Changes that apply from October 2011

The following changes are now in effect:

Providing a definition of Completion

Under the Act, there was no definition of completion for the purposes of the ‘date of completion’ for statutory warranty and Home Warranty Insurance time periods.

The Act now provides that residential building work is complete when it is completed in accordance with the requirements of the contract.

If there is no contract or the contract does not specify when the works are complete the works will be complete when they have reached practical completion which is when the work is complete except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose.

Ten year limit

For Home Warranty Insurance policies issued before 1 July 2010, all claims (including related claims) must be lodged by the consumer within 10 years of the work being completed. This change does not affect the Home Warranty Insurance coverage periods (i.e. 6 years on structural and 2 years on non-structural defects).

Clarifies the definition of developer

The Act will now provide that an owner of land on which residential building work is carried out who owns or will own four or more of the existing or proposed dwellings, is a developer for the purposes of the legislation.

Expands Fair Trading’s Dispute Resolution Service

The Home building Division of Fair Trading is now able to accept disputes initiated by building contractors not just consumers.

February 2012 changes

Some changes have a delayed implementation date. The changes outlined below will apply to the following work from 1 February 2012:

• New residential building work.
• New home warranty insurance policies
• New residential building contracts.

Statutory Warranties

The statutory warranty period for residential building works has been reduced from 7 to 6 years. This means that the statutory warranty period is now aligned with the Home Warranty Insurance period so that all warranties will apply for 6 years on structural defects and 2 years on non-structural defects from the date of completion.

Home Warranty Insurance

The threshold for obtaining Home Warranty Insurance will be lifted from $12,000 to $20,000.

Building Contracts

Under the new provisions a less onerous written quote arrangement for small jobs of less than $5,000 will be implemented.

A small job contract must be in writing, dated and signed by or on behalf of both parties and contain the following information:

• The names of the parties including the name and number of the holder of the contractor license,
• A description of the works including any plans and specifications for the work, and
• The contract price if known.

All contracts for residential building work over $5,000 will still requires the use of a building contract that complies with the Act.

Here at The Quinn Group we have a team of experienced lawyers who can assist you with all legal matters related to the Home Building Act. If you would like to make an appointment or if you would like more information, please submit an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166.

Please note your HIA contracts comply with the new provisions.

For more information on the changes please contact your Workplace Adviser on 1300 650 620.

Current  at: 9 November 2011

What is a Winding Notice?

A Notice of Winding Up Application is when the court makes an order for the company to be wound up (‘a winding-up order’) on the petition of an appropriate person, usually a creditor. A winding-up petition is usually presented by a creditor on the grounds that the company cannot pay its debts, and this has to be proved in the Court.

What does a Winding Up Notice do?

A Winding Up Notice gives a company notice to action the matter within 21 days or the company will be wound up and liquidated to repay its debts. Therefore, it is imperative that you seek professional advice immediately upon receiving a Winding Up Notice.

Most activity occurred in Queensland, followed closely by NSW and Victoria. The ATO aren’t relenting – since 30 June 2011 it has become harder to negotiate debt repayment plans with the ATO. We have been successful in securing repayment plans for our clients, but it entails far more work these days!

If you received one of these Winding Up Notices you should contact us immediately! Here at The Quinn Group we have an experienced team of lawyers and accountants who are interested in the welfare of your business. Contact us now by submitting an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to book an appointment.

How can I become bankrupt?

You can become bankrupt voluntarily owing any amount or you can be made bankrupt on the actions of a creditor if the debt is $5,000 or more.

If you find that you are unable to repay your debts, you cannot just declare that you are bankrupt. You must go through a formal process and be deemed eligible, and hence legally declare it; that is if the bankruptcy is voluntary.

Will bankruptcy affect my partner?

In some circumstances your partner will be affected. Where your partner is solvent (non bankrupt) and is jointly liable for the debts, the creditor will continue to pursue them for payment. If you & your partner have joint assets, your interest in the asset will vest with the trustee and may be sold.

Who administers a bankruptcy?

•  Insolvency and Trustee Service Australia (ITSA)
•  A registered trustee who agrees to administer your estate

How long does bankruptcy last?

Generally, bankruptcy lasts for a period of three years and one day from the date a statement of affairs is filed or from the date of bankruptcy as determined by the Court. However it can also be extended to five or eight years if any conditions of bankruptcy were breached or your trustee objects to your discharge as a result.

What may cause an extension of the bankruptcy period?

The period may extend to 5 years if a bankrupt:

•  makes a void transfer against the trustee - any under-valued transactions and preference payments
•  continues to manage a corporation
•  engages in misleading conduct
•  fails to disclose to the trustee a liability that existed at the date of bankruptcy
•  fails to notify a change of address or daytime telephone number
•  fails to advise the trustee of any material change to the information disclosed on their statement of affairs
•  fails to attend a creditors’ meeting without written approval from the trustee
•  fails to attend an interview or examination
•  fails to disclose any beneficial interest in any property
•  leaves Australia without the written permission of the trustee and does not return (five years additional once they return to Australia)

It may extend to 8 years from the date of filing a statement of affairs if a bankrupt:

•  makes a void transfer against the trustee, which includes transfers to defeat creditors
•  fails to provide details of property and income when requested
•  deliberately provided false or misleading information to the trustee after the date of bankruptcy
•  fails to disclose details of income or expected income
•  fails to pay contributions as assessed
•  fails to adequately explain how money was spent or assets were disposed of
•  fails to disclose a liability that existed at the date of bankruptcy
•  fails or refuses to sign a document when required
•  intentionally fails to disclose to the trustee a beneficial interest in a property

How long will the record last?

There is a permanent record of your bankruptcy on the National Personal Insolvency Index (an electronic public register which can be accessed by anyone for a fee).

Bankruptcy and other serious credit infringements are recorded for 7 years. Your name will be listed for 7 years from the commencement of your bankruptcy even if your bankruptcy has been discharged. Lenders may limit your ability to borrow money or buy things on credit for an amount exceeding $4,1700, it is an offence if you do not inform the person that you are an undischarged bankrupt; also you may find it hard to rent, or get electricity, water or the telephone connected, without paying a bond.

What will change while I am bankrupt?

Employment

Bankruptcy generally does not prevent you from working. Your employer is not normally notified of your bankruptcy, unless you owe him or her money. If you are engaged in particular trades or professions there may be certain restrictions imposed by professional associations or licensing authorities. You should contact your professional association or licensing authority to confirm whether there is any effect on your membership or ability to practice a particular trade.

Change of details

You are required to inform your trustee of any changes to your name or address.

Travel

Any person who is an undischarged bankrupt must obtain written permission from their trustee to leave Australia. As soon as you become aware that you may need to leave Australia you should write to your trustee well in advance of the proposed departure with the following details:

•  reasons for departing Australia
•  dates of departure and return
•  details of the itinerary and any overseas contact details
•  particulars about who will fund travel costs
•  any documentary evidence supporting the request eg confirmation by an employer of the need to
•  travel, confirmation of payment of costs by a third party

It is an offence to leave Australia without the written permission of your trustee and your bankruptcy can be extended.

Here at The Quinn Group, the dedicated team of lawyers and accountants at can assist you with advice and assistance for your bankruptcy needs. Contact us now by submitting an online enquiry form or call 1300 QUINNS or on +61 2 9223 9166.

Often insolvency practitioners are appointed by the courts to oversee affairs of troubled corporations to either:

•  Have them trade out of their difficulties; or
•  To wind them up.

Variations of insolvency, include, but are not limited to, the following:

•  Voluntary administration
•  Insolvent trading
•  Directors liability
•  Schemes of Arrangements
•  Bankruptcy

If you are a director of an insolvent company, you may not be protected from insolvency proceedings. Trading while insolvent may lead to your personal assets being seized or frozen, whilst administrators try to prove negligence or insolvent trading. In the extreme there is a possibility you may be held personally responsible for unpaid taxes and debts and could face criminal prosecution, fines and even jail time.

If your company is insolvent, do not allow it to incur further debt. Unless it is possible to restructure, refinance or obtain equity funding to recapitalise the company, generally your options are to appoint a voluntary administrator or a liquidator.

Liquidation involves drawing to a close all of a company’s dealings, so that the business operations can be shut down. Assets are turned into currency, and subsequently used to settle any liabilities. Once all creditors’ debts and other liabilities have been settled, the remaining money, if any, is disbursed to stakeholders of the business.

Here at The Quinn Group, our team of experienced accountants and lawyers can help you if your business is struggling and you would like more advice on insolvency and winding up your business. If you would like to arrange and appointment or you would like to find out more information, please submit an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166.

In Australia, it is important to verify the source of income as it determines the tax treatment upon that income and who it is originates from – residents and non-residents. All income is required when assessing the tax bracket and the amount that a person is required to pay. This ensures that everyone is paying the correct amount of tax. Without this proper calculation, then the amount of tax that tax payers and businesses have to pay may be too much, or too little and when the ATO realises, they may be fined if they are under reporting their income.

Ordinary income is income from rendering personal services, income from property and income from carrying on trading activities. Statutory income is income which is made assessable by specific provisions of the tax law e.g. Capital gains, Foreign currency gains, Recoupment of tax depreciation claims etc.

An Australian resident, for tax purposes, is assessable on ordinary and statutory income derived directly or indirectly from all sources, whether in or out of Australia.

If a resident receives income from overseas, they must declare that income in their Australian income tax return, even if they paid tax on it in the country from which they received it. If foreign tax has been paid on their foreign income, they may be entitled to an Australian foreign income tax offset (FITO), which provides relief from double taxation. All foreign income, deductions and foreign tax paid must be converted to Australian dollars.

Personal Income Tax Returns address all significant financial transactions by the taxpayer for the year. So this includes not only income from employment and wages but also regular income from investments and rental properties as well as one-off payments as a result of the sale of assets. Additionally, any losses incurred during the period also affects the net amount of taxable income and hence the total amount of tax payable by the taxpayer.

A non-resident is only assessable on ordinary and statutory income which is sourced in Australia.

Here at The Quinn Group, our team of experienced Tax Agents and Accountants can help assist you with lodging your tax return or all other tax and ATO related issues. For more information, or a FREE Tax Record Kit, please submit an online enquiry, or call us on 1300 QUINNS (784 667).

A small business employer, for the purpose of determining redundancy pay under the NES, is an employer who employs fewer than 15 employees. This is based on a simple head count of employees immediately before the relevant person was terminated, or at the time when the person was given notice of termination (whichever happened first).

When calculating the number of employees employed at a particular time, all the following factors are to be taken into account:

•  all employees employed by the employer at that time are to be counted
•  a casual employee is not be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis
•  associated entities are taken to be one entity
•  the employee being terminated, and any other employees being terminated at that time are counted.

What is redundancy?

Redundancy under the NES occurs when an employer either:

•  decides they no longer want an employee’s job to be done by anyone and terminates their employment (except in cases of ordinary and customary turnover of labour), or
•  becomes insolvent or bankrupt.

Redundancy may happen when:

•  the job someone has been doing is replaced due to the employer introducing new technology (i.e. it can be done by a machine)
•  business slows down due to lower sales or production
•  the business relocates
•  a merger or takeover happens
•  the business restructures or reorganises.

Genuine redundancy or unfair dismissal?

If a dismissal is a genuine redundancy it will not be an unfair dismissal.

Under Commonwealth workplace laws, a person’s dismissal is a ‘genuine redundancy‘ if:

•  the employer no longer needs the person’s job to be done by anyone because of changes in the operational requirements of the business, and
•  the employer followed any consultation requirements in the modern award, enterprise agreement or other industrial instrument that applies.

A dismissal is not a genuine redundancy if it would have been reasonable in the circumstances for the employee to be redeployed within the employer’s enterprise or an associated entity.

Payouts and Notice Periods

The following table highlights redundancy pay periods

The following table highlights notice periods

If you have a query regarding an issue related to redundancy or another employment law matter, please call us on 1300 QUINNS (1300 784 667) or +61 2 9223 9166 or complete and submit the online enquiry form and we will contact you to discuss your enquiry.

In NSW, you can challenge a Will if you believe that it has not adequately provided for your maintenance, education and advancement in life. For matters where the deceased passed away after 1 March 2009 you must be a person listed below in order to be eligible to contest a Will under the family provision chapter of the Succession Act:

•  The wife or husband of the deceased person at the time of their death (this includes de-facto partners and life partners).
•  A child of the deceased, or a child of a domestic relationship with the deceased.
•  A former wife or husband of the deceased.
•  A person who was at any particular time wholly or partly dependent on the deceased and was at that particular time or any other time a member of the deceased household.
•  A grandchild who was at any particular time wholly or partly dependent on the deceased.
•  A person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.

This was to ensure that adequate provision is made for certain defined eligible persons, whether or not there was a will and whether or not the eligible person was mentioned.

A Will can be challenged under the following circumstances:

Undue Influence & Duress - A person can only make a valid Will if that Will is made by them freely and voluntary. As a result, if someone attempted to influence the terms of the Will or if physical, psychological or threatening duress was placed upon the deceased the Will can be contested.

Incapacity - A Will can also be challenged if the deceased lacked the necessary legal capacity to make the Will. This means that the deceased did not understand the nature and effect of a Will they were making, or were unable to make rational decisions regarding the distribution of their property. This situation most frequently occurs in relation to the elderly, people in frail health, or those suffering from an illness which affects their mind.

Contract to Make a Will - In some situations, people (usually married or de facto couples) may choose to enter into a binding contract to make their Wills in a certain way. This presents problems if one of them makes a Will later on, which is inconsistent with the contract; often without telling the other contracting party about their new Will, or if the other person has passed away. Where the contract regarding the making of the Wills has been properly drafted and is legally enforceable, persons affected by a breach of the contract may be entitled to make a claim for damages or other relief from the court.

If you think you are eligible to contest a Will and would like more information please submit an online enquiry to our experienced team of lawyers here at The Quinn Group. You can also call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.

Last day for superannuation guarantee contributions to be made to a superannuation provider for quarter 2 2011-12 (1 October - 31 December).

If an employer does not make the minimum superannuation guarantee contributions for quarter 2 by this date, they must pay the SGC (Superannuation Guarantee Charge) and lodge a Superannuation guarantee charge statement - quarterly by 28 February 2012.

The SGC is not tax deductible.

December BAS due on 28th February 2012

The Business Activity Statement (BAS) is a pre-printed document issued by the ATO on either monthly or quarterly basis. The document summarises the amounts of GST payable and receivable for the relevant period and a range of other taxes including PAYG withholding and ABN withholding. If you don’t submit your BAS on time, you may be subject to a failure to lodge (FTL) penalty.

Monthly PRT due on 16th January 2012

Payroll tax is imposed on an employer’s liable NSW wages minus any threshold entitlement.

An individual employer or a group of related businesses may be liable for payroll tax if the total liable wages throughout Australia, including NSW, exceeds the payroll tax threshold for that year.

Each monthly payment or ‘nil’ remittance is due seven days after the end of each month (i.e. December payment is due by 16 January  due to ATO’s extension) or the next business day if the seventh day is a weekend or public holiday. The annual reconciliation and payment, if applicable, is due by 21 July.

Here at The Quinn Group our experienced team of accountants can help you with all your business’ Accounting issues and needs. For more information submit an online enquiry. If you have received an OSR audit or questionnaire it is vital that you seek professional advice because it is important that all questions be answered accurately. Call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.

It should be noted that both these test have undergone significant legislative change in the last 10 years such that the current tests have become far more stringent and restrictive. Companies seeking to satisfy the requirements of either test, need to be cautious in ensuring their continued compliance from the start of the income year in which the loss was incurred, to the end of the income year in which the loss is to be deducted (“ownership test period”). Failure to satisfy either test will result in the prior year losses being lost. 

To satisfy the Continuity of Ownership test, a company must demonstrate that any shares carrying:

1.  the right to exercise more than 50% of voting power in the company;
2.  the right to receive more than 50% dividends and
3.  the right to receive more than 50% distribution of capital
are beneficially owned by the same person or persons during the ownership test period.

Since 21 September 1999, the person must own the same interests in the same shares throughout the ownership test period to satisfy the above test.

If the company is unable to satisfy the Continuity of Ownership Test, prior year losses can still be utilised if the company is able to satisfy the Same Business Test. In essence, the company must carry on the same business in the year it seeks to claim prior year losses, as it carried on immediately before the “test time”.

To satisfy the Same Business Test, the company must not derive assessable income during the Same Business Test period from:

1.  a business of a kind that it did not carry on before the test time (“New Business Test”); or
2.  a transaction of a kind that it had not entered into in the course of its business operations before the test time (“New Transactions Test”).

This makes the dates on which any changes in the company’s business, or the company’s ownership, critical to the assessment of the test. The concept of “same” has been considered by the Commissioner and does not strictly equate to a business’ operations being identical. The natural growth or discontinuation of certain aspects of a business’ operations are allowable provided no sudden or dramatic change in the business’ activities have been undertaken on a considerable scale.

These tests are further subject to numerous anti-avoidance measures specifically enacted to disallow the illegitimate exploitation of these company tax benefits. As this area of tax is becoming increasingly complex, it is important to seek professional advice in regards to whether your company is entitled to carry forward its losses and how to best utilise them against your company’s future assessable income.

Here at The Quinn Group our experienced team of accountants and tax agents can assist you in determining whether your company meets the requirements of either test enabling your prior year losses to be retained. For more information about prior year losses, the Continuity of Ownership or Same Business tests or for any other tax advice submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.

• vacant land, including vacant rural land
• land where a house, residential unit or flat has been built
• a holiday home
• investment properties
• company title units
• residential, commercial or industrial units, including car spaces
• commercial properties, including factories, shops and warehouses
• land leased from state or local government.

Once you have registered for land tax you will be sent a notice of assessment from the Office of State Revenue based on the information you have supplied. This will show any land tax payable on the land you own. If you have previously registered for land tax, you do not need to complete another registration unless your ownership or usage details have changed.

As of 2012, the Valuer General has determined that the land tax threshold for the 2012 land tax year is $396,000. The premium land tax threshold for the 2012 land tax year is $2,421,000

There are many concessions and exemptions that you may be eligible for. Since there are so many and it can be difficult to differentiate between them it is recommended that you seek our advice when applying for these concessions/exemptions. Check with us to see if you are eligible for any of the following:

• Principal place of residence
• Boarding houses
• Land used for primary production
• Low cost accommodation

o your property is within five kilometres of the Sydney GPO, and
o you let a room or rooms under a Residential Tenancy Agreement, and
o the rent is within the limits set by the Treasurer.

• Residential parks, including caravan parks
• Non-profit organisations
• Retirement villages, aged care establishments and nursing homes
• Conservation agreements
• Special Trusts - where the trustee is the only person who meets the definition of ‘owner’ for land tax purposes, and the beneficiaries are not considered to be owners. If a trust does not meet one of the following trust definitions, it is a special trust. Examples of special trusts include most family trusts, discretionary trusts, some unit trusts and some trusts created by a will. The land tax threshold does not apply to special trusts which are taxed at a flat rate for amounts up to the premium land tax threshold and then at the premium rate thereafter.
• Other exemptions

o Aboriginal Land Councils
o land used for two or more purposes, each of which is exempt
o land used for a child care centre, where the centre is licensed under the Children [Care and Protection] Act 1987 and where it is used for the provision of a child care service.

The threshold applies to:

• Individuals
• Certain Fixed (i.e. Unit) Trusts
• Self Managed Superannuation Funds

For more information on land tax or to find out if you are eligible for any of the above concessions or exemptions contact our experienced team of lawyers and accountants here at The Quinn Group. For this, or any other accounting or legal advice submit an online enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to book an appointment.

LAND TAX IS DUE SHORTLY.

If you do not receive a notice of assessment but think that you are liable to pay land tax this year, please contact us to discuss this further.