Govt backsdown on backpacker tax

Posted by: Scott Thompson

 

Great news for our rural clients that rely on backpackers for seasonal labour.

ABC News Release

Changes to Retail Shop Leases Act - what does it mean?

Posted by Denis Stephenson

The Retail Shop Leases Amendment Act 2016 (Qld) (Amendment Act) has been passed by the Queensland parliament.

It hasn’t commenced as yet and will commence on a date to be proclaimed. Commencement is expected to occur before Christmas 2016.

Both lessors and lessees need to understand the changes.

Lessors need to review and amend their leases and procedures so that they comply with changes as soon as the Amendment Act commences. Leasing agents/managing agents also need to be updated and understand the changes.

Obligations surrounding disclosure requirements are one of the key changes made by the Amendment Act.  These include new disclosure requirements and consequences of failure to make disclosure. For example, where a lessee exercises an option to renew in a lease:

• The lessor will now have to give a current lessor disclosure statement to the existing lessee within seven days of receipt of the lessee's notice of exercise of the option.

• The lessee may within fourteen days of receiving the current lessor disclosure statement, whether or not their renewed lease period has commenced, give the lessor a written notice stating that the notice exercising the option is withdrawn. The lessee does not need to give any reasons.

• If the lessor does not give a current lessor disclosure statement or the current lessor disclosure statement is defective the lessee may within six months after the commencement of the option period terminate the retail shop lease.

Further changes include where upon an assignment both the lessee and the lessee's guarantors will now be released from liability where the conditions set out in the Retail Shop Leases Act have been satisfied. Previously the lessee's guarantors weren’t released.

Requirements with respect to recovery of outgoings by lessors have been "tightened". In addition a lessee will have the right to withhold payment of outgoings until the estimate or audited statement is given by the lessor.

The above mentioned changes are only a few of the changes that will occur on the commencement of the Amendment Act. The Amendment Act will have the effect of further regulating retail leasing.

If you have any questions in relation to the changes please contact Denis Stephenson of our office. 

Roadshow proves to be priceless for family communication

Posted by: Kylie Wilson

I enjoyed getting out with the crew from Resource Consulting Services and Entello Group for another succession and continuity roadshow last week, this time for Mitchell, Miles and Goondiwindi.

Fantastic inroads were made with many of the participants in relation to the importance of early planning and communication.  

Most of the participants labelled the day "priceless" and some of the comments and feedback we received from the roadshow sessions included:

"Very informative and interesting"

"Enlightening" 

"Invaluable to have people who have succeeded in using the process"

"Great introduction to facilities to help with process"

As with our previous roadshow in central Queensland in February of this year, it is was very eye opening for both generations participating in a workshop session identifying the aims of the "older" generation and the "younger" generation.  As with every one of the sessions that have been conducted to date, the top aims for both generations in relation to desired outcomes of succession planning very closely reflect each other, with financial security and family harmony often at the top of the list for both generations. 

Achieving a successful succession of a rural family business, with the older generation able to retire comfortably and the younger generation able to take on a viable business, is crucial to achieving the goals both generations continue to indicate are a priority.  To achieve this requires careful, and often long term, planning and honest communication about needs and expectations.  Practical examples of both the good and the ugly of rural succession planning from the Lawrie family and Claudia Power and John Moore of RCS was again invaluable in helping to get this message across.  Entello group also discussed some very insightful options to enable off farm investments to assist in funding parents' retirements.  

The plan is to do this again in North Queensland later in the year and I'm looking forward to catching up with clients up north again. 

Changes to transfer duty for primary producers in Qld - What does it mean?

Posted by: Kylie Wilson

From 1 July 2016, significant changes were made to the Duties Act (Qld) in respect of intergenerational business property transfers for primary producers.

Prior to this change, a transfer of primary production land to the next generation was only exempt from duty to the extent that it was by way of gift and there was no "consideration".  In practice, because consideration under the Duties Act includes the assumption of debt, where the next generation refinanced a loan in the course of being gifted the land, the amount of the relevant debt was dutiable.

From 1 July 2016, section 105 of the Duties Act was amended such that the dutiable value of business property which is used to carry on a primary production business is taken to be nil.  This means that, provided the other requirements of the relevant part are met, a transfer of intergenerational farming land and personal property to the next generation will not attract duty, whether debt is assumed in the course of the transaction or not. 

A practical and basic example of the advantages for primary producers of this change is illustrated by the case study below.

Duty or no duty?

Jack and Jill are in their late sixties and wish to retire, giving control of their primary production property (beef cattle) to their eldest child, which includes primary production land with a total value of approximately $20 million. 

Associated with the transfer of this property, their son will need to refinance the existing debt of $5.4 million. 

Pre-1 July 2016, the $5.4 million assumption of debt would have been regarded as consideration with duty payable to the Office of State Revenue of over $290,000.

The same transaction from 1 July 2016 no longer incurs duty, a saving of well over a quarter of a million dollars in transaction costs.

Care still needs to be taken to ensure that all the requirements for the concession are met, in particular meeting the definition for defined relative (in respect of the transferor) and ensuring that the transferee does not take the land as trustee of a trust. 

A further budgetary measure that was announced by the Queensland government at the same time as this duty change was the grant of up to $2,500 to seek up-to-date and best practice information on financial management, mitigating climate risks, succession planning and multi-peril crop insurance options.   Detail on this grant is not as yet fully available but is expected to be announced in the near future.

If you have any questions in regard to the changes to duty for primary producers, please contact Kylie Wilson of our offices.

Litigants know your enemy!

Posted by: Dale Ellerman

It is an important step when involved in legal proceedings in the Planning and Environment Court to understand who your opponents are and to consider their legal status. 

This point was demonstrated recently in Urban Potentials Pty Ltd v Southern Downs Regional Council & Anor in which the court held a submission made by an entity purporting to be an unincorporated association was in fact made individually by the list of persons who had signed the group submission. 

The court made orders removing the unincorporated association as a party to the appeal instead allowing the individual submitters a chance to elect to join the appeal out of time. 

As it transpired, none of the many individual submitters took up the opportunity to join the appeal and the case effectively "shrunk" accordingly.  

A link to the case is attached for anyone interested.  To view the case click here. 

Badenach v Calvert [2016] HCA 18

Posted by: Kylie Shaw

Jeffrey Doddridge had been recently diagnosed with a terminal illness and wished to amend his will so as to leave the entirety of his estate to the son of his long term partner, Mr Calvert.

In 2009, Mr Doddridge approached Murdock Clarke Solicitors, a firm who had prepared his previous wills, and asked to have a new will drawn up accordingly. Mr Doddridge owned two properties which he owned as tenants in common in equal shares with Mr Calvert.

Following Mr Doddridge's death in 2010, and with no provisions preventing otherwise, a claim was made by his estranged daughter seeking control of her father's interests in any property. The daughter's claim succeeded and she was awarded a significant amount of her father's estate.
As such, Mr Calvert filed a claim against both the solicitor, Robert Badenach, and the firm who had prepared the will.

Although initially succeeding in the Full Court of the Supreme Court of Tasmania, the claim ultimately failed and was dismissed by the High Court of Australia.
The Court had previously held that a beneficiary to a will may make a claim where his interests and the interests of the testator align completely, such that by working in the best interests of a client a solicitor could also be considered to be working in the best interests of the beneficiary. The Court held that as the duty of Mr Badenach was to advise Mr Doddridge in relation to all options available to him, even if said options worked against the interests of Mr Calvert, that the two interests did not align and no claim could be made.

The Court also found that although Mr Badenach should have enquired as to the existence of another family member,
it was impossible to say whether Mr Doddridge would have been able to provide enough evidence in order for him to fully advise on the likelihood of a claim. Further, the Court found that even if Mr Doddridge had been able to provide all the relevant information, it could not make an assumption as to how Mr Doddridge would react. As such the High Court found that although the solicitor may have breached his duty it was not possible to show that without that breach no damage would have been incurred by Mr Calvert.

This case highlights the importance of discussing options with your solicitor when making a Will, particularly when it comes to considering potential claims against your estate.

Superannuation and small business in the 2016 Federal Budget - what does it mean for you?

Posted by: Kylie Wilson

In the Budget last night Scott Morrison announced some big changes to superannuation and a tax cut for small business companies.  Some of the changes to superannuation were unexpected and are likely to cause a rush on an adjustment of planning strategies for some who are already in pension phase.

Superannuation key points

The key changes announced for superannuation include:

• A cap will apply to the transfer of superannuation balances into retirement phase from 1 July 2017. Those in pension phase now do not receive the benefit of any grandfathering provisions.  Therefore existing tax-free pension phase superannuation balances over $1.6 million will have to be transferred back to accumulation phase and will be subject to a concessional 15% tax rate.
• In a largely unexpected move, concessional contribution caps have been lowered to $25,000 (previously $30,000 for those under 50, and $35,000 for those 50 and over) to be introduced from 1 July 2017.
• Non-concessional contributions will have a lifetime cap of $500,000 from last night.  This is a lifetime cap as opposed to a previous annual cap of $180,000 or for those using the bring-forward rule, up to $540,000 in a three year period.
• The tax offset of up to $500 on concessional superannuation contributions for low income earners continues (although renamed).
• The ability for people under the age of 75 to make concessional contributions to superannuation has been significantly extended, and people aged under 75 will no longer have to satisfy the work test to be able to receive contributions from their spouse.
• From 1 July 2017, the 10% rule that has applied to claiming a tax deduction for personal superannuation contributions will be removed.
• From 1 July 2017, the Division 293 threshold will be reduced from $300,000 to $250,000 (a largely expected move).
• A rollover of unused concessional contribution caps will be made available from 1 July 2017, which will allow individuals to make additional concessional contributions for years where they have not previously reached their concessional contributions caps.  This will apply to people with superannuation balances of less than $500,000 and may be helpful for people who have had interrupted work patterns.  It should be noted, however, that amounts will carry forward on a rolling basis for a period of five consecutive years, and only unused amounts accrued from 1 July 2017 can be carried forward, which does restrict the effectiveness for many of those with interrupted work patterns; and
• From 1 July 2017, the Government will repeal anti-detriment payments.

So far the industry response has been mixed, with the most significant criticism revolving around the reduction of the concessional contributions cap to $25,000.

 

Small business key points

• From 1 July 2017, company tax relief will apply for small and medium sized businesses, with the company tax rate for businesses with an annual turnover under $10 million cut to 27.5%. 
• The Government has announced a plan to progressively reduce this tax rate to 25% by 2026/27.
• All small businesses with a turnover of less than $10 million will also be eligible for the instant tax write-off for equipment purchases of up to $20,000 made next financial year.
• To help fund the above, the Government has announced, in relation to multinationals, that the ATO will receive an extra $679 million to hire further staff to form part of a 1,000 person team to monitor multinationals, with any moneys that are planned for shifting off-shore to be taxed at a higher 40% tax rate.