driver was not a common carrier and therefore was not entitled to the lien.  This matter turned on the facts and whether the tow truck driver was a common carrier and held himself out to pick up all jobs at reasonable rates without reservation.

If you should have any queries about goods being held until payment, please do not hesitate to call us at Everingham Solomons because Helping You is Our Business.

Click here for more information on Mark Grady.

Planning for Stamp Duty Changes

KJSbwWhen GST was introduced in 2000, part of the then agreement between the Commonwealth and the States for the sharing of GST revenues proposed the abolition of various state taxes relevant to business.

As might have been anticipated, most State Governments including NSW have not been particularly prompt in doing that. Finally, there is good news the business on this front.

Effective 1 July 2013 NSW stamp duty on –

  • Purchase of shares in private companies;
  • Mortgages; and
  • Purchase of business assets other than land,

is to be abolished.

The abolition of these duties was originally proposed to take effect from 1 July last year however that was deferred in the 2012 State Budget to this year. Most experts are waiting on this year’s State Budget, scheduled to be released on 18 June, before relying upon the proposed changes taking effect.

Traditionally June is a peak activity month for business sales and purchases. This year however the “carrot” of reduced or eliminated stamp duty and the uncertainty until after the State Budget may recommend that some business transactions be deferred into the new financial year.

There are anti-avoidance provisions already in the stamp duty legislation to stop the exemption applying to transactions which finalise after 1 July but result from legally enforceable arrangements entered into before that time. This means that there is limited scope to put a legally binding deal in place before 30 June and then claim the benefit of the stamp duty exemption if settlement takes place after 1 July.

This will be one of the issues that vendors and purchasers will need to grapple with in the period leading up to the end of the financial year. Sellers will naturally wish to complete transactions whereas some purchasers may wish to defer until the new financial year.

At Everingham Solomons the business law team has the experience and expertise to provide advice on all sale and purchase of business matters and associated stamp duty issues because Helping You is Our Business.

Click here for more information on Ken Sorrenson.

Inheritance: a financial contribution to the relationship or not?

SKNProperty proceedings before the Family Court are often complex and can go beyond simple tangible property and financial assets.  One such area of complexity relates to receiving, or potentially receiving, an inheritance during the course of a marriage or de-facto relationship.

Despite clear intentions set out in a will to leave property to a particular party, it is possible to argue before the Family Court that such an inheritance should be considered an asset of, or contribution by, both parties – not just a contribution made by the party who received the inheritance.

Ultimately, there are a number of factors which the court takes into consideration.  For instance, the court may look at the timing of the inheritance (i.e. prior to co-habitation, during the relationship or immediately after separation); the length of the relationship; the size of the inheritance; and whether the non-recipient party could be said to have made a contribution to it.

In the interesting case of White and Tulloch v White (1995) FLC 92-640, the full bench of the Family Court considered a husband’s claim that his estranged wife had an expectation of inheriting a substantial amount of property upon the death of her mother, and that this should be a factor when assessing the asset pool.  The Family Court determined that an expectant inheritance could not be a seen as a financial resource as the wife could not control or be certain that she would receive such property under her mother’s will, because the mother could revoke her will or completely alter how her estate was to be distributed upon her death, at any time.

There is no hard and fast rule when it comes to how the court will view an inheritance in relation to the financial contributions of the parties.  Whilst the Family Court in White and Tulloch v White said that a prospective inheritance could not constitute a financial resource, it can still be taken into consideration under the very wide provision of s75(2)(o) of the Family Law Act (1975).  This provision requires the Court to bear in mind “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.  In other words, the Court will consider facts or circumstances (of a largely financial nature) when assessing the financial pool, which therefore may include a potential or expectant inheritance to one the parties.

Clearly it is always advisable to have a carefully written will which sets out your intentions in relation to the distribution of your estate.  However due to the often unpredictable nature of the law you must also be mindful that the contributions made within a marriage or de-facto relationship may extend to inheritances and even to property not yet in your hands.

At Everingham Solomons we have the expertise and experience to assist you with all legal matters associated with Family Law because Helping You is Our Business.

Click here to learn more about Sophie Newham.