Business and Commercial Law - Defences to Directors Penalty Notices
Date: October 08, 2010
Authors: LAC Lawyers
When faced with liquidity problems, it is common for companies not to make the relevant payments to the Commissioner of Taxation in regards to their tax obligations under Income Tax Assessment Act 1936. Division 9 of Part IV of the ITAA 1936 imposes a duty on Directors to cause their companies to make the payment to the Commissioner. The most common failure encountered by the Commissioner is the failure to remit the PAYE tax deductions to the Commissioner. Subdivision B of the Division 9 of the ITAA establishes a system of parallel liability which allows the Commissioner to charge company directors with payment of amounts due pursuant to the withholding tax provision of the legislation. A director of the company now is obligated to remit the payment to the Commissioner within 14 days or alternatively do one of the following 3 things:-
- cause the company to enter a payment arrangement with the Commissioner;
- appoint an Administrator; and
- causes the company to be wound up.
Defences for Director
A Director will not be personally liable if:
- The Director took reasonable steps to ensure that the company would take one of the three options above; or
- There were no reasonable steps that the director could take to ensure that the company complied with the above options; or
- The director did not participate in the management of the company for illness or some other reason.
In determining the issue of reasonableness, regards is made to the followings facts:-
- when, and for how long the person was a director and took part in the management of the company; and
- all other relevant circumstances.
The authorities make it clear that the requirement of Section 222AOJ(3) ITAA is only satisfied if the director establishes that he or she took all reasonable steps in respect of each of the three options by which the director’s duty is satisfied.
Whether the defences provided by Section 222AOJ ITAA are available to a particular director is a question of fact and the court will also consider the circumstances of the directors, their level of experience and expertise and role in the management in determining what is reasonable. We at LAC Lawyers are able to assist clients in determining whether the defences are available to them when issued with a Director Penalty Notice.
Business & Commercial Law - New Business Name Registration Regime with ASIC
Date: May 08, 2012
Author(s): Ben Youn LL.B., B.Bus (Accounting)
As of 28 May 2012, registration of business or trading names will be handled by the Australian Securities and Investments Commission which is done by completing and lodging an online application to the aforementioned government agency.
Tax Law - Business Running Guide: Unit Trust(Part 1)
Date: May 08, 2012
Author(s): Ben Youn LL.B., B.Bus (Accounting)
This series of articles discusses the features, characteristics, advantages and other matters regarding unit trusts in Australia. Part 1 discusses the summary of features and characteristics.
Tax Law - Business Running Guide: Unit Trust(Part 2)
Date: May 08, 2012
Author(s): Ben Youn LL.B., B.Bus (Accounting)
This series of articles discusses the features, characteristics, advantages and other matters regarding unit trusts in Australia. Part 2 discusses the trustee's liability and the trustee's right to indemnity.
Tax Law - Business Running Guide: Unit Trust(Part 3)
Date: May 08, 2012
Author(s): Ben Youn LL.B., B.Bus (Accounting)
This series of articles discusses the features, characteristics, advantages and other matters regarding unit trusts in Australia. Part 3 discusses how unit trusts compare against companies and how taxes are applied after entitlements are received.
Employment Law & Commercial Law - Restraint of Trade Clause - Introduction Fees? Are they restraint of trade clause?
Date: February 27, 2012
Author(s): Patrick Mulligan B.A., LL.B.
The purpose of this article is to analyse a recent decision in the Supreme Court of Victoria regarding the interpretation of restraint of trade clauses. In Earth Force Personnel Pty Ltd v E A Negri Pty Ltd & Anor [2010] VSC 426 (22 September 2010) a labour hire company appealed a decision by the Magistrates Court regarding the interpretation of an introduction fee. In that case the respondents argued that the introduction fee was unenforceable as a restraint of trade clause and that the introduction fee was therefore not payable.
Tax Law - Compliance Programme 2011-2012 Fiscal Year(Part 1)
Date: February 20, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The collection and recovery of tax debts has proved challenging for the ATO in the last financial year. Declining economic conditions coupled with natural disasters have made tax and superannuation compliance hard for everyone. That said, some taxpayers have resorted to cheating the taxation system but as the year progressed, the ATO was able to address some of these problems.
Tax Law - Large business entities(Part 1)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 2)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 3)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Demerger(Part 5) – Cost base calculation
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A complicated and often misunderstood area of tax law is the CGT and dividend tax relief available in respect of demergers. A demerger occurs when a group of entities (basically, companies or fixed trusts) divides itself into multiple entities or groups in a certain way. This part of the article goes into more detail about how the interest-holders of the head entity ought to adjust the cost bases of the interests in the demerged entity they end up holding.
Tax Law - Companies - Late Payments - Directors Penalty Notices (DPN)
Date: November 14, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
As of recent times we have been approached by a number of taxpayers who are experiencing difficulties in meeting their tax and BAS obligations. It is apparent that the ATO has a much lower threshold of tolerance where BAS obligations are not met on time they are now insisting on 50% of the outstanding balance due when a payment arrangement is being negotiated.
Tax Law - Tax Debts - Personal Liabilities of Directors for Company Tax Debts
Date: October 24, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
In most situations where a company has a tax debt, the Commissioner of Taxation and the ATO will respect the “corporate veil” and not touch the assets or money of the individual directors or shareholders.
Tax Law - Tax Debts - Bankruptcy and Liquidation Factors
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
In our companion articles Tax debt recovery: bankruptcy and Tax debt recovery: liquidation, we already discussed the basics of when the Commissioner will impose these harsh measures. However, an important issue for a taxpayer who is subject to these measures is what factors the Commissioner takes, or should take, into account when deciding to impose them.
Tax Law - Tax Debts - Indemnity Requests upon Liquidation or Bankruptcy
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
When a tax debtor is subject to bankruptcy or liquidation, either a trustee or liquidator will take over the taxpayer’s assets and undertake to pay the debts of the taxpayer as best as possible. These debts include debts to the ATO as well as other debts. The trustee or liquidator will often find itself in a situation where a certain action, such as litigation, will result in more funds being available to pay creditors.
Tax Law - Tax Debts - Liquidation
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
When the ATO and Commissioner of Taxation decide to impose measures upon a company taxpayer with a tax debt, the most extreme sanction available is that of liquidation. As can be imagined, this harsh measure is not imposed lightly.
Business and Commercial Law - Agency Agreements
Date: April 13, 2011
Section 55 of the Property, Stock and Business Agents Act 2002 provides that a written agency agreement must be prepared for all services to be performed by an agent for a client (principal), unless the services relate only to livestock.
Contract Law - The Validity of Online Contracts
Date: January 13, 2011
Author(s): LAC Lawyers
Online trading has become the object of ever increasing attention over the past few years. The legal obligations of the buyers and sellers of an online contract has been the subject of disputes when interpreting the online contracts. Ebay remains one of the most active trading portals used by buyers and sellers to buy and sell their goods. It is estimated that eBay has hundreds of millions of users actively trading on their online portal.
Business and Commercial Law - Partnerships - The traps and pitfalls
Date: January 07, 2011
Author(s): Scott Gray LPAB, Grad. Dip. Legal Practice
There are no strict legal requirements for the forming of a partnership other than when two or more persons carry on a business in common for profit, however given that this is a legal relationship it is advisable to create a written partnership agreement so that the terms of the relationship are clarified between the partners.
Commercial Law - Drafting Commercial Agreements
Date: November 01, 2010
Author(s): LAC Lawyers
Lawyers are often called upon to draft documents on behalf of clients when they wish to enter a business agreement with another person or entity for the furtherance of a common goal. From the client perspective; drafting a commercial agreement should not be complicated or involve consideration of legal issues.
Business and Commercial Law - Liability of Directors in Trustee Company's
Date: October 08, 2010
Author(s): LAC Lawyers
You have been appointed as a Director of a Corporate Trustee pursuant to a Deed of Trust and you are now concerned about your function and role in the Corporate Trustee with respect to the liabilities of the Corporate Trustee and your liabilities to the Trust if there are insufficient assets to meet the Trust’s liabilities.
Business and Commercial Law - Restraint of Trade
Date: October 08, 2010
Author(s): LAC Lawyers
Key employees have always been the cornerstone of every successful business or enterprise and great difficulties are caused by the sudden loss or departure of key employees which in turn could harm the relationship between the business and its clients. Key employees have over the years enjoyed a close relationship with clients and losing them would have a detrimental effect on the management and reputation of the business.
Is it the beginning of the end for discretionary trusts and one-man companies - A change of view point
Date: September 01, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
There are suggestions that Australian courts are now changing their approach to the interpretation of statutes with the effect that discretionary trusts are not as useful in avoiding statutory obligations. In other words, in the words of the Bob Dylan song “… the times, they are a-changin”!
Is it the beginning of the end for discretionary trusts and one-man companies - Centrelink, Bankruptcy and Taxation
Date: September 01, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Another example is Elliott v. The Secretary of the Department of Education, Employment and Workplace Relations decided in 2008 immediately before the High Court of Australia’s decision in Spry and was concerned with the means test for Centrelink pensions.
Is it the beginning of the end for discretionary trusts and one-man companies?
Date: September 01, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The traditional usefulness of discretionary trusts arises from the puzzling position they hold in the law. Property transferred to these entities is effectively ownerless until discretionary trustees determine to appoint the property to discretionary beneficiaries.
Taxation Law - Phoenix Activity - Further Changes in the Pipeline
Date: August 02, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The Rudd/Gillard Federal Governments are also considering giving to the ATO and to ASIC a number of additional powers against directors involved in fraudulent Phoenix activity including the following powers
Reversal Of Effect Of Sons Of Gwalia Decision - Ending Of Equal Ranking Of Shareholder Claims With Claims Of Unsecured Creditors In Corporate Insolvency
Date: July 30, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The Corporations Act will be amended so as to reverse the decision of the High Court of Australia in Sons of Gwalia v. Margaretic. The Sons of Gwalia decision determined that, in a corporate insolvency, certain shareholder claims against a company rank equally with the claims of other unsecured creditors.
Intellectual Property - Trade Practices - The Law of Passing Off
Date: August 28, 2009
Author(s): LAC Lawyers
The principle behind the tort of “passing off” is that a person cannot represent their goods or services as those of another. The action for passing off protects business goodwill and reputation from wrongful appropriation.
Business Law - Personal Guarantees & Indemnity
Date: August 04, 2009
Author(s): LAC Lawyers
If you are a supplier of goods and operate your business on a credit system then it pays to protect your position in relation to your debtors. The following scenario depicts a common occurrence in the supplier/purchaser market leading to frustration and ultimately loss of moneys owning.
Debt Recovery - Personal Insolvency Agreements
Date: August 04, 2009
Author(s): LAC Lawyers
If you find that you are overwhelmed with debt and cannot pay all those debts as and when they are due but at the same time you do not want to be declared a bankrupt, you may still have the option of entering into a Personal Insolvency Agreement (“PIA”).
Property Law - Business Leases - Tenants in Trouble
Date: July 04, 2009
Author(s): LAC Lawyers
Tough economic times can bring grief to all of us, in varying degrees. It’s almost a cliché that we should be cautious in our business affairs. But by so doing we should be able to weather the storm. Caution is needed before entering into a lease. But what if the tenant finds itself in a situation which it had not seen coming?
Employment Law - General Employee Entitlement & Redundancy Scheme (GEERS)
Date: June 05, 2009
Author(s): LAC Lawyers
If you have been made redundant or have lost your job because your employer has gone bust and you have not been paid your outstanding wages or entitlements, then you may be eligible for payment under GEERS.
Business & Commercial Law - Franchising Law - Franchising Code of Conduct
Date: May 29, 2009
Author(s): LAC Lawyers
Franchising in Australia is governed by the Franchising Code of Conduct (“FCC”). This piece of legislation was design to protect potential franchisees from unscrupulous franchisors and requires the franchisor to disclose certain information to the franchisee so as to...
Bankruptcy & Insolvency Law - What Can I Do If I Am Declared Bankrupt?
Date: April 29, 2009
Author(s): LAC Lawyers
The global economic crisis has no doubt affected millions of people and businesses world-wide. Australia is not immune and coupled with record high unemployment and talks of recession, it is not surprising that many people cannot pay their debts and the instance of bankruptcy proceedings being commenced by creditors has increased as a result.
Business Law - Business Structures - Companies
Date: April 22, 2009
Author(s): LAC Lawyers
A company is a form of business organisation made up of members or shareholders and managed by directors.
Business Law - Business Structures - Partnerships
Date: April 02, 2009
Author(s): LAC Lawyers
The term “Partnership” is defined in the Partnership Act 1892 (the “Act”) as the relationship that exists between persons carrying on business in common with a view of profit. From this...
Bankruptcy - Advantages and Disadvantages of Bankruptcy
Date: January 16, 2009
Author(s): LAC Lawyers
Bankruptcy involves you handing over control of your property and finances to a Trustee (the person who takes control over your property) in exchange for protection from legal action by your creditors (the people/companies you owe money to). You do not have to have a minimum amount of debts or property to enter bankruptcy.
Debt Recovery - The Common Stages
Date: September 24, 2008
Author(s): LAC Lawyers
At LAC Lawyers we are able to assist you with all debt recovery matters and advice you on the best method of enforcement to avoid unnecessary costs having regard to the circumstances of each matter.
Taxation Law - Business Records and Substantiation
Date: July 27, 2008
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Generally taxes are all about income, deductions and substantiation. One of the areas where taxpayers are substantially at risk is record keeping and substantiation for claims made for deductions.
Business Law: Obtaining embarrassing documents from banks, mortgage companies and insurers - the limits of legal professional privilege
Date: May 25, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The New South Wales Court of Appeal has handed down an important decision in Westpac Banking Corporation v. 789 Ten Pty Ltd which places a limit on legal professional privilege.
Commercial Litigation: When is your lawyer not really your lawyer?
Date: May 19, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Over the last decade, there has been enormous growth in the appointment of in-house lawyers employed by corporations to provide a range of legal services from corporate covenants to debt collection to litigation support and advice. These lawyers are generally called in-house or general counsel.
Franchising - ACCC Increases Focus on Franchisor Obligations
Date: February 08, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
New franchising regulations will commence on 1 March 2008. Franchisors will need to comply with the current franchising code up until 1 March 2008 and then comply with the amended code afterwards.
Partnership Agreements - Simple and Flexible Business Vehicles (Vic.)
Date: January 28, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The only real test is whether the parties were carrying on a business in common with a view of profit as defined in the Partnership Act. For taxation purposes it simply amounts to the joint receipt of income.
Franchise Agreements: Franchisee and Franchisor Responsibilities
Date: January 21, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Franchisees and franchisors should always seek legal advice before entering into franchise agreements. The question arises, however, as to whether a lawyer should act for both or only one party.
Insurance Law and Business Interruption Insurance
Date: December 05, 2007
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
People in business insure their premises, contents and stock against the material damage risks of fire, explosion and other perils, but have they given the same thought to the other problems which would arise following any of these events, the problems which manifest themselves when the fire engines have driven away.
Franchising - Code of Conduct Changes from 1st March 2008
Date: November 21, 2007
Author(s): LAC Lawyers
The Franchising Code of Conduct ("the Code") applies to a franchise agreement entered into, renewed or extended on or after 1st October 1998.
Business & Commercial Law - How To Improve Your Cash Flow and Statutory Demand
Date: October 05, 2007
Author(s): LAC Lawyers
Credit is an integral part of commerce, sometimes for the better and at other times for the worse. To improve your cash flow and to ensure that credit is being given to debtors who are credit worthy, a comprehensive credit application should be completed at the inception. From the information in the credit application referred to below you are likely to be in a better position to recover any debts.
Taxation Law - Taxation Settlements
Date: September 11, 2007
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Taxation law and practice is a highly complex area of the law. For any number of reasons individual or corporate taxpayers may find themselves in dispute with the ATO. In order to provide some certainty as to how a taxation dispute may be dealt with the ATO follows a Code of Settlement Practice.
An Explanation of Some Areas of Risk for Director's
Date: June 24, 2007
Author(s): LAC Lawyers
If you (personally) breach the Act, both you and the organisation may be prosecuted. If convicted, both you and the organisation may have to pay significant penalties.
Business & Commercial Law - Director's Duties To The Company
Date: June 21, 2007
Author(s): LAC Lawyers
Taxation Law - Goods and Services Tax
Date: May 01, 2007
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
As everyone understands there are a number of Commonwealth Government taxes. The major ones are CGT, FBT, ICT, GST, LCT and PAYG (earn/withholding). At this stage this paper will only deal with GST legislation. The main piece of GST legislation is a new tax system (Goods and Services Tax Act 1999) which came into operation on 1 July 2000 and is payable only on supplies and importations made on or after that date.
Trade Practices Law - Key Provisions that all businesses should be aware of!!!
Date: April 22, 2007
Author(s): LAC Lawyers
Key provisions of the Trade Practices Act that a business should be aware of in order to avoid a breach of the Act.
What to expect when you call LAC Lawyers
Date: December 13, 2006
Author(s): LAC Lawyers
LAC Lawyers is a full service firm dedicated to the provision of superior legal services in Australia. Our aim is to provide unrivalled client satisfaction coupled with high quality service and advice. When you call LAC Lawyers our friendly reception staff will spend time with you to identify the area of law your enquiry relates to then pass you on to one of our qualified solicitor's who can help you.
The Benefits of Hiring A Lawyer
Date: August 16, 2006
Author(s): LAC Lawyers
The old adage “you get what you pay for” is as true today as it has ever been.
Why stay with your lawyer
Date: August 01, 2006
Author(s): LAC Lawyers
The lawyer/client relationship is a personal one and there are many reasons which will dictate who you can and cannot work with. If you don’t like your lawyer, should you change? Ultimately, the relationship between a lawyer and client must be built on mutual trust.
Employment Law, Contract Law - Is a person who has a services company entitled to relief under s 106 of the Industrial Relations Act (NSW)?
Date: September 26, 2005
Author(s): LAC Lawyers
Choosing a business structure - Which one is right for you?
Date: September 25, 2005
Author(s): LAC Lawyers
When starting out in business or changing the nature of your business you need to consider which method of operating the business is best for you.
Business and Commercial Law - Do’s and Don’ts for Small Businesses
Date: September 24, 2005
Author(s): LAC Lawyers
Starting a new business can be a daunting operation. A remarkably high percentage of small businesses fail within the first five years of operation. Sometimes that is because the business itself is not sound. However, on other occasions the problem lies in a lack of planning or an ignorance of the many legal requirements that must be met by the small business operator.