Many business owners involve their self managed superannuation funds (“SMSF”) in their business as owner of or part owner of their business premises.
There can be benefits in doing this but there are also costs associated particularly with –
transferring the asset into the SMSF; and
the complex ongoing compliance regime for SMSFs
In the past month I have come across good examples of both points.
A client had heard of the benefits of transferring his business premises into his SMSF and better still, that it could be done for only $50 stamp duty. As usual, the devil is in the detail. A short discussion revealed that-
For various reasons, the stamp duty concession would not apply taking the potential stamp duty cost from $50 to approximately $60,000.00;
The transfer would trigger a significant capital gains tax cost; and
He was unaware that if the business premises were transferred to the SMSF , they could no longer be used for financing his business.
The other example involved a lease of business premises already owned by a SMSF to the operating company of the business owner.
This client was aware in general terms of what are sometimes referred to as the “arms length” rules. These rules provide that a related party transaction (in this case the lease ) cannot be on less favourable terms to the SMSF than would be the case if the SMSF was dealing with an unassociated party.
He did not wish to pay less than a market rent . He had reached the stage in life when he was trying to maximize his retirement income and get every cent he could into his SMSF. He wanted to pay a rental that was vastly more than the market rental.
From a superannuation law viewpoint, the danger was that the excess rental component would be regarded by the ATO as a contribution to the SMSF on his behalf rather than a rental receipt . As the client was already contributing all he was able to into superannuation, excess contributions tax would have been payable at an effective tax rate of 46.5% on part of the excess rental and 93% on another part.
In summary, any proposal involving the transfer of assets into an SMSF or a dealing between a SMSF and a related party needs to be carefully considered before it takes place. Expert legal, tax and financial advice should be taken.
At Everingham Solomons we have the expertise in superannuation, tax and business laws to help you because Helping You is Our Business.
When orders have been made by the Court in relation to the welfare of children and it is time to hand the children over to the other parent, what do you do when the child says “I don’t want to go”. Do you put the child back in the car or do you encourage the child to go?
This was addressed in the recent case of Raider and Raider [2011] by Justice Forrest. The facts of this case were the mother lived in Sydney with the two children, aged 13 and 11, and the father lived in Surfers Paradise, Queensland. The children were to spend time with the father during the school holidays and the mother was to give the father 28 days notice of when that was to occur.
The father alleged that the mother did not comply with the Orders because the children did not spend time with him over the holidays and he was not speaking to them on the telephone. The mother stated that they did not want to go nor speak to him.
Justice Forrest had to determine, in accordance with the Family Law Act, whether the mother had intentionally failed, or made no reasonable attempt to comply with those orders and if so, did she have a reasonable excuse.
To assist him in his determination, Justice Forrest relied on the Full Court’s decision of Stevenson v Hughes [1993] regarding the positive obligations to encourage access. He stated “They said that it is not a sufficient discharge … to say to the effect “you see, I tried, but the child does not want to go” and thereafter to figuratively fold their arms as if that were the end of the matter. They held that the custodial parent’s role is an active role with an obligation to positively encourage access.”
Justice Forrest determined that the mother had contravened three of the five allegations in that 1) she did not provide the father with the travel details 28 days prior, 2) she did not encourage the children to speak to their father on the telephone and 3) she provided the wrong days for the children to spend time with their father.
In relation to the last two allegations however, the Court found that the mother did have a reasonable excuse on the basis that the 13 year old boy had threatened self harm and it was in the childrens interest for them not to spend time with their father to protect their health and well being.
If you need assistance determining what is reasonable compliance of children’s orders you should seek legal advice from Everingham Solomons because we have the experience and expertise to assist you because Helping You is Our Business.
At present, business name registrations have been handled on a state by state basis by differing departments in each state. For example Fair Trading in NSW and Consumer Affairs in Victoria.
As and from 28 May 2012 the registration and renewal of business names will be managed by the Australian Securities and Investment Commission (ASIC) on a national level. Accordingly ASIC will oversee a national business names database and will handle all Australian business name applications and renewals.
This means that if you have the same name registered in multiple states, you will no longer need to renew them in multiple locations. All names will be registered from the various state locations on the new database. If you are in this situation it will be up to you to decide whether you ought cancel any duplicated names as they will all appear on the new national data base.
The change is about making it easier for businesses to operate in different states of Australia and making it easier for people to know who it is they are dealing with in a business, by cutting the red tape.
The change will not affect existing registered business names, as they will be automatically transferred to the new ASIC register and retain their existing expiry dates.
After 28 May, renewal notices will be sent from ASIC. Payment and renewal applications can be attended to online.
You should note however that the registration of a business name does not provide protection to you from someone else being permitted to register a similar business name. If this is what you require then consideration to registering a trademark ought to be considered.
If there are similar or identical names already registered in different states, then ASIC will register the names notwithstanding that they are similar or identical and will then identify them by indicating that the name was previously recorded in a particular state so that the public can differentiate the name when searching.
If you require any assistance with respect to business names, trademarks or any other business related matter we at Everingham Solomons have the expertise to help you because Helping You is Our Business.
The Criminal Procedure Acts sets strict time limits in which a person must be charged for a summary offence.
Summary offences are those crimes of lesser severity which must be finalized in a local court by a magistrate. Summary offences have a maximum penalty of two years imprisonment or less.
If a person is accused of a summary offence, the police must commence their proceedings against the accused person within six months of the date that the offence was said to have been committed. There are however exceptions to this general rule.
This means that two dates become critical. The first is the time of the alleged offence and the second is the time that the proceedings are commenced.
Where the offence is a single act, such as an assault, the time that the offence was alleged to be committed is straightforward.
However, where the offence is a continuous offence, meaning that it can be discontinued at will by the offender, (e.g. keeping stolen goods in custody) the offence will be taken to be committed just before the illegal act was discontinued.
The Criminal Procedure Act states that proceedings are commenced by the police or a prosecuting authority when the Court Attendance Notice (‘CAN)’ is filed in the court registry.
Often, when a person is arrested and charged for a minor offence, they are issued an on the spot or field CAN. The issuing of this notice does not however, commence the proceedings for the purpose of the Criminal Procedure Act. It may be the case that the CAN is not filed in the court registry until some time later.
In other instances, the police or prosecuting authority might spend a substantial amount of time investigating an offence before charging anyone. If this is the case it is important to ensure that any charge has been laid within the time limits set by the Criminal Procedure Act.
If you have any questions relating to summary offences please do not hesitate to contact Everingham Solomons Solicitors because Helping You is Our Business.
Not only are parents morally obligated to support their children we should be aware that there is also an obligation for parents to maintain their children in a financial sense. Human nature being what it is, some parents, will not comply with their obligations to support their children. Indeed, failure of a parent to pay maintenance towards a child has been a ongoing social problem. Various Acts of Parliament have been enacted in an attempt to enforce maintenance payments with only a limited amount of success.
It is believed that arrears have become more readily recoverable since the creation of the Government instrumentality, the Child Support Agency (“CSA”).
For any number of reasons, parents defaulting in child support obligations may seek to travel outside Australia. In appropriate cases, Departure Prohibition Orders (“DPOs”) may be used to stop parents with outstanding child support arrears from leaving Australia. DPOs are an effective way to collect outstanding child support. In the year 2008-9 the CSA recovered around $5 million of overdue child support by using DPOs.
A DPO is an administrative order and does not need the endorsement of a Court. The power to issue such orders may be delegated to certain senior CSA officers.
Whilst it is not appropriate to set out all the provisions of such law, in an article such as this, certain features should be noted. The CSA can make a DPO when four conditions are satisfied:
the relevant person has a child support liability;
the relevant person has not made satisfactory arrangements to hold discharge to liability;
CSA is satisfied that the person has persistently and without reasonable grounds failed to pay child support debt;
CSA believes it is desirable to make such an order to ensure that person does not leave Australia without wholly discharging the liability or making satisfactory arrangements to do so.
Awareness of these provisions may assist parents in enforcing payment when a child support liability has not been paid.
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 for more information on Jennifer Blissett.
The use of the internet and iphones by workers is increasing, and with social media becoming more and more popular, so too is the use of these devices by employees during work hours.
Whilst some employers may encourage their staff to actively promote the business via social media networks such as Facebook and Twitter, many a boss is lamenting the rise of the thumb-twitching, seemingly constant, updating of employees’ status between nine and five.
The most obvious impact of an employee using work time for personal communications is decreased productivity. But having the employee’s mind more focused on who “liked” what and what they had for breakfast could be the least of the employer’s worries.
The use of social media at work also raises concerns regarding inappropriate conduct which can negatively impact on public perception of the business, or could also lead to bullying and harassment or disclosure of confidential information (whether intentional or not).
There are further risks for employers when attempting to discipline employees who inappropriately use social media.
To combat the risks of inappropriate social media use, it is recommended that employers adopt a social media policy which provides strict guidelines on the use of social media in the workplace, as well as out of hours. Such a policy can also reiterate employees’ responsibilities in relation to harassment and confidentiality.
A standard social media policy should include:
a definition of inappropriate use;
details of the employer’s expectations in relation to social media use in the workplace;
a warning that comments made in private accounts out of hours may result in disciplinary action;
reiteration of obligations around the use of confidential information;
consequences of inappropriate social media use.
If you think your business could benefit from a social media policy, contact the employment law team at Everingham Solomons where Helping You is Our Business.
Click here for more information on Rebecca Greenland.
The Government-funded Paid Parental Leave scheme (PPL scheme) commenced on 1 January 2011. From 1 July 2011, employers have been required to facilitate the payment of paid parental leave (PPL) through their payroll.
Who is eligible?
Employers are not responsible for determining whether a person is eligible; the assessment is completed by the Family Assistance Office (FAO)
In order to be eligible the employee must meet certain criteria, including a carer test and work related tests.
How does it work?
The scheme provides eligible working mothers and initial primary carers of children born or adopted on or after 1 January 2011 with PPL for the duration they are not working, to a maximum of 18 weeks at the national minimum wage.
PPL payments will be paid in ‘instalments’ where possible on the employee’s regular pay day, however an employer is not obliged to make an instalment until they have received the amount due to be paid from the FAO.
Employer obligations
An employer’s obligations include:
pay instalments to the employee when the funds have been transferred from the FAO and, where possible, in accordance with the employee’s usual pay cycle
not withhold unauthorised deductions
comply with all of its other obligations, including those which might arise under an industrial instrument, contract of employment or other law — for example, annual or long service leave.
provide a pay slip to the employee in the same manner as usual and in accordance with normal pay slip requirements
make and keep records for 7 years for each person who receives PPL pay
notify FAO in writing as soon as practicable if any relevant business changes happen — for example bank details, payroll dates, ceasing of business, person ceases to be employed (for example, is made redundant), person returns to work, and if any underpayments or overpayments of PPL instalments occur.
How Everingham Solomons can help
If you think your business could benefit from a Paid Parental Leave policy, contact the employment law team at Everingham Solomons where Helping You is Our Business.
Click here for more information on Jessica Simmonds.
Since 1 November 2011, a mortgagee (financial institution) has a higher duty to the mortgagor (property owner) when selling their property as a result of the property owner having defaulted on their loan repayments.
Section 111A of the Conveyancing Act 1998 (NSW) replaces a duty to ‘act in good faith’ with a negligence style duty of care.
Financial institutions already owe this duty to corporations but not to individuals.
Prior to these amendments, the law only required the financial institution to act in good faith. This meant that the financial institution should not act willfully and recklessly and sacrifice the property owner’s interests. The only remedy was for the property owner to go to the Equity Division of the Supreme Court. This meant that sales referred to as ‘fire sales’ were often just that and purchasers would be able to pick up property well below market value, with little or no recourse for the property owner.
Since November 2011 a financial institution must take reasonable care to make sure that the property is not sold for less than market value. If they breach this duty they will be liable to the property owner in damages. More importantly the financial institution will not be able to contract out of this duty. This means that the mortgage documents that are signed when the property owner takes out a loan will not allow the financial institution to exclude the provision.
It is also important to understand that this obligation extends to not only the financial institution but also their agents which would obviously include real estate agents.
The banks must take all reasonable care to ensure that the property is sold for either:
not less than market value; or
the best price that can be reasonably obtained.
‘Reasonably obtained’ would mean that the bank must take steps to obtain the best result which may include obtaining professional valuations, advertising the property, leaving it on the market for a reasonable period and allowing inspections.
This is definitely a step in the right direction for those people whose houses are sold by banks. If we can be of any assistance, the property group at Everingham Solomons will be happy to assist you because Helping You is Our Business.
The strictness of the law relating to the sale of real estate in NSW can have devastating consequences for a successful purchaser at an auction.
It is possible for a purchaser to be the highest bidder after the reserve has been reached or the auctioneer announces that the property is on the market, have it knocked down to him or her and then end up with nothing. It is terrible because the purchaser will have gone to great trouble and spent money on preparing for the auction but, more than this, it is terrible because the joy of being the winning bidder is snatched away so quickly. At one moment, the purchaser is as happy as a butterfly and the next, as sad as a flute.
It happens when, after the auction, the vendor refuses to sign the contract for sale and forbids the auctioneer from signing it on his or her behalf.
It does not happen often but when it happens, it is because the effect of a particular section of the Conveyancing Act 1919 is that no legal proceedings can be brought to enforce the sale of land without a memorandum or note of the contract for such sale signed by the party against whom enforcement action is to be taken.
The signed writing does not have to be the contract for sale on display at the auction. Courts have accepted letters to third parties, receipts, drafts and correspondence (even correspondence denying liability under the contract) to be sufficient. The writing can comprise several different documents, provided there is sufficient connection between them and they are signed. Even an email can be said to be signed.
This is all very well but arguing in court about whether there is sufficient writing to enforce a contract for sale of land is time consuming, expensive and uncertain. Better that the problem with auctions be fixed by legislation. It is a State matter, a job for Premier Barry O’Farrell’s Government.
In the meantime, if you are selling or leasing real estate of any kind, the property group at Everingham Solomons will be happy to assist you because Helping You is Our Business.
In every family law property case there must be full and frank disclosure of all financial information.
The matter of disclosure and making informed decisions was raised in the recent case of Nyles & Nyles [2011] FamCA 565 whereby the husband sought to set aside Orders on the basis of the wife failing to disclose pertinent financial information.
The facts of the case were that the wife was a director and shareholder in a company which was possibly going to be placed on the public market. If this was to occur, the wife stood to receive significant financial gain. Despite this, the husband and wife entered into consent orders prior to the information relating to the public float being available.
The husband sought to have those Orders set aside on the basis that the wife failed to make full and frank disclosure and fraudulently misled him into entering into Consent Orders. The wife denied she did not make full disclosure and that she did not misrepresent the husband in relation to the float of the company.
The first question before the Family Court of Australia was whether the wife misrepresented her financial position to the husband. The Court found that the wife did engage in fraudulent conduct by failing to disclose updated financial information about the company float.
The next question before the Court was, did the husband who relied on the misrepresentation of the wife result in a miscarriage of justice enough for the Orders to be set aside?
The Court did not believe that the husband relied on the information that was provided to him by the wife to make his decision to enter into any agreements. At all material times, the husband was aware of the float and was provided with adequate legal advice.
This case illustrates two main points. Firstly, you must disclose all information particularly in the event that something material changes in your circumstances.
Secondly, you can make a decision prior to obtaining financial disclosure information, but it is not in your best interests to do so. The husband in this case may have been successful in his application had he waited for all information.
If you are considering separating or have separated and you need financial disclosure, you should seek legal advice from Everingham Solomons because we have the experience and expertise to assist you.
Many business owners involve their self managed superannuation funds (“SMSF”) in their business as owner of or part owner of their business premises.
