Indeed, computer technology has been one of the most important drivers of economies worldwide. However, while it has largely made our lives easy, its downside is that the collection and storage of your personal information may be considered an intrusion of your privacy. The data gathered from you is prone to abuse and misuse by individuals and organised groups with illegal intent. If mishandled, the systems of these institutions may either be hacked or breached, and your data may ultimately fall into the wrong hands, in turn putting you at risk.

Such concern calls for governments’ intervention to ensure that your privacy is protected. The European Union (EU), for one, has moved to update, strengthen, and harmonise existing privacy laws that impact EU citizens, and this has paved the way for the establishment of a new General Data Protection Regulation (GDPR).

What is GDPR?

To strengthen the measures for securing and protecting the collection and use of personal information from possible abuse and breaches, the European Union is now ready to implement the General Data Protection Regulation (GDPR).

How will GDPR affect Australian-based businesses?

Australia has its own privacy protection law embodied under the Australian Privacy Act 1988, which was further amended and enhanced via the Privacy Amendment Act 2012.

Schedule 1 of the Privacy Act includes the Australian Privacy Principles (APP), which serve as guide for the handling, use, and management of personal information collected by various government agencies; private and non-profit organisations with over $3 million turn over per annum; private healthcare service providers; and other small business enterprises. These are collectively called APP entities. Businesses incorporated in Australia, or even those from other countries but collect personal information from sources in Australia and maintain such information in the country, are covered by the Privacy Act. It also applies to foreign entities that run their business in Australia.

In effect, while your business may not be based in an EU member country, if you collect data or have access to data collected from EU citizens or if you run websites that process and control the data of EU citizens — whether they are residing in EU or not — the GDPR should apply to you. If you believe that your business falls in this category, you must confirm that you are covered by the GDPR and must take the necessary measures to ensure your compliance by May 2018. Generally, to ensure that you are GDPR compliant, you will need to appoint a representative (established in EU) who will act as your contact for supervisory authorities and individuals in EU, specifically for issues pertaining to your data processing activity.

What are the differences between the Australian Privacy Act and the EU GDPR?

Generally, it would seem that the Australian Privacy Act is similar to the EU GDPR, as they share the common goal of protecting the privacy of personal information. However, there are two notable distinctions between the two laws.

Coverage

Under the Australian Privacy Act, businesses with less than $3 million of annual revenue need not comply. On the other hand, all businesses that meet the criteria set under the GDPR, regardless of revenue, must comply with the EU law. In addition, data processors and controllers — whether EU-based or not — are covered by the GDPR.

Penalties

The GDPR imposes higher penalties for privacy breaches. They amount to €20 million or 4% of the company’s total annual revenue in the preceding financial year where such revenue was derived from its worldwide operation. On the other hand, the highest fine under the Australian law is $2.1 million.

Other Features and Enhancements

Enhanced features of the law include how to obtain consent to collect data, as well as how to explicitly inform individuals of what information you are collecting and why you are collecting their personal information.

The most notable enhancement is ensuring the right to request deletion or restriction on the use of information if it becomes irrelevant or if the individual withdraws their consent. This is consistent with the right to be left alone or the ‘right to be forgotten’.

Data Breach Notification

Data controllers are given 72 hours to report data breach to designated authorities once they become aware of it, but if the individual’s rights and freedom are likely compromised, then reporting should be immediate and must not be delayed.

Proactively, Australia rolled out its data privacy regulation in February 2018. Way ahead of the date set for the implementation of the EU GDPR, Australia introduced its mandatory breach notification scheme. The Office of the Australian Information Commissioner (OAIC) handles reported data breaches.

Conclusion

The enactment of the GDPR, set on May 25, 2018, has set a frenzy among Australian businesses and organisations. Regardless of whether you are EU-based or established and operating in other countries, as long as you gather and use information from EU citizens, then you are covered by the GDPR.

You may have access to appropriate technology, adequate resources, and IT experts to handle the requirements of the GDPR; however, there are features of the law that may somewhat cause confusion. In this case, your best bet is to consult with our legal team who will help you get properly oriented, not only about your responsibilities but your rights as well.

Being GDPR compliant allows you to gain a competitive advantage and ensures that your business complies with all current legislation. Contact our team to discuss your GDPR options or for any further information that you may require.

The post General Data Protection Regulation (GDPR) – What is it? written by Glenn Ferguson appeared first on Business Law Today.

1. Tax deductions on vacant land – better start that build

From 1 July 2019, taxpayers will not be able to claim holding cost deductions on vacant land until a property has been constructed and is available for rent, unless that land is being used (in its vacant state) in a business conducted by the taxpayer.

This means that for most persons buying vacant land to construct a dwelling to be used as an investment property – interest, rates and land tax are not able to be claimed as deductions until construction has been finalised.

2. Partnerships and assignment of income – goodbye to a glorious loophole

It is not uncommon for partners in a business partnership to assign their right to future income to a related entity, such as a company or trust. This is usually an assignment of the right to income only, not the ownership of the partnership interest, which avoids triggering capital gains tax and transfer duty consequences.

It is proposed that changes be made to ensure partners who assign their right to future income will not be able to apply capital gains tax concessions in relation to those rights.

3. Contributions/gifts to testamentary trusts – you thought you were being sneaky

First, what are testamentary trusts? A colleague has an excellent article with all the background you need here.

One big tax benefit associated with testamentary trusts is that income of the trust that is distributed to minors (who are beneficiaries) will usually be taxed as though that minor were an adult.  Note – minors ordinarily have higher tax rates for distributions from trusts.

Where a testamentary trust is established, it is common for assets that were not part of the estate to be gifted to the testamentary trust – thereby obtaining concessional tax treatment of income from these assets to minors. Changes will be made to ensure that income distributed to minors from a testamentary trust will only be taxed at adult marginal rates where it is from assets placed in the trust by the deceased – not those later gifted to the testamentary trust.

4. SMSF Auditing – wait, there is some good news!

From 1 July 2019, if you have been a good trustee, your annual audit requirements will go back to once every three years! This will be available to SMSF trustees that have three consecutive years of clear audit reports.

No doubt some of these changes may affect how you structure your affairs, and you should consult with your accountant or legal advisors if it sounds like you may be affected. It is worth noting that these announcements are part of the budget and are not yet law – some changes might be made before these come into effect.

Should you have any questions regarding the 2018-19 budget and the changes listed above, please contact our team today.

The post 2018-19 budget – what tax deductions & concessions are out the door? written by Nick Casey appeared first on Business Law Today.

The Privacy Act (the “Act”) was amended on 22 February 2018 to introduce new requirements for businesses (and anyone really who is caught by the Act) to notify the Australian Information Commission if they have an ‘eligible data breach’. A failure to notify can result in crippling fines.

Who do the changes apply to?

Subject to some exceptions, all Australian Government Agencies, all businesses and not-for-profit organisations with an annual turnover of more than $3million have responsibilities under the Privacy Act and are required to notify of an eligible data breach.

Some small business operators are also covered in certain circumstances (and these circumstances are wide and varying). Therefore, we strongly recommend you get legal advice if you are not sure whether the Privacy Act and these new provisions apply to you or not.

What is an eligible data breach?

The legislation defines this to be any unauthorised access to information, or loss of information, where the information involved is such that a reasonable person would conclude that access is likely to result in serious harm to any of the individuals to whom the information relates.

Although this definition is wide, and may be open to interpretation, the message is clear; where you hold personal information, you must take measures to secure that information.

What must I do if I have an eligible data breach?

We strongly advise firstly to do everything possible to secure your data, and then seek legal advice.

If you are required to comply with the notification requirements, a statement must be prepared and sent to the Commission, and you are required to notify the client/customer/people involved that their private information has been compromised.

Do I really have to notify the Commission?

Whilst there are some exceptions to the requirement to notify the Commission, these are limited. We recommend treading very carefully if you wish to rely on any exception.

If you fail to notify the Commission, this is considered to be an interference with the privacy of the individual(s) involved and you can be liable to significant fines, up to $2.1 million.

What should I do now?

Whilst we may not be IT whizzes, there are some simple preventative actions which we recommend;

1. Complete and implement detailed and robust data security procedures;
2. Conduct regular training of staff in your data security procedures; and
3. Ensure electronic devices such as phones and laptops can be externally wiped (to ensure no data breach can occur from lost or stolen devices).

Prevention is always better than a cure. We strongly recommend –

1. reviewing your data security procedures (or putting one in place if you haven’t got one already);
2. reviewing practices within your business to identify and minimise situations where data breaches could arise; and
3. consulting with IT experts to minimise the risk of you committing a breach.

If you are not sure whether this legislation applies to you or if you find yourself in a situation where data is compromised, don’t hesitate to contact our team.

The post Businesses and confidential information – what happens if you have a data breach? written by Glenn Ferguson appeared first on Business Law Today.

It is often an after-thought consideration whether or not the lease should be registered on the property title.

Depending on the intentions of the landlord and tenant and the length of the lease, this is often a step which not should be missed and one which may need to be considered before signing of the Lease.

What if it is only a short-term lease?

In Queensland, short-term leases are provided what is known as ‘indefeasibility’ of title without needing to be registered.

The effect of indefeasibility is discussed further below, but quite simply it means that the tenant’s interest in the lease is protected, including where the landlord sells the property to the another party.

Importantly, to be a short-term lease, the lease must have a total term of 3 years or under including any options to extend. Therefore, a lease which is 3 years with an option to extend for a further 1 year or more is not a short-term lease, and beyond the initial 3 years the tenant is not guaranteed indefeasibility.

You should ALWAYS register a long-term lease

A lease of over 3 years in term (including options) does not have indefeasibility of title unless it is registered. Accordingly, you should always look to register long-term leases.

So what does not having ‘indefeasibility’ of title mean?

Not having indefeasibility of title does not automatically mean that a lease is unenforceable or void. There is still a written agreement in place, and in most cases this should continue to bind the parties as long as the landlord remains landlord of the property (i.e. does not sell or dispose).

However, if you do not have indefeasibility of title for a lease:

1. Landlord implications –

The implications for the Landlord are relatively minor. However, registration is usually looked on favourably by banks conducting valuations and potential buyers of an investment property.

2. Tenant Implications –

The implications for tenants are much more serious.

• If the Landlord sells the property with an unregistered long-term lease, the Buyer is not usually only required to honour the existing term of the lease (excluding options). This is a grey area and is assessed based on the circumstances on a case by case basis.
• If the Landlord’s bank/mortgagee takes possession of the property (e.g. if the Landlord defaults in repaying its loan), the bank/mortgagee is not required to recognise the tenant’s right to occupy the property unless the lease is registered and the bank has consented to the lease. This means that a bank could kick a tenant out if they took legal possession from the owner.

How do I register my Lease?

As with all things legal, the process is fairly simple provided the Lease complies with all requirements of the Queensland Titles Registry and the landlord’s mortgagee. For example:

• To be registered, a lease must be in the approved Queensland Titles Registry form (i.e. not a commercial tenancy agreement); and
• It may be required for example that the leased area is identified by a plan that is prepared by a cadastral surveyor (i.e. not just a sketch).

This is why it is important for the parties to consider registration prior to signing of the Lease.

If you require assistance in reviewing, entering into, registering or amending your lease, please contact our team today.

The post Should the lease be registered with the Land Titles Office? written by Tom Wood appeared first on Business Law Today.

In the most recent review, the Fair Work Commission decided that all awards should provide a right for casual employees to convert to part-time or full-time permanent employment in some circumstances. Some awards already contain a casual conversion clause, but not all.

Whilst the changes aren’t set in stone, employees should be aware that, very soon, they may be able to make this request (if not already, depending on the award). Employers should begin planning now for the potential impact of these changes.

In what circumstances can casual employees request to be made permanent?

The Commission has developed a model casual conversion clause which it proposes to include in 85 modern awards (which do not currently contain a similar right to casual employees).

To be able to make a request for conversion to permanent, the casual must –

1. Have worked with the employer for 12 months; and
2. Have worked over the 12 months a pattern of hours on an ongoing basis, without significant difference, which could continue to be performed in accordance with the full-time or part-time employment provisions of the relevant award.

Employers should be aware that even if the conversion clause is not invoked, employing someone on a regular and systemic pattern can still be deemed a part-time employment arrangement even if the parties are treating it as a casual employment. This is particularly relevant in the event of dismissal.

The model clause also requires the employer to provide all casual employees (whether they become eligible for conversion or not) with a copy of the casual conversion clause within the first 12 months after their initial engagement.

Can an employer refuse a request for conversion to permanent?

If a casual worker makes a request for conversion, the employer may refuse the request if –

1. it would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment in accordance with the terms of the applicable modern award; or
2. it is known or reasonably foreseeable that within the next 12 months:
   • the casual employee’s position will cease to exist; or
   • the employee’s hours of work will significantly change or be reduced; or

3. on other reasonable grounds based on facts which are known or reasonably foreseeable.

If you have questions regarding casual and permanent employment or any employment law issues, please don’t hesitate to contact me.

The post Casuals converting to permanent employment – can it be done? written by Angelo Venardos appeared first on Business Law Today.

The PPSR is a real time online national register on which secured parties such as financiers and suppliers can register their security interests in personal property.

A ‘security interest’ is defined in the Personal Property Securities Act 2009 (PPSA) as an interest in personal property that secures the payment of monies or other obligation.

How can you protect yourself when you provide goods on credit?

A retention of title clause (indicating that title remains with you until goods are paid for in full) in your contract or invoice, no longer protects you on its own, your interests must be registered on the PPSR.

Making a PPSR registration shows anyone searching the register that you are claiming an interest in the goods you are selling on retention of title terms, or have consigned to someone else to sell on your behalf. This interest means the goods or assets secure the debt or obligation that someone owes you. The registration protects your interest in the goods or assets should the customer default or go broke, for example, if a receiver or liquidator is appointed to the customer.

If you intend to provide goods or services without being paid first you should consider whether you need to register your interests on the PPSR.

The best way for you to secure your interests is by registering your interests against your customer via the PPSR. This will ensure that you are counted as a secured creditor should the customer go into any form of receivership, liquidation or bankruptcy.

You can register your interests online at www.ppsr.gov.au, please note there are small fees involved.

The time at which a security interest is registered will affect your priority, so any interests should be registered as soon as the goods are no longer in your possession.

Please note that if you wish to register your interests on the PPSR, your interests must be evidenced by an agreement between you and the customer.

Questions and More Information

If you have any questions regarding personal property, providing goods on credit or PPSR, please contact our business law team today, or visit the PPSR website.

The post Protecting yourself when you provide goods on credit written by Tom Wood appeared first on Business Law Today.

Unfortunately, it is often the case that even basic decisions are not appropriately documented. This can have disastrous legal and financial consequences that are not always capable of being fixed at a later stage.

Exercising powers – how does a trustee record decisions?

Each trust deed should prescribe methods in which the trustees may record their decisions and exercise their powers. Most commonly, this is by way of a minutes of meeting or trustee resolution. Modern trust deeds also often allow a number of more convenient ways for multiple trustees to make decisions, such as by a trustee resolution that is circulated electronically, and signed separately by all trustees.

Regardless of how flexible or inflexible a trust deed is, it is imperative that a trustee follows the deed’s prescribed methods of recording its decision. The decision may otherwise be legally ineffective.

Trustee powers – what can a trustee do?

A good trust deed will provide a trustee with a broad range of powers. Trustees are also provided basic powers under the Trusts Act. These powers allow a trustee to effectively manage the assets and investments of a trust, and may include powers such as:

• Taking out loans and granting security over assets.
• Entering into certain types of transactions.
• Making certain types of distributions or classifying certain types of income.

Even if a trustee appropriately documents a decision, that decision will be ineffective if it is not authorised under the trust deed, legislation or under common law. Legal advice should always be sought if you are not confident that the trust deed adequately provides a trustee with power to make a decision.

So what can happen when it all goes wrong?

A High Court case from earlier in the year highlighted the importance of trustees ensuring that their decisions are accurately documented and made in accordance with powers granted to the trustee under the trust deed.

The case – Fischer v Nemeske Pty Ltd

This case revolved around technical issues regarding the trust powers and trustee decisions. It arose years after the trustees had made and documented the relevant decision, at which point both trustees were deceased. In summary:

• In 1994, the trustee entered into a transaction which it believed to be in accordance with powers granted under the trust deed. The transaction involved revaluing shares owned by the trust and making a capital distribution to the beneficiaries, although no distribution was actually made and instead the beneficiaries loaned the ‘distributed’ amount back to the trust. This loan was for $3,904,300.00.
• In 2010 the first beneficiary died, and in 2011 the second beneficiary died.
• Under the second beneficiaries’ will, it was stated that all assets of the trust would go to the Fischers, with the balance of his estate going to other beneficiaries under the will (“the Estate Beneficiaries”).
• The Fischers claimed that the 1994 trustee resolution was ineffective, and that the trust did not have to repay the loan to the estate.
• The court determined, by a 3-2 margin, that the trustee resolution in this case was effective. Issues that raised significant uncertainty for the court were whether the trust deed had an appropriate power for the transaction, and whether the trustee resolution clearly documented the transaction.

Had the 1994 trustee resolution been determined to be ineffective, it would mean that the trust would not have had to repay the loan to the beneficiaries. In turn that the Estate Beneficiaries would share in a significantly reduced amount under the second beneficiaries’ will. This is obviously a significant financial consequence, that was likely unforeseen by the trustees at the time they made their resolution so many years before.

How does this affect you?

If you are a trustee, you should ensure that you and your advisors are familiar with your trust deed and that any decisions made are appropriately documented. By the same token, advisors should always consider whether a trustee has appropriate power to enter into a proposed transaction. Just because there is no immediate risk of a trustee’s decision being challenged or reviewed does not mean it will not face tough scrutiny in the future.

This article is intended to provide general information only, and should not be relied upon as legal advice. If you have concerns about any trusts matter you should obtain legal advice, having regard to your specific circumstances. Please contact Tom Wood or Nick Casey if you require any assistance in this regard.

The post Trustee Resolutions – Tips and Traps written by Nick Casey appeared first on Business Law Today.

Key points of this article

• A recent Queensland Supreme Court decision means that self-managed superannuation funds (“SMSFs”) with related party dealings can potentially be grouped for payroll tax purposes. This has potentially significant consequences for anyone using SMSF as an asset protection strategy when assets are related to a business
• If a SMSF is grouped with other business entities for payroll tax purposes, the SMSF becomes liable for the payroll tax debt of the other group members.  In the Mewcastle Case, the SMSF became liable for the $2.6 million payroll tax debt of its group members.
• A SMSF is more at risk of being grouped for payroll tax if it engaged in related party dealings that are not on “arm’s length” terms, but there is no certainty that it won’t apply to dealings that are on arm’s length terms.
• SMSF trustees and advisers need to consider the potential effects of this case; related party dealings are no longer only a concern for SMSF and tax compliance purposes, but also estate planning and asset protection.

Here is a detailed article written by Nick Casey, Solicitor on this very important case. Please contact Nick if you have any questions about this.

Introduction

It is well understood that breach of the Superannuation Industry (Supervision) Act 1993 (“SISA”) or either Income Tax Assessment Act 1936 or 1997 (together “ITAA”) can have significant consequences for SMSF trustees and advisers, and result in penalties against the SMSF or trustees and director. However, in a recent Queensland case a SMSF that had engaged in a number of related party dealings was ‘grouped’ for payroll tax purposes, even though the SMSF did not itself employ persons or carry on business activities. This meant the Fund was jointly and severally liable for the payroll tax debts of its group members.

Payroll Tax Grouping – A Brief Background

All states in Australia have a form of payroll tax. Payroll tax is covered by state legislation, and is levied against business entities operating within that state, based on a business’ total employee wages.

In Queensland, the applicable legislation is the Payroll Tax Act 1971 (“the PTA”).  A summary of how it operates is as follows:

1. If persons or an entity (“the Employer”) is carrying on a business, they may be liable for payroll tax where the total wages paid by the Employer in a financial year are more than $1.1 million.

2. There are anti-avoidance provisions in the PTA which aim to stop Employers from splitting either their business or employees across multiple entities in order to avoid or minimise their payroll tax liability. These are commonly referred to as ‘grouping provisions’, and are contained in sections 69 to 72, and 74A to 74G of the PTA.  These provisions focus on there being a common ‘controlling interest’.  Where entities are grouped, the group’s payroll tax amount is calculated based on the combined taxable wages paid by all group members.

3. Under section 74 of the PTA, the Commissioner for State Revenue (“the Commissioner”) has the discretion to exclude an entity that would automatically be caught by the grouping provisions, if the Commissioner is satisfied that “the business carried on is independent of, and not connected with the carrying on of, a business carried on by any other member of the group”.

Other Australian states contain similar grouping provisions.

The case – Scott and Bird & others v Commissioner of State Revenue

Steven Scott and Cheryl Bird were the trustees for the Mewcastle Superannuation Fund (“the Fund”), which is an SMSF operated under SISA. The Fund owned a commercial property through a custodian trust under a limited recourse borrowing arrangement, which it leased to a number of its related business entities (“the Mewcastle Group”).

Importantly, the Rent that was charged by the Fund to the Mewcastle Group members on this property varied, and appeared to be significantly above the market rent.

On 16 April 2015, the Commissioner advised the trustees of the Fund and the trustees of the custodian trust, as well as other members of the Mewcastle Group, that they were considered ‘grouped’ for the purposes of the PTA. The effect of this was:

1. The Fund and the custodian trust were jointly and severally liable for the payroll tax debt of the Mewcastle Group, in accordance with s 51A of the PTA.

2. The Commissioner could look to take action against the Fund and the custodian trust for recovery of the payroll tax debt under the PTA and Tax Administration Act 2001.

Around the same time, the Commissioner issued assessment notices to two of the members of the Mewcastle Group for tax liabilities exceeding $2.6 million.

The Commissioner subsequently issued garnishee notices in relation to property proposed to be sold by the custodian trust.

Application for Exclusion from the Group

The Fund and the custodian trust applied to the Commissioner to be excluded from the Mewcastle Group for payroll tax purposes.

The Commissioner subsequently refused to exclude the Fund and custodian trust from the Mewcastle Group. Two separate cases were then initiated by the trustees of the Fund and the trustee of the custodian trust, being:

1. The main case, applying for judicial review of the de-grouping application.

2. A secondary case to set aside the garnishee notices which had been issued by the Commissioner against the Fund and the custodian trust, where the custodian trust intended to dispose of the property.

I have only focused on the case concerning de-grouping in this article.

Why was the de-grouping application unsuccessful?

The Supreme Court upheld the Commissioner’s decision that the Fund should be included in the Mewcastle Group. The primary reason for this decision was that the business carried on by the Fund was not considered to be independent of the other Mewcastle Group entities’ businesses because:

1. The trustees of the Fund had control over all of the Mewcastle Group entities.

2. The trustees of the Fund entered into lease arrangements with a number of Mewcastle Group entities, which were not arm’s length commercial transactions, as demonstrated by inconsistent rent amounts paid by the lessees, which in any event were in excess of market rent.

3. The trustees had lent money to an associate of a Mewcastle Group member, and this loan was not at arm’s length or on commercial terms. The loan funds were applied by the associate to another Mewcastle Group member.

4. The trustees of the Fund lent money to a number of Mewcastle Group members.

Based on the facts of this case, the Supreme Court supported the Commissioner’s view that the grouping of the Fund was consistent with the legislative purpose of the PTA.  This was notwithstanding that the Fund was an SMSF and, as argued (unsuccessfully) by the trustees of the Fund, carried on for the purpose of providing retirement benefits to members.

The Supreme Court also upheld the Commissioner’s decision that the custodian trust should be included in the Mewcastle Group under the PTA. The primary reason for this decision was that the custodian trust was not carried on independently of the business carried on by the Fund, which (as discussed above) was considered to be a member of the Mewcastle Group.

Breach of SISA and the ITAA

The case did not consider whether there were breaches of SISA and the ITAA.  However, based on the inconsistent rent and uncommercial loans, there is a possibility that:

1. The trustees of the Fund have breached the sole purpose test under section 62 of SISA.

2. The trustees of the Fund have breached the non-arm’s length income provisions in section 295-550 the ITAA 1997.

Conclusion

This case contains a number of facts that supported grouping of the Fund with the Mewcastle Group under the PTA. Unfortunately, it is not clear whether the Fund and custodian trust would have been grouped under the PTA had all transactions between the Fund and the Mewcastle Group members been on arm’s length and commercial terms.  There is a possibility that even if the Fund had engaged in all transactions on arm’s length and commercial terms, it may still have been grouped under the PTA given the number of dealings between the Fund and the Mewcastle Group members.

In the absence of any further clear direction, trustees and advisers should always be mindful to the primary purposes for which SMSF transactions are being entered into, and consider not only SISA and ITAA compliance, but also whether the transaction or the combined effect of a number of transactions places the SMSF at risk of being grouped under any other tax legislation. This could have drastic consequences for estate planning and asset protection purposes, where traditionally SMSFs have been considered a safe haven.

If you have any questions regarding payroll tax or SMSFs, please don’t hesitate to contact me.

The post SMSF Alert – Related party transactions and payroll tax grouping written by Nick Casey appeared first on Business Law Today.

Background

Three days prior to the dismissal, two young children escaped from the kindergarten without detection and walked down the street to a nearby primary school. The 4 year olds managed to escape by opening two doors with the aid of chairs (and replacing the chairs afterwards to cover their tracks) and then by climbing a fence to unlock a “child-proof” gate.

The teacher in question was a nominated supervisor at the time and was dismissed from her employment for:

1. demonstrating a lack of adequate supervision;
2. breaching the duty of care and responsibilities of an early childhood educator and nominated supervisor;
3. failing to show remorse and accept responsibility being the vitals reasons.

The Law

Section 385 of the Fair Work Act 2009, deals with the question of what is considered to be an unfair dismissal. A persons has been unfairly dismissed if the Fair Work Commission is satisfied that:

1. the person has been dismissed; and
2. the dismissal was harsh, unjust or unreasonable; and
3. the dismissal was not consistent with the Small Business Fair Dismissal Code; and
4. the dismissal was not a case of genuine redundancy.

Predominantly relevant to this case was the question of whether or not there was a valid reason for the termination and if so, was the dismissal harsh, unjust or unreasonable.

Findings

Fair Work Commission held that the failure of the teacher to properly supervise the children and allow them to not only escape the kindergarten, but to also allow the disappearance to go unnoticed, was a valid reason for dismissal.

However, the Fair Work Commission also held that the dismissal was harsh, as the kindergarten company had failed to consider the teacher’s 39 year employment in the role in which time her record was unblemished. The Fair Work Commission stated that the economic consequences to the teacher far outweighed the valid reason for the breach and that the kindergarten had shown some clear deficiencies in their investigation process with regard to the issue.

Together, these two conclusions resulted in the Fair Work Commission finding in favour of the teacher and stressed the importance of employers taking into account their employees career history and also the need for a careful investigation process.

Remedy

The Fair Work Commission ultimately exercised its right not to grant any remedy to the teacher despite the finding that there was a valid reason for dismissal. Consequently, the teacher was paid for a period of notice, which would not have occurred without a determination by the Fair Work Commission that the dismissal was unfair.

If you have any questions relating to unfair dismissal or any employment law issues, please contact me.

The post Unfair Dismissal is no child’s play written by Angelo Venardos appeared first on Business Law Today.

If you have been considering franchising your business, and you are not sure where to start, we recommend that you ask yourself the following questions:

“Is my business profitable and successful?”

This may sound like an obvious question but some business owners see franchising as a way of “saving” a failing business. To effectively “sell” a franchise, you will have to demonstrate that the business has at least 3 and ideally 5 years of profitable trading figures or a very good reason why not. If not a Franchisee will simply not be interested and most certainly the bank or lending institution will not lend on the purchase of the franchise.

“Can my business be replicated in other geographical areas?”

Maybe your business is situated in a particular area that generates great sales or customers. Can that be transported to another area? If not then your business may have difficulties. Ideal businesses are where there are numerous branches that are all operating profitably in their own right.

“Can my business be cloned?”

Are you able to repeat the same business in different state based or interstate areas, do the laws of those areas impact adversely on this happening?

“Are my systems documented and transparent?”

It is essential to be able to franchise a business to be able to rely upon well documented Operations Manual. This is the bible. Many people think that it is the Franchise Agreement but it is the Operations Manual and training in the workings of that Manual that will be the difference between an easily operated and profitable franchise to one that needs constant input and management of the Franchisee, the whole reason for many Franchisors in going down the franchising path.

“Do I have a good financial model to demonstrate that a Franchisee can be successful?”

Ultimately what you as the Franchisor want is to have a series of franchises in the system that all operate profitably so that they can pay to you the various franchise fees under the Franchise Agreement. If not then franchisees will fail and enormous time will be spent doing a “workout” of that franchise business.

For instance it may be suggested that the Intellectual Property (“IP”) for the business be place into a separate legal entity to protect it in the future in the event that business suffers some catastrophic business or economic failure.

There is no formal registration process for franchises but it is a highly regulated environment and one not to stray into without sound and experienced legal advice by franchising lawyers that know what they are talking about.

We recommend obtaining an experienced franchising lawyer to review your intended set up and Sajen Legal can assist to ensure your business is ready. Franchising can be a very challenging and exciting process and putting in the ground work in the early stages, considering your options and getting the necessary legal and financial advice is imperative.

For more information please read our article on the “Keys to setting up a Franchise Business”.

Contact our franchising team today to find out how we can ensure your business is ready to franchise.

The post Are you ready to franchise your business? written by Glenn Ferguson appeared first on Business Law Today.