Friendly Fire - Flesh Wound or Fatal

Posted by: Scott Thompson

We may have handled the GFC better then most countries but the current slow economy is full of testing times for business owners.  The danger for businesses now is even greater then during the GFC as we experience a slow down due to economic lag and overseas financial fallout. Some businesses who struggled through the GFC and the couple of years that followed, will now be realising they have not rebounded as planned – they have been mortally wounded, business death for them is not far away.  As entrepreneurs and businesses discover, the tighter lending policy from the banks results in reduced cash flow funding options.  No matter how great your business runs tight fiscal control and management - you are always exposed to collateral damage.  Do not become default bankers for your clients by providing interest free unsecured loans. Complacency is your enemy. You must be vigilant in hunting debtors. This requires registering secured interests, a debtor recovery policy and quick results. Does this aspect of your business need attention?

Budget boon for first home owners and construction industry

 Posted by: Tony Allen

In the Joint Statement of Premier, The Honourable Campbell Newman and Treasurer and Minister for Trade, The Honourable Tim Nicholls on Monday, 10 September, 2012 it was announced that:

First home buyers will receive "$15,000 - up from $7,000 - when purchasing a newly constructed home or property off the plan, under the re-shaped First Home Owner Construction Grant (formerly First Home Owner Grant)" [FHOG].

The relevant facts about the FHOCG are:

• The Newman Government’s First Home Owner Construction Grant is worth $15,000
• The FHOCG is for first home buyers who are buying a newly constructed or off-the-plan property
• The FHOCG replaces the First Home Owner Grant which was $7,000
• Those first home buyers who are about to purchase an existing dwelling will have until October 11 to finalise their contract (to be eligible for $7000 grant)
• First home buyers signing contracts for new properties before September 12 will receive $7000 and those signing on or after September 12 will receive $15,000
• The program will be administered within existing arrangements in the Treasury department
• Major banks and financial institutions will continue to advertise the FHOCG in their loan marketing material, reducing the cost for taxpayers

The following eligibility criteria still apply:

• It must become your principal place of residence within one year of taking ownership.
• It must be your principle place of residence for at least six months.
• You must not dispose of all or part of the property within one year after you start to occupy the residence as your home.
• The property must be bought or built at a value under $750,000

If you would like to know more, contact our Tony Allen on 07 3234 3112 or email.

 

Minister "calls in" Jewel Development on the Gold Coast

Posted by: Megan Tilbrook

I read this week that the Deputy Premier and Minister for State Development, Infrastructure and Planning has made a decision to "call in" the proposed $1 billion Jewel development proposed for Surfers Paradise. This is an astonishing turn of events as it essentially means that two valid submitter appeals which were made to the planning and environment court against the Gold Coast City Council's approval will no longer have any effect. Mr Seeney will now make the final decision on the project in accordance his powers under the Sustainable Planning Act 2009. According to the Ministerial Media Statement from 11 July 2012, the aim is to kick start the slumped construction industry on the Coast, and to "ensure applications such as this do not languish or get bogged down in protracted legal proceedings". It is clear the Minister is of the view that some submitter appeals are creating "red tape" for approvals, potentially undermining the important role that members of the community can play in the planning process. The ability to appeal against an impact assessable development is a right that should not be taken away lightly. This is the first time a ministerial "call in" has been made by the Newman Government and will no doubt raise an interesting argument on the competing interests of submitters having their say and the significant delay that can occur as a result of court proceedings brought by submitters. Mr Seeney's decision on the proposed development is expected to occur by early August. The Ministers decision will not be able to be appealed on planning grounds.

Sustainable Planning & Other Legislation Amendment Bill 2012 introduced into Parliament today

Posted by: Megan Tilbrook

The State Government announced proposed amendments to the Sustainable Planning Act introducing the amendment bill into parliament today.  According to the Government there will be some significant changes to the planning legislation in an attempt to "restore efficiency and consistency to Queensland's planning and development system".  Some of the key changes to look out for are:

1. the streamlining of the development application process, allowing developers to deal with one single officer, rather than multiple departments when seeking State Government assessment of development applications;
2. the removal of master and structure planning arrangements;
3. the discretion on the part of Councils to accept development applications that do not contain all of the required supporting information; and
4. the expansion of the Planning and Environment Court's powers to impose cost orders, with the general rule being that costs of a proceedings are at the discretion of the court but follow the event, unless the court orders otherwise.

The proposed amendments will have an impact on the way applications are handled and on how the court process runs.  I am sure there will be much more discussion in relation to these amendments, and in particular, I wonder what an "event" will be for the purpose of the costs provision. For more information, the Bill can be found by following this link.

Future glimmers of hope amongst uncertainty

Posted by: Dale Ellerman

I attended an interesting legal industry lunch last week that had speakers addressing Australia's economic prospects in a world of uncertainty. The take away message for me was that there is an elevated risk of another shock from Europe but that it is unlikely to be as bad as the GFC. The mining boom will fall away as Chinese development moves away from public expenditure on infrastructure to consumer driven spending (not as reliant on coal/steel which is far and away our most valuable export). When the dollar falls the expectation is that our  manufacturing, education, tourism and agriculture will pick up to fill the gap.

Overall, a few 'bumps' but the future has glimmers of hope.

Well Drafted Default and Termination Provisions in Leases

Posted by: Denis Stephenson

Prove to be very beneficial

It is now quite clear since the case of Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 that:

1. The ordinary principals of contract including that of termination for repudiation or fundamental breach applies to leases;
2. The presence of an express proviso for the entry in a lease does not exclude other common law rights available to the lessor for termination or damages.

 

A contract may be determined for any breach of a fundamental or essential term. A lease (as well as granting an estate in land) is a contract.  A breach of an essential term may also constitute a repudiation of the lease, also entitling termination. The recent CMA case again illustrated the importance of specifying essential or fundamental terms of the lease.

In the CMA case, the lease specifically stated that the tenant had an obligation to:

1. Keep the premises in good repair and condition; and
2. Promptly repair any damage to the premises for which it was responsible, and
3. and that the tenant's obligations with respect to repair were essential terms of the lease.

 

The tenant was in breach of the obligations to repair.

The Tasmanian Conveyancing and Law Property Act (Act) has a provision similar to our Property Law Act section 124 (1) providing that "a right of entry or forfeiture under any provision or stipulation in a lease, for a breach of any covenant or condition in the lease, shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice specifying the breach complained of...requiring the lessee to remedy the breach...and the lessee fails, within a reasonable time thereafter, to remedy the breach...

In the CMA case the landlord sent a letter to the tenant (not a specific notice under the Act but saying it was a notice) requiring the tenant to remedy the breach within a reasonable time and pointing out that the breach was a breach of an essential term of the lease and advising that if the tenant failed to comply, the landlord would at its election either forfeit the lease or accept the tenant's repudiation of the lease.
After 18 days after the date of the letter, the landlord re-entered the premises and locked the tenant out. It affixed a notice to the premises stating that the landlord had accepted the tenant's repudiation by failing to comply and terminated the lease.
The tenant commenced proceedings against the landlord seeking a declaration that the landlord re-entry was unlawful and ineffective to terminate the lease. The court held that the landlord had validly terminated the lease and denied the tenant relief against forfeiture.
The court found if the landlord terminates and re-enters under an express term of the lease it must comply with giving a notice to remedy in accordance with the Act (our section 124 (1) of the Property Law Act). However it found that if the landlord terminates and re-enters pursuant to its common law right it may do so without serving a notice.
The court followed the authority of the High Court in Progressive Mailing House Pty Ltd v Tabali Pty Ltd.
In summary, in the CMA case the landlord by having specified in the lease the obligation to keep the premises in good repair and to promptly repair was an essential condition was able to validly terminate the lease notwithstanding that the landlord had not given a notice to remedy under the provisions of the Act and notwithstanding that in the particular circumstances the court found that the tenant's actions did not constitute repudiation.
For more information please contact Denis Stephenson on 07 3234 3107 or email.

Superannuation Contributions from 1 July 2012

Posted by: Tony Allen

Superannuation contributions - excess contributions tax alert!

Did you know that the tax deductible superannuation contributions cap of $50,000, including salary sacrifice amounts, if you are 50 or older will stop on 30 June 2012?
From 1 July 2012, the cap will be limited to $25,000 regardless of your age and any excess over $25,000 will be taxed at an additional rate of 31.5%. With 15% tax already paid on the tax deductible contribution, the additional 31.5% tax on the excess brings the total tax liability to 46.5%.  Excess concessional contributions are also counted against your non-tax deductible superannuation contributions cap.
Tax deductible superannuation contributions (also known as concessional contributions) include any contributions made by your employer such as 9% superannuation guarantee contributions and salary sacrifice contributions and personal tax deductible superannuation contributions.

What should you do?

If you are 50 or older, and your concessional contributions in the 2011/12 financial year will be more than $25,000, you should:

1. Contact your employer(s) to review the total amount being contributed to superannuation so that you won’t exceed the tax deductible contributions cap.
2. Make sure amounts claimed as personal tax deductible superannuation contributions from 1 July 2012 do not exceed the cap when combined with all other tax deductible contributions to superannuation.

Don’t forget:  it is the total of your tax deductible superannuation contributions (concessional contributions) made to all superannuation funds which is counted against your concessional contribution cap. If you are a member of more than one superannuation fund, make sure the total of your tax deductible contributions made to all funds are counted.  This also includes payments made by your employer or claimed by you as a tax deduction for superannuation insurance premiums.

How can we help?

If you need to reduce your tax deductible superannuation contributions we can assist by calculating the impact on your taxable income and your projected retirement benefits. We can also review your tax planning strategies, your retirement planning goals and assess other retirement funding options. 

There are circumstances when contributing amounts in excess of the $25,000 cap, and incurring excess contributions tax, may not have a material impact on your overall financial situation. Reducing your tax deductible superannuation contributions in these circumstances may not be necessary. We can help you to assess the impact of excess contributions tax and to determine the appropriate course of action given your individual circumstance.

If you have any concerns, or wish to obtain advice in these areas, please do not hesitate to contact Tony Allen on 07 3234 3112 or email.