Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Covid-19 continues to disrupt business operations, creating an uncertain environment for business owners to trade within. In response to the drastic impact of Covid-19 on the Australian economy, the Federal Government introduced the JobKeeper scheme to support small businesses and combat unemployment. Whilst many businesses have benefited greatly from the scheme, some were excluded from Commonwealth support as they failed to meet the eligibility criteria. The recent case of Apted v Commissioner of Taxation considered the requirement for businesses to have an active Australian Business Number (ABN) when applying for the JobKeeper package; the Tribunal finding that the purpose of the scheme was to support businesses and arbitrary eligibility requirements were contrary to this objective.

Overview

Mr Adept was the sole trader of a small business where he worked as an expert valuer in rental disputes up until July 2018 at which point he retired. As such, he cancelled his GST and ABN registration effective June 2018. However, after he decided retirement wasn’t for him, in September of 2019 Mr Apted was engaged to provide services for the odd client. He mistakenly assumed that he was not required to reactivate his ABN as he did not anticipate to make more than $75 000 per year and did not think he needed to be registered for GST or an ABN.

At the end of March 2020, Mr Apted applied to have his ABN reactivated, which was reinstated by the Registrar with a date of effect of 31 March 2020. He then subsequently applied for a JobKeeper payment in April 2020, but his application was rejected as he was deemed ineligible due to his inactive ABN at the 12 March 2020 cut-off date. Mr Apted then contacted the Registry and had his ABN retrospectively backdated to be effective from July 2019 after which he appealed the decision with the Commissioner. His claim again failed on the basis of ineligibility and Mr Apted subsequently escalated the decision of the Commissioner to the Administrative Appeals Tribunal of Australia.

Eligibility Requirements for JobKeeper

There are several requirements set out in the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) that must be met in order for a business to qualify for JobKeeper payments. These include:

  • At 1 March 2020, the entity was an active business; not for profit operating primarily in Australia; or a deductible gift recipient.
  • The entity employed at least one eligible employee during the JobKeeper fortnight being applied for.
  • The entity satisfies the original decline in turnover test: which is generally satisfied when an entity’s projected GST turnover for the test period falls short of current GST turnover for the relevant comparison period by the specified percentage (normally 30%). There are alternative tests for businesses started in 2020 before March 1.
  • The entity satisfies the actual decline in turnover test: which is generally satisfied when an entity’s actual GST turnover for the test period falls short of the relevant comparison period, by specified short fall percentage (normally 30%).
  • The entity satisfies the integrity rules: have an ABN that was active on 12 March 2020; and an amount was included in the entity’s assessable income for 2018-19 income in relation to the business or the entity made a taxable supply in a tax period between July 2018-12 March 2020.

Decision of the Administrative Appeals Tribunal of Australia

In its decision, the Tribunal considered the purpose of the JopKeeper scheme as a mechanism for providing necessary and accessible support to small business owners. The Tribunal found that the Integrity Rule containing the requirement for an active ABN at 12 March 2020 was contemplated by the government as putting trust in the Registrar and the ABN process, rather than a fixed deadline. As a result, where the Registrar decides to use its discretion to retrospectively date an ABN, this does not vitiate the integrity of the ABN for the purposes of JobKeeper eligibility. The Tribunal found in favour of Mr Apted, and reiterated the need for JobKeeper to remain a streamlined and attainable scheme for Australian businesses.

It is worth noting that that the ATO has confirmed that they have lodged an appeal against the decision in the Federal Court of Australia and the possible future implications of this decision remain unclear. However, the ATO maintains the AAT’s decision has not changed the need to satisfy all of the other eligibility conditions.

Other Recent JobKeeper Updates

From the 28th of September 2020, businesses and non-for-profits seeking to claim JobKeeper payments to March 2021 must reassess their eligibility with reference to their actual turnover in the December quarter and demonstrate the required decline turnover test has been met. Further, from January 4th the payment amount has decreased to $1,000 per fortnight for eligible employees and business participants working for 20 hours or more a week on, and $650 per fortnight for employees and business participants who were working for less than 20 hours a week.

How do I check the status of my ABN?

An Australian Business Number is a unique identifier that enables your business to identify itself, avoid PAYG tax, and claim GST credits. It is important as the owner of a small business that you are able to check the status of your ABN and reactivate it before expiry. You can apply or reapply online for an ABN through the Australian Business Register website, and once your application is successful your details will be added to the Australian Business Register. The Register contains the status of all ABN’s including their expiration date. Once you have obtained an ABN it is important you keep your details up to date in the Register, as this is how you will be contacted when your ABN is due for renewal. If you do not receive a notice of renewal, or unsure about the status of your ABN you may need to seek out further assistance.

Further Information

Matters such as these highlight the importance of seeking expert legal and taxation advice when conducting a small business. Mr Adept himself acknowledged his misunderstanding of ABN requirements was because he failed to obtain proper advice. If you are the owner of a small business, and want to understand more about your eligibility for JobKeeper payments or about the implications of an ABN for your business, do not hesitate to contact us on 9963 9800 or via our contact form.

Modern Awards – An Update, June 2020

Modern Awards – An Update, June 2020

Several modern awards have been significantly varied by the Fair Work Commission (‘FWC’) to grant businesses and employees temporary measures to preserve the ongoing viability of businesses and jobs during the COVID-19 pandemic. In addition to the unpaid pandemic leave and annual leave flexibility that has varied over 99 awards since 8 April 2020, the NSW Government has inserted provisions in the Long Service Leave Act 1955 (NSW) relating to pandemic leave. Employers should become familiar with these important industry award changes which we will outline below.

Changes to Modern Awards in 2020

The Tranche 2 awards, including the following listed below, have been finalised and will come into effect from the 29 May 2020. In addition to unpaid pandemic leave, the following changes have been inserted that are temporary and will be reviewed on 30 June 2020:

1. Clerks — Private Sector Award 2010

Operational flexibility: employees can be asked by their employers to do any tasks that they have skill and competency for, even if they are not in their usual classification or normal work, given that the employee has the appropriate licenses and qualifications. If an employee is told to work above their usual classification for more than one day, they must be compensated by being paid at a higher rate.

Work from home agreements: Part-time employees can agree to have minimum engagements reduced from 3 hours per shift to 2 hours. Casual employees can agree to be paid for a minimum 2 hours’ work shift instead of 3 hours.

Ordinary hours change while working at home: Agreements can be made to allow employees to work between 6am to 11pm on Monday to Friday, and 7am to 12.30pm on Saturday.

Reduced hours: Any employee who has had their hours reduced can ask their employer for permission to find more work with another employer and/or access training, professional development and study leave through their employer.

See determination for further information.

2. Hospitality Industry (General) Award 2010 and Restaurant Industry Award 2010

Operational flexibility: An employee can perform any duties within their skill and competency provided that they are licensed and qualified to perform them. Employees engaged to perform higher duties must be compensated at a higher rate than their ordinary classification.

Working hours: An employer may direct a full-time employee to work an average of between 22.8 and 38 ordinary hours per week and be paid on a pro-rata basis. An employer may direct a part-time employee to work an average of between 60% and 100% of their guaranteed hours per week (over the roster cycle).

Annual Leave: An employer may, subject to considering an employees’ personal circumstances, direct the employee to take annual leave with 24 hours notice.

See determination for the Hospitality Industry Award and the determination for the Restaurant Industry Award.

3. Educational Services (Schools) General Staff Award

Temporary reduced hours: An employer may issue a notice of intention in writing to direct an employee to reduce their ordinary hours by up to 25%. The direction will come into effect 5 days after the notice of intention was issued and will remain in force for a period of no more than 12 weeks.

Operational flexibility: An employee can perform any duties within their skill and competency provided that they are licensed and qualified to perform them. Employees engaged to perform higher duties must be compensated at a higher rate than their ordinary classification.

Other awards that have been varied include the Rail Industry Award, Contract Call Centres Awards and Manufacturing and Associated Industries and Occupations Award. See what other awards have changed in 2020 here.

Considerations for Employers

Employers must be aware of their changing obligations surrounding unpaid pandemic leave and any other laws, such as those relating to the JobKeeper subsidy. The greater flexibility in relation to job roles and duties, work hours and leave under some awards is a positive development towards enabling businesses to meet the challenges caused by the pandemic. However, employers must proceed with caution to ensure that their work agreements comply with these award variations.

Further Information

For further assistant on any matter relating to work from home policies or any workplace matter, please contact one of our experience employment and litigation solicitors on 02 9963 9800 or law@etheringtons.com.au.

How to Protect Your Assets during a Financial Crisis

How to Protect Your Assets during a Financial Crisis

The COVID-19 pandemic has shocked the financial markets and created difficult situations for people who own assets that have fallen in value. In this article, we explore three tips that could help protect your assets and finances throughout the COVID-19 crisis.

Disclaimer: This article has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, financial advice. We recommend that you should consult your own finance advisors before engaging in any transactions. 

Protecting Personal and Family Assets

A discretionary trust (also known as a family trust) can be used to protect assets in the event of a financial crisis or bankruptcy. A typical family trust operates as a legal relationship between a trustee and beneficiaries, where the trustee is under an obligation to hold property for the benefit of the beneficiaries. The trustee is the legal owner of the trust property and the beneficiaries only hold an interest in the trust property. Therefore, if a beneficiary were to experience financial hardship, trust assets are protected from the beneficiary’s creditors as they do not own the trust property.

However, trustees on the other hand may fail to achieve asset protection if the predominate purpose for the administration of a trust was for a tax benefit or other considerations. For example, it is common for family trusts to have a corporate trustee as this structure brings tax benefits and can exist indefinitely and can appoint multiple directors to control the trust.

There are many events that risk exposing the assets of a trust, including where loans are made from a family trust, when there are unpaid allocations of trust income and capital, and when companies are beneficiaries. Many deficiencies stem from a poorly constructed Trust Deed, therefore it is important to consult a legal professional to carefully draft a deed with relevant clauses included to ensure asset protection.

Protecting Business Assets

One of the greatest risks during economic downturns is for a business to become bankrupt. Creating limited liability companies or corporations is the most common strategy to help protect your personal assets from the reach of creditors. Businesses can also use the structure of a trust to protect assets that have value, such as machinery, equipment or intellectual property, to prevent them from being taken in the event of a lawsuit.

Professionals that are at risk of personal liability must be careful as the risk of insolvency and/or lawsuits frequently arise during a financial crisis. Thus, it is important to check your business and professional indemnity policies for inclusions and exclusions. One way you could protect yourself is to increase your professional and public liability policy premiums and cover more extensively the events that are likely to occur in the current environment.

Pension and Superannuation Funds

Most pension and superannuation funds can allow you to shift your investments across different asset classes. As volatile market movements have resulted in falling share prices, shifting your investments could substantially reduce the current value of your portfolio. If you are older or rely on income from your fund, you could consider reducing the risk of your investments by shifting holdings from equities to bonds and cash. However, it is important to note that moving your investments could mean that you sell at a lower than usual price and therefore miss out on opportunities for future price increases. As such, some financial advisors may suggest to sit out of the market and wait until things blow over. If you are middle-aged or younger and will not need to rely on a fund income within the next ten years, attempting to time the markets is risky and a series of rash decisions could lead to a loss in the potential future value. Many suggest that the key is to maintain a balanced portfolio that spreads risk across different asset classes to reduce your downside risk and also ensure exposure to upside risk when the market outlook improves.

Further Information

If you would like more information on how we can advise you about trusts and protecting your assets, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au.

Effects of COVID-19 on Workplace Law – An Employee Perspective

Effects of COVID-19 on Workplace Law – An Employee Perspective

The COVID-19 is a health crisis that has caused extensive disruption to our way of life. Lockdown placing restrictions on travel and cautious spending habits, it is unlikely that the economy will see an immediate recovery to previous activity levels. This has had a notable impact upon workplace law as many employees have been stood down or made redundant. In response, the Fair Work Commission has acted to vary industry awards and will continue to conduct hearings for cases of unfair dismissal.

Redundancy and being ‘stood-down’

Many businesses have been shut down for being a non-essential business, or a result in reduced demand due to restrictions on movement. It is likely that the unemployment rate will take a long time to recover as a result of this environment of fear and uncertainty.

If you have been made redundant or stood down, it is important that you seek legal advice on whether the decision complied with the basic principles of workplace law. Unlawful termination of contracts of employment or enterprise agreements and unfair dismissal is a key issue in most employment law cases.

Unfair Dismissal

Fair Work Commission (‘Commission’) is conducting hearings and conferences for general protections and unfair dismissal but by way of phone or videoconference. If you have believe that you have been unfairly dismissed, you must apply to the Commission within 21 days of your dismissal taking effect. It is recommended that you seek legal advice prior to lodging an application to explore other avenues of action you could take.

Award Implications

The Fair Work Commission is in the process of varying industry awards to allow for more flexibility during the COVID-19 pandemic. On 8 April 2020, the Commission made determinations to vary 99 awards to provide for unpaid pandemic leave and great flexibility for annual leave for employees. The changes to these awards provide for two weeks of unpaid pandemic leave and the ability to take twice as much annual leave at half their normal pay if their employer agrees.

These measures will are temporary and are in effect until 30 June 2020. The leave does not need to have been accrued and is not pro-rated for employees who do not work full-time. If you are an employee looking to take unpaid pandemic leave, you should know your rights under this award as this should not affect other paid or unpaid leave entitlements or require you to use all your paid leave first.

JobKeeker Provisions

Not surprisingly, there has been a surge in applications to the ATO for relief and JobKeeper payments (which are set to be released in May 2020). If an employer is eligible to receive these JobKeeper payments they have an optional right to give an employee a ‘JobKeeper enabling direction’ that entitles them to payments. If an employee agrees to the terms of the JobKeeper payments, this does not diminish their existing rights under workplace laws.

The employee must continue to be paid the same base rate, or the applicable penalty rates, and any other allowances that apply to the hours they work. An employee may be asked to work additional hours, and these hours need to be reasonable. An employee can refuse a request to work, and if the only reason for a request to work additional hours is to ‘match’ the amount of the JobKeeper payment, this is not likely to be a reasonable request. Under general protection provisions of the Fair Work Act, it is unlawful to for an employee to work unreasonable additional hours, or require this to be a condition in order to receive the JobKeeper payment.

Further Information

It is important to be fully aware of your protections as an employee under workplace laws and your employment contract. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au. Read more on our blog here for further more information and analysis on the restrictions and rules in place during COVID-19.

Busting 5 Common Objections to Making a Will

Busting 5 Common Objections to Making a Will

Making a Will can often feel like a daunting and unnecessary task. With much of the angst in the community regarding COVID-19 beginning to subside, you may be thinking that making a Will is not an important task anymore. However, the unfortunate reality is that death is inevitable and proper creation of a Will is always an important task, regardless of the circumstances. In this article, we explore five of the most common objections to making a Will and why these objections may not always hold up in reality.

1. I’ve told my family my wishes and I know they will do the right thing.

Sometimes knowing the wishes of a loved one who has recently passed away can mean a variety of different things to different family members. Moreover, verbal instructions are an inadequate way of dealing with your estate. Verbal instructions aren’t always binding and can result in delays and expenses for the administration of your affairs. The death of a family member is already an emotionally difficult time. Through ensuring you leave behind a clearly laid out and validly executed Will, your family will have one worry taken off their hands.

2. I’m a young person – the need to make a Will is far off for me.

Unfortunately, death is no respecter of age! Even with the simplest of estates in the case of a young person, the creation of a Will, enduring power of attorney and advance care directive helps ease the burden on those left, and may prevent the need to apply to the court for clarity.

3. My affairs are just too complex.

The issue with this objection is not that your affairs are too complex, but rather a solution seems too difficult to find. Yet, what is required is an experienced legal professional who can talk through your affairs and find an appropriate process to deal with your affairs.

4. What’s the point? Wills are successfully challenged a lot.

This is a common misconception. Wills and Estates lawyers are highly qualified in assessing the risk of a successful challenge and can suggest ways to reduce the value of the assets that are vulnerable to a challenge. Assets vulnerable to a Will challenge are assets that are owned under your own name. Your lawyer can advise you on mechanisms to reduce this risk, for example through transfer to a trust, jointly owning bank accounts and changing ownership of property to ensure your assets are dealt with in your desired way.

5. I already have a Will from quite a few years ago.

It is important that all Wills are regularly reviewed. Circumstances will inevitably change in life, such as the birth of a child, the start or breakdown of a relationship or assets being bought or sold. It is commonly suggested that Wills should be reviewed at least every three (3) years to ensure they reflect your most current circumstances. Old Wills could be obsolete and result in your estate not being dealt with in accordance with your wishes or being challenged by disgruntled and self-entitled beneficiaries.

Further Information

Making a Will is vital to ensure your estate is dealt with in your desired way. If you would like more information on how we can assist you in making or updating your Will, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au. For more information, check out our blog here.

COVID-19: Witnessing Legal Documents Electronically

COVID-19: Witnessing Legal Documents Electronically

The Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) (The Regulation) is another government initiative in response to COVID-19. The Regulation officially came into force on 22 April 2020 and aims to provide clarity on how some documents can be witnessed by an eligible witness via audio visual link. One of the most critical aspects of the Regulation is that it does away with the requirement for a witness to be physically present to witness the execution of documents. In this blog, we answer some of the most common questions regarding the new method of witnessing legal documents electronically.

What does audio visual link mean?

Audio visual link means any technology that enables audio and visual communication between two persons who are not physically present in the same room. This usually consists of the classic video conferencing platforms such as Zoom, WhatsApp, Skype and FaceTime.
What documents can be witnessed by audio visual link?

The below documents can now be witnessed through an audio visual platform:

  • a Will;
  • a Power of Attorney or Enduring Power of Attorney;
  • an Appointment of Enduring Guardian;
  • a deed or agreement;
  • an affidavit (including any annexure or exhibit to an affidavit) except for the purposes of divorce; and
  • a statutory declaration.

How do I witness a document by audio visual link?

In order to have a validly witnessed document it is imperative that the Regulation is followed correctly and carefully. In accordance with the Regulations, a person witnessing the signing of a document using an audio visual link must:

  1. Observe the person signing the document in real time (i.e. not via a pre-recorded video) to confirm the signature is legitimate.
  2. Next, the person witnessing the document must sign the document (or a copy) as soon as possible after the witnessing via audio visual link to confirm they witnessed the signature. This could be done on a hard copy of the original document that the signatory signed which is either sent in the post or electronically to the witness.a.
    • It is important to note that the person witnessing the document must be reasonably satisfied that the document signed by the witness is the same document signed by the signatory.
  3. The person witnessing must then state on the document the method of witnessing (either countersigned or counterpart) that was used and that it was witnessed in accordance with the Regulation.
    • For example: “I, [insert name here] attest that this document was signed in counterpart and witnessed by me by audio-visual link via Skype in accordance with clause 2 of Schedule 1 to the Electronic Transactions Regulation 2017”.

Are there changes to who can act as a witness?

The Regulation has altered who can witness a Statutory Declaration. Traditionally, only Justices of the Peace and Solicitors could act as a witness to a statutory declaration.

The Regulations have been amended to allow the below persons to witness a statutory declaration

  • financial advisors;
  • pharmacists;
  • nurses;
  • accountants who are a member of Chartered Accountants Australia, CPA Australia or the Institute of Public Accountants;
  • psychologists;
  • veterinary surgeons;
  • police officers; and
  • teachers (only those employed on a permanent full time or part time basis at a school or tertiary education institution).

Further Information

With so many changes happening in the legal sector due to COVID-19 it is important to be fully aware of how these may practically impact you. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or via our contact form. Check out our blog for further information and analysis on the restrictions and rules in place during COVID-19.