Those making a long weekend out of the upcoming Australia Day celebrations this Thursday are reminded of the double demerits points scheme that applies for driving offences, including:
The scheme is designed to encourage safe and responsible driving and will apply from 25 – 29 January 2017 inclusive as well as on other long weekends and holiday periods throughout the year. Drive safely.
Before starting a new business, the first thing that you need to consider is the structure of the entity to operate the business.
There are numerous options to choose from, such as:
This is when it can pay to get good accounting/taxation, financial planning and legal advice as there are advantages and disadvantages associated with each type.
WHICH STRUCTURE IS THE BEST?
There is no right or wrong answer to this necessarily, although some are preferred more than others.
To determine the most appropriate structure, you need to consider what is most important for you and your family and things such as what assets/business you already have interests in, whether you intend to be in business with others or you’ll go it alone, how you intend to run the business and whether it is a long term plan or whether you intend to quickly build and sell it.
Each option has different qualities, including:
OTHER THINGS TO CONSIDER
Once the structure has been determined, and depending on the structure to be adopted, other things that need to be covered off include:
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to starting or buying a business, drafting business documents or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.
We wish our clients, family and friends a very merry Christmas and a happy new year. Our office is now closed until Monday, 9 January 2017
Now is the time of year for many businesses to have their annual Christmas parties. Before dusting off your Santa hat, consider your responsibilities in protecting your staff and your business.
Businesses should be aware of the risks that can arise when holding an office party, whether at Christmas or for any other event. Employers can be responsible for the actions of their employees at such events (such as for sexual harassment and the like) and for injuries that arise as a result of such celebrations.
Employees should be made aware that a Christmas party is a work event and that, although it is a time to relax and enjoy themselves, they need to remain responsible and respectful.
HOW TO MINIMISE THE RISKS
To minimise the risks to your business, there are many things you can do, including:
Considering transport arrangements for staff to and from the venue, using a buddy system or inviting partners.
FURTHER INFORMATION
For further information in relation to employment issues or any business or commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.
GRANTING A POWER OF ATTORNEY
The Powers of Attorney Act 2003 (NSW) provides for a person to appoint another person as their attorney to make financial and contractual decisions on their behalf. The document granting a power of attorney is a prescribed form under the Act.
A general power of attorney does not require a solicitor’s certificate however, it ceases to be of effect if you lose mental capacity (like where you are in a coma or suffer from dementia).
An enduring power of attorney on the other hand continues to be effective if you were to suffer such an incapacity. For this reason, an enduring power of attorney must be explained to you and witnessed by a lawyer who will provide a certificate in the prescribed form. We usually recommend an enduring power of attorney so that if some event happened to you that affected your capacity, your attorney would still be able to assist you.
If you are suffering from any illness, have deteriorating health, are going overseas or interstate or just want peace of mind, appointing an attorney to assist you to manage your affairs is generally a good idea.
HOW DOES IT OPERATE?
The nominated attorney has the ability to decide whether or not to accept that role by signing it.
You can choose when your power of attorney is to take effect. It can be restricted to only take effect if a registered medical practitioner certifies that you are of unsound mind, upon some other event (such as whilst you are overseas), from a date you choose or, it can operate immediately (for convenience).
You can give the power of attorney for specific purpose (for example to assist with the sale or purchase of a specific property or to attend an auction and bid on your behalf), for a specified time (for example, between 2 dates) and you can give directions on how powers are to be exercised (such as not to bid above a certain level or to only sell for a certain reserve price).
You can have a power of attorney for situations of necessity, like where you are ill or absent, or simply for convenience, but you have to appoint someone you trust without reservation.
An attorney may not use the principal’s monies or assets for gifts or benefits to the attorney or third parties unless this is specifically authorised in the document granting the power of attorney
ENDING AN APPOINTMENT
Provided you remain of sound mind, you can revoke a power of attorney at any time by signing a form of revocation and providing the attorney with that revocation.
The New South Wales Civil & Administrative Tribunal can review or revoke a person’s appointment as a power of attorney and can make a financial management order appointing a new attorney (or attorneys) or by appoint a representative of the NSW Trustee & Guardian if it is considered that your attorney not making appropriate decisions on your behalf.
DO I HAVE TO REGISTER THE POWER OF ATTORNEY?
A power of attorney must be registered at the Land & Property Information Division of the New South Wales Department of Lands if it is being used for dealing with land in NSW, such as selling, transferring, mortgaging property and the like.
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.
WHAT IS A DIRECTOR PENALTY NOTICE?
In addition to potential liability for insolvent trading, company directors need to be aware of their potential personal liability if their company fails to remit certain amounts as and when due.
Directors will become personally liable when a company fails to remit amounts withheld under the PAYG withholding system or fails to meet its superannuation guarantee obligations.
This personal liability arises through the issue by the ATO of a Director Penalty Notice (DPN) under s. 222AOE of the Income Tax Assessment Act. If not complied with, a DPN makes the director it was issued to personally liable for the amount that the company should have paid, through imposition of a penalty.
The director’s PAYG withholding credits can also be reduced/taxed as part of the process.
The Commissioner is using the Director Penalty Notice provisions to pursue directors more and more.
The Commissioner of Taxation will usually first make a formal demand on the company seeking payment. If the company fails to comply with the notice, at the Commissioner’s discretion, a DPN may be served.
2 TYPES OF DPN
There are 2 types of DPN:
HOW TO AVOID LIABILITY
A director’s liability under the DPN is remitted if, within the 21 days stated in the DPN, the company either:
These 4 options are available for non-lockdown DPNs only.
The liability will not be remitted if the company has failed to report its PAYG withholding liability, GST or superannuation guarantee shortfall etc within 3 months of the lodgement day (and the DPN is thus a lockdown DPN). This encourages timely reporting.
Payment in full is therefore the only solution for a lockdown DPN.
Importantly:
* note that entering into a payment arrangement in relation to a debt does not make the debt cease to be due and payable
Defences may be available where recovery proceedings are subsequently instituted against a director following non-compliance with a DPN.
All directors must ensure they stay completely abreast of their company’s affairs and must ensure the company meets all relevant obligations at all times.
This is why having good procedures and good advisors – whether legal, accounting, financial or otherwise – can prove invaluable.
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to bankruptcy/insolvency, litigation and dispute resolution or any commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.
Online business is booming. Most consumers now favour online shopping given that it is quick, convenient and usually cheaper than in a retail shop.
Consider the legal considerations and responsibilities of running business online, preferably before you start trading.
THE FORMALITIES & NECESSARY REGISTRATIONS
The first thing that needs to be remembered is that even though you do not have a shopfront, you are still operating a business. As such, there are certain legal requirements that you will need to abide by. In particular, you need to think about:
Although these considerations may seem daunting at first, it is important that they are given due consideration. Take for instance the choice of business name. Many would consider this the most important decision in the establishment of an online business. When choosing a name, you need to make sure that it does not infringe upon or not too similar to an existing business name or another person’s trademark. Preferably you would do this before spending money on websites, logos and the like!
CONSUMER LAWS
Before embarking into the world of e-commerce, it is important to remember that there have been major legislative changes to the laws regulating business transactions. In particular, you should take note of the Australian Consumer Law which regulates consumer affairs and transactions. Provisions which may be relevant to an online business usually concern the issue of misleading and deceptive conduct, misrepresentation and misdescription of products.
Consider the descriptions that you will be putting up about the products you will be selling and the impact that these may have in the mind of the consumer. If you think that they may create a false assumption, then it is best to re-word them and make it clear exactly what the product or service does.
If you are planning on selling products internationally, then you may also need to take regard of legal requirements of the countries that you are proposing to deliver to.
TERMS OF TRADE
Most online businesses do not sufficiently state the terms of their proposed sale to consumers. The description of the goods is usually there, as is the price and a method of delivery… but that’s about it! What if something goes wrong – what other terms would be useful?
Consider these:
Many, if not all, of these matters can be addressed by having appropriately drafted terms of trade. If you haven’t brought all of your terms to the customer’s attention before the contract is entered into, they do not form part of the contract at all.
SECURITY & PRIVACY CONCERNS
On-line systems are at risk of fraud 24/7 and from anywhere in the world. When dealing with sensitive information such as personal contact details and credit card information, it is important that you have appropriate security measures in place. You should aim to:
Remember that by doing these actions, you are not only protecting consumers, but also protecting your and your business.
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.
DOES YOUR BUSINESS EVEN HAVE ANY TERMS OF TRADE? IF SO, ARE THEY ADEQUATE (AND UP TO DATE)?
We all sell goods and services, but do we ever really stop and think about what it takes to have a valid contract? There are 4 essentials at law, namely:
Even buying a bottle of water for $1 is entering into a contract. We know what is on offer, we know the cost, we know that once we pay the price, ownership changes hands and it is accepted by paying the price.
Certain things cannot be sold without a written and signed contract in a very specific format that contains certain prescribed documents and words – such as a contract for the sale of land. Most things however don’t need that sort of detailed documentation to form a legally effective and binding contract
Most T&Cs are terribly inadequate. Often they are just copied and pasted from other documents and not tailored, leaving businesses thinking they are adequately protected when they really are not.
Most businesses that have Terms of Trade have terribly inadequate ones and often, the terms don’t form part of the deal at all as they are notified too late – for example where they are printed on the back of a receipt after the deal is concluded. The Terms need to be agreed before the deal is done.
WHAT SHOULD BE IN YOUR TERMS OF TRADE?
Here is a some of the things that should at least be considered for Terms:
If you buy, hire, sell or on-sell goods or services, whether through a shopfront or on-line (or you have a client that does so), please consider whether they actually even have any Terms and Conditions of Trade or if they do, whether they are adequate.
If they do have T&Cs, it may be that they simply copied and pasted various parts from other documents and websites they had seen. This can often lead to them mistakenly thinking they are adequately protected when they actually are not.
They may need to be updated to reflect recent changes in the law such as the Australian Consumer Law and the Personal Property Securities Act (or if they refer to legislation that doesn’t even exist anymore! (Such as the old Corporations Law and the Trade Practices Act).
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to starting or buying a business, drafting business documents or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.
WHAT IS A TESTAMENTARY TRUST?
A Testamentary Trust is simply a trust established by a person’s Will. As opposed to more “simple” Wills, where beneficiaries receive the benefit of any gift personally, with a Testamentary Trust, the beneficiaries receive the benefit of the gift but rather than having it legally owned by them personally, a trustee holds the relevant asset in trust for them.
Wills with Testamentary Trusts are recommended by many lawyers, accountants and financial advisers for various reasons, including asset protection and taxation advantages.
ASSET PROTECTION
Because of the legal ownership being different to the beneficial interest, Testamentary Trusts can offer beneficiaries significant and important advantages such as asset protection. As the trustee of the Testamentary Trust owns the asset (not the primary beneficiary personally), creditors and trustees in bankruptcy of the relevant beneficiary cannot gain access to the asset.
Often, beneficiaries are in business for themselves and have implemented asset protection measures so as to keep their assets safe from claims by third parties. The last thing that beneficiary may want is to receive an inheritance in their personal name, effectively undoing all of their efforts to safeguard their assets!
There can be significant tax advantages in taking an inheritance through a testamentary trust, in addition to asset protection.
Testamentary Trusts can be drafted so as to have the beneficiary effectively control the trust and for that control to be relinquished on the occurrence of certain events, such as bankruptcy or divorce/marital separation, with a nominated person to act in the role of trustee whilst that incapacity remains.
TAXATION BENEFITS – INCOME SPLITTING
Rather than taking a gift in a personal capacity as would usually be the case with a more “basic” Will, with a Will that incorporates Testamentary Trusts, beneficiaries have the ability to split income earned among other people in their family such as spouses, children, grandchildren or any other company or trust in which they have an interest.
Where an estate has income producing assets such as an investment property, under a more “simple” will, the person who received that gift would have the income earned from that asset added on top of the income they already receive from their employment or investments. This could mean that they go into the next marginal tax bracket and pay significantly more tax.
A Testamentary Trust allows the income earned to be split amongst the various family members, many of whom are likely to either not be working (so the tax free thresholds become available) or earn lower incomes (and are therefore in lower taxation brackets).
Children that receive income from a Testamentary Trust are taxed at marginal rates as if they are adults (as opposed to the usual discretionary / family trusts, where they are taxed at unearned income penalty tax rates) so for a family with a non-working spouse and several children, significant income can be received whilst very little or no tax may be payable on the testamentary trust income.
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.
We found Fionne to be highly skilled in providing estate planning and business succession advice to us. She was responsive and really took her time in answering our questions and explained everything in a way that we could understand. We feel at ease now that we know our three young children will be cared for financially in the event that something happens to us.
