On occasions, it is desirable to restructure the assets of a trust. The motivations for a restructure can include: succession planning, separating control of certain assets to different persons, separating passive investments from business activities, and separating different businesses. ...
Trust splitting is a process that involves appointing a separate trustee for certain identified assets of a single trust. The purpose of a trust split is to separate the control and legal ownership of assets into separate trustees. The reasons for implementation include: succession planning, separating control of certain assets to different persons, separating passive investments from business activities, and separating different businesses. ...
The ATO has had on its radar what it describes as stapled structures. It has identified a number of concerns that it has with stapled structures. Then in the May 2018 budget, the Government announced amendments to the law to address some of the concerns. ...
Pay attention to a cascading restraints clause in your employment contract
A restraint of trade clause which provides for different levels of restraint in an employment contract is commonly referred to as a cascading restraint clause.
Cascading restraint clauses can operate by providing for multiple options in relation to distance, geography, time periods and the nature and type of conduct to be restricted.
Each variable is treated as an individual clause. Cascading restraint clauses cab be annulled and are independently binding. This means that where one level of restraint may be deemed too harsh, an employer can look to enforce a lower level restraint without the entire clause being invalidated.
The operation of cascading restraint clauses was tested in OAMPS Insurance Brokers Ltd v Hanna  NSWCA 781.
The decision by the New South Wales Court of Appeal confirms that these clauses are valid and enforceable.
OAMPS Insurance Brokers Ltd v Hanna
Mr Hanna started employment as an experienced insurance broker with OAMPS in 1990, resigned in 2010 and moved to a position with another insurance broker firm.
During his time with OAMPS, Mr Hanna’s employment was subject to a written employment agreement. A schedule to the employment agreement contained a post-employment restraint of trade clause.
After Mr Hanna left OAMPS, a dispute arose regarding the enforceability of the restraint clause in the contract.
The restraint clause itself was a cascading clause with 9 restraints. The restraints ranged from 15 months across Australia, down to 12 months across metropolitan Sydney.
OAMPS sought an order to prevent Mr Hanna from providing services to a number of its clients. The order was granted and Mr Hanna was restrained from dealing with 17 ...
Most trusts, and all private discretionary trusts, have what is known as a vesting date which is described differently in different trust deeds e.g. Vesting Date, Perpetuity Date, Termination Date, Vesting Day. The question often asked is what happens when that day is reached? This issue is considered by the ATO in Taxation Ruling TR 2018/6 Income tax: trust vesting - consequences of a trust vesting. ...
Take note that from 30 January 2019 security interests registered for 7 years will begin to expire.
After its commencement in January 2012 many businesses registered security interests on the Personal Property Securities Register (PPSR) with a 7 year renewal option.
Nearly 7 years has passed since registrations on the PPSR commenced and they are about to start expiring.
Once a registered security interest expires it can no longer be renewed. Therefore, it is imperative that renewals are commenced in a timely manner and sooner rather than later. You can, and should, extend your PPSR registration ahead of time.
If your security interest lapses and you register the interest again you run the risk of losing the protection that you may have enjoyed had the security interest been renewed, for example:
- Subject to exceptions, due to the first-in-time approach of the priority rules for enforcing security interests, if your business allows its PPSR registrations to expire so that a new security interest needs to be registered on the PPSR then, unless an exception applies, your business will go to the back of the security interest enforcement line. This means that you may miss out on money owed to your business in the event you need to rely on the security interest.
- If the business granting your business the security interest becomes insolvent within 6 months of the security interest being re-registered after it has lapsed your security interest may not be effective. Again, you may miss out on money owed to your business.
Where to Begin?
Identify what security interests you have registered on the PPSR and when they expire. Diaries the expiry date and set a reminder well in advance of expiry to renew the registration. Check all the information is correct and seek assistance if in doubt.
The first 7 year PPSR registrations are coming up for ...
There has been quite a bit happening with regards to casual employees of late that businesses should take stock and review all casual employment arrangements they currently have in place.
Whilst casual employees are not entitled to annual leave under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) (FW Act), the recent Full Federal Court decision of WorkPac Pty Ltd v Skene  FCAFC 131 (the Skene decision) has looked closely at when an employee is really a casual for the purposes of the NES and therefore entitled to annual leave.
We recommend that all businesses now take stock and do the same, considering whether their casual employees really are casual employees.
In the Skene decision, the employee, fly in fly out worker, was placed on a roster which was set 12 months in advance. He worked regular, fixed shifts and was paid a flat hourly rate, with no separately identifiable casual loading.
When he was terminated, the employee argued that he was a permanent, not a casual, employee, and therefore entitled to be paid out annual leave on the termination of his employment.
The Court closely reviewed the true nature of the employment relationship in the Skene decision.
They found that the employee had no choices with regards to the days and hours he could work and that his roster was set 12 months in advance, meaning his working arrangements were clear and predictable and he worked regular and certain shifts.
The Court agreed that the employee, despite being paid by the hour, was not engaged as such, and was not a casual employee for the purposes of annual leave entitlements under the NES and therefore he was entitled to such annual leave on the termination of his employment.
Employees may therefore not necessarily be regarded as casual employees for all purposes, and there is now a real risk that, depending on the true nature of the engagement, that a casual employee, despite being paid a ...
Australia has numerous industry codes and laws governing franchising. Industry codes are sets of enforceable rules and measures regulating the conduct of that industry. Franchising is regulated by the Franchising Code of Conduct (Code), together with the Australian Consumer Law (ACL)
The Australian Competition and Consumer Commission (ACCC) is the nation's competition and consumer watchdog. A compliance and enforcement priority of the ACCC for 2018 is the protection of small businesses in relation to unfair terms in business contracts. Franchisor-compliance with the Code and the ACL is on the forefront of the ACCC's radar.
With this ACCC focus, it is important that franchisors review and audit their standard template franchise agreements to ensure full compliance, if they have not already done so. Of particular note is the business-to-business unfair contract terms regime under the ACL.
Franchisors should remember that the ACCC can require franchisors to provide to the ACCC documents which the franchisor is obligated to generate or keep under the Code, which include franchise agreements and disclosure documents.
The Unfair Contract Terms Regime and Franchise Agreements
Generally, franchise agreements are likely to be caught by the unfair contract terms regime because they are usually:
- standard form (with little opportunity to negotiate the terms); and
- for the supply of goods or services; and
- entered into with a franchisee who meets the criteria of a 'small business' under the ACL; and
- have an 'upfront price' payable to the franchisor of under $300,000 for an agreement less than 12 months in length, or $1,000,000 if over 12 months. Upfront price includes payments, fees and charges payable over the life of the agreement, which would include both the initial franchise fee payable when signing the franchise agreement and ongoing franchise or royalty fees payable for the duration of the agreement.
A recent Federal Government regime commencing on 1 July 2018 may affect the operation of insolvency clauses in contracts entered into on and from 1 July 2018. The types of clauses that may be impacted are clauses allowing a party to terminate or change the operation of a contract if another party to that contract becomes insolvent.
This Federal Government regime was introduced primarily under the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 (Cth), and is commonly described as the ipso facto regime (Regime).
What is an ipso facto clause?
An ipso facto clause is effectively a bankruptcy or insolvency clause whereby a party is permitted to exercise its rights to terminate a contract due to the bankruptcy or insolvency of the other party.
How are insolvency clauses affected?
The ipso facto regime changes the functionality of insolvency clauses in contracts by placing a stay on a party’s right to terminate or change the operation of the contract, unless excepted. That means that any action that can be taken by a party against another party (ie such as the right of one party to terminate the contract in the event of the insolvency of the other party) would be put on hold, unless an exception applies.
Notably, under the Regime, while a stay is in place on an ipso facto clause, the company the subject of an insolvency event may not exercise any right it may have under the contract to request an advance of money or to request credit from the other party.
What types of insolvency events are affected?
The following are examples of the types of insolvency events we have seen in contracts to which the Regime applies:
- Company Arrangement – an arrangement between a company and the creditors of that company (for the purpose of avoiding being wound up) that is put in place to determine how the company’s affairs will be dealt with;
- Receivership – in the event a controller or manager is ...
In the evolution of a business, there may come a time when it is necessary to restructure into a company. Often, non-tax factors will trigger this: government regulations, a need to attract equity investment, corporatisation leading to a potential buyout, or a need to fund working capital.
On the surface, a company rollover appears the ideal option – no CGT is triggered on the restructure, and the same tax attributes, including cost base, are maintained. ...