02 July 2018
#Competition & Consumer Law, #Corporate & Commercial Law, #Immigration Law, #Planning, Environment & Sustainability, #Property & Real Estate, #Transport, Shipping & Logistics, #Workplace Relations & Safety, #Construction & Infrastructure
The new financial year has brought some important changes. Our experts outline what you need to know in the areas of:
We also examine some key changes coming soon, including new modern slavery laws for NSW and Australia.
New laws to restrict a right to terminate a contract for insolvency events
As part of broader reforms to Australia’s corporate insolvency laws, new laws that have come into effect from 1 July 2018 will restrict the ability of a party to enforce a right to terminate a contract in the case where the counterparty suffers an insolvency event (commonly known as ‘ipso facto’ clauses). The new laws will only apply to contracts, agreements or arrangements entered into from the commencement time of the Act.
The purpose of the reforms is to protect companies in financial difficulties that are undergoing genuine restructuring in accordance with the requirements of the Act.
The refinement to the application of ipso facto clauses in contracts in such circumstances is hoped to enable a business to continue to trade on in order to recover from financial distress.
Read more about the changes in our previous update here.
GST on low value imported goods
From 1 July 2018, low value imported goods are subject to Australian goods and services tax (GST). Low value imported goods are physical goods that have a customs value of A$1,000 or less (excluding alcohol and tobacco) that have been supplied to Australian consumers from offshore. Multiple low value imported goods shipped in one consignment totalling more than A$1,000 are not captured.
The new law requires overseas vendors, electronic distribution platforms and re-deliverers who meet the GST turnover threshold of $75,000 to register for and charge GST on such goods, and lodge returns to the Australian Tax Office.
By imposing GST on low value imported goods, foreign businesses now face the same tax regime as goods sourced domestically. The Government’s stated intention in introducing these changes is to level the playing field for Australian retailers by reducing the tax advantage previously conferred on offshore rivals, with a view to ultimately supporting the growth of local businesses and the creation of job opportunities.
Definition of large multinational
The Government has introduced changes to broaden the definition of large multinational or significant global entity (SGE), as part of a continuing focus and drive to tighten up Australia’s multinational tax integrity rules. Entities which qualify as an SGE are subject to increased scrutiny and reporting obligations under multinational tax integrity rules.
Previously, the definition of SGE only applied to an entity which is a member of a group headed by a public company or private company required to provide consolidated financial statements (with an annual income over A$1 billion). However, this definition will now be widened to capture entities whose multinational groups are headed by private companies, trusts, partnerships or investment entities.
The change means many large multinationals previously excluded from the SGE category due to their corporate group structures, may now be caught as SGEs and subject to compliance with Australia’s multinational tax regime, including the Multinational Anti-Avoidance Law, Diverted Profits Tax and Country by Country reporting obligations.
The change will apply to income years commencing on or after 1 July 2018.
New food labelling laws come into effect
If you sell any food products in Australian retail stores, all food products packaged from 1 July 2018 must display the new Country of Origin Labelling (CoOL).
The CoOL laws have applied to food products sold in retail stores in Australia from 1 July 2016. However, following a two-year transition period, display of the CoOL labels is to become mandatory as of 1 July 2018.
The new label Standard requires country of origin labels for food to comply with of one of two options:
The new labels are not mandatory for non-priority foods such as seasonings, confectionery, biscuits and snack food, soft drinks and alcoholic beverages. However, these products will still need to display a statement of origin on their packaging.
Failure to comply with the new labelling requirements may amount to misleading and deceptive conduct under Australian Consumer Law, attracting hefty fines from the consumer watchdog.
Authors: Dan Pearce & Madison Tonkes
Trial Global Talent Scheme visa commences
The 12-month trial of a new Federal Government visa scheme, designed to attract highly skilled global talent to Australia has now commenced. Announced in March, the visa scheme includes an established business stream and a start-up stream.
The trial scheme forms part of the government’s ongoing reforms to skilled visas, as demonstrated by the recent abolition of the subclass 457 Temporary Work (Skilled) visa and its replacement with subclass 482 TSS visa.
Purchasers of 'new residential premises' must now remit GST on behalf of developer
In a bid by the Federal Government to tackle some issues of non-compliance with GST laws by the property development industry, purchasers of ‘new residential premises’ or ‘new residential subdivisions’ must now remit the GST component of the purchase price directly to the Australian Taxation Office (ATO).
The Government hopes this will help stamp out the practice known as ‘phoenixing’, where a developer collects GST on the purchase price of a property (a taxable supply) but dissolves the collecting entity before their next Business Activity Statement is lodged to avoid remitting the GST.
The ATO has estimated that the practice of ‘phoenixing’ has resulting in the loss of $2 billion in taxation revenue for the 2015/2016 tax year.
Read our full update here.
An employer’s obligation to make Superannuation Guarantee (SG) contributions on behalf of an employee in 2018-2019 remains at 9.5 per cent of the employee’s ordinary time earnings up to the maximum super contribution base. The maximum limit on any individual employee's earnings base for each quarter of the 2018-2019 financial year is $54,030.
The Superannuation Guarantee amnesty that has been in place since 24 May 2018 will continue until 23 May 2019. Employers who voluntarily disclose previously undeclared shortfalls in SG contributions during this period will not be liable for the administration component and penalties that may otherwise apply to late SG payments. In addition, they will be able to claim a deduction for catch-up payments made in the 12-month period.
Employers will still be required to pay the unpaid SG amounts owed to employees and the nominal interest, as well as any associated general interest charge.
The Amnesty applies to previously undeclared SG shortfalls for any period from 1 July 1992 up to 31 March 2018, however it does not apply to the period starting on 1 April 2018 or subsequent periods.
If you are able to pay the full SG shortfall amount directly to your employees' super fund or (funds), then complete a payment form and submit it to the Australian Taxation Office (ATO) electronically through the business portal.
If you are unable to pay the full SG shortfall amount directly to your employees' super fund or (funds), then complete and lodge a payment form and the ATO will contact you to arrange a payment plan. If you start payment before ATO contacts you, this will reduce the General Interest Charge.
Single Touch Payroll reporting starts from 1 July 2018
Employers with 20 or more employees will gradually start reporting to the ATO from their payroll software each time they pay their employees. Known as Single Touch Payroll or STP, employers will be reporting their employees’ salaries and wages, pay as you go withholding and super information.
If you have 19 or fewer employees, you don’t have to do anything yet. However, you can choose to report through STP if you use payroll software that is STP-enabled.
You need to update your software for STP.
The ETP cap amount for the 2018–19 income year is $205,000. The whole-of-income cap amount for the 2018–19 income year remains at $180,000.
Genuine redundancy and early retirement scheme payments are tax free up to a limit based on the employee's years of service. In 2018-2019 the tax-free limit is equal to $10,399, plus $5,200 multiplied by the years of service.
From 1 July 2018 the high income threshold in unfair dismissal cases will increase to $145,400. The relevance of this threshold is:
The compensation limit will be $72,700 for dismissals occurring on or after 1 July 2018. This is the maximum amount of compensation that can be awarded by the Fair Work Commission in an unfair dismissal claim.
From the start of the employee’s first full pay period commencing on or after 1 July 2018, the national minimum wage for award/agreement free employees is $719.20 per week. This is calculated on the basis of a week of 38 ordinary hours, or $18.93 per hour. Special rates apply for a junior employee, an employee to whom a training arrangement applies or an employee with a disability.
The casual loading for award/agreement free employees is 25 per cent.
For employees to whom a modern award or enterprise agreement applies, the statutory minimum wage will be set out in that instrument.
The 2016-2017 national minimum wage is $694.90 per week or $18.29 per hour.
Further reduction in penalty rates will apply for hospitality and retail employees for hours worked on Sundays as follows:
|Modern award employees||Sunday hourly rate - 1 July 2017 to 30 June 2018||Sunday hourly rate - 1 July 2018 to 30 June 2019|
|Full-time and part-time employees - General Retail Industry Award 2010 and Pharmacy Industry Award 2010||195% of the base hourly rate||180% of the base hourly rate|
|Casual employees - General Retail Industry Award 2010||195% of the base hourly rate (inclusive of casual loading)||185% of the base hourly rate (inclusive of casual loading)|
|Casual employees - Pharmacy Industry Award 2010||220% of the base hourly rate (inclusive of casual loading)||205% of the base hourly rate (inclusive of casual loading)|
|Full-time and part-time employees - Hospitality Industry (General) Award 2010||170% of the base hourly rate||160% of the base hourly rate|
|Level 1 full-time and part-time employees – Fast Food Industry Award 2010||145% of the base hourly rate||135% of the base hourly rate|
|Level 1 casual employees - Fast Food Industry Award 2010||170% of the base hourly rate (inclusive of casual loading)||160% of the base hourly rate (inclusive of casual loading)|
Author: Charles Power
Construction & Infrastructure
Watch this space: Modern slavery laws in NSW and Australia
The Modern Slavery Act 2018 (NSW) (Act) received assent on 27 June 2018 and will come into effect on a date to be announced by the minister. The Act is a crucial step forward in establishing laws to help abolish slavery, slavery-like practices, and human trafficking. The Act will apply to commercial organisations with employees in NSW that supply goods and services for profit or gain, and have an annual turnover of more than $50 million.
In particular, a large focus of the Act is ending modern slavery-like practices in organisations and their supply chains by imposing mandatory measures such as undertaking due diligence to assess and manage the risk of modern slavery in their organisation, and publishing modern slavery statements. Failure to comply with these mandatory measures may result in penalties of up to $1.1 million.
Further, the Modern Slavery Bill 2018 (Cth) (Bill) was introduced into Commonwealth Parliament on 28 June 2018. While the objectives and mandatory measures of the Bill align with its NSW counterpart, the Bill will only apply to commercial organisations based or operating in Australia that have an annual consolidated revenue of more than $100 million. The Bill is further contrasted to the Act as there are no sanctions or penalties for non-compliance with the Commonwealth legislative instrument.
If you are a commercial organisation based in NSW with an annual turnover of more than $50 million, or are currently based or operating in Australia with an annual consolidated revenue of more than $100 million, you need to be ready for the new requirements established by the Act and the Bill.
Please see a previous update here.
Authors: Scott Alden & Christopher Yong
Transport, Shipping & Logistics - From 1 October 2018, the new heavy vehicle safety laws will come into operation, meaning larger penalties for parties throughout the supply chain and with potential jail-time for 'white collar' offenders throughout the supply chain. Read more here.
Workplace Relations and Safety - From 1 November 2018, the Long Service Leave Act 2018 (Vic) is due to take effect, introducing key changes to Victorian employees’ long service leave entitlements including long-awaited reforms which are more favourable for parents. Read our summary of the changes here.
Planning, Environment & Sustainability - From 1 September 2018, a developer who has an existing development consent will not be able to obtain an interim occupation certificate for a partially completed building, or part of a building. See our recent update about the recent amendments to the Environmental Planning and Assessment Act 1979 here.
Construction & Infrastructure
T: +61 2 8083 0419
Corporate & Commercial
T: +61 2 8083 0487
Competition & Consumer
Dan Pearce, Partner
T: +61 3 9321 9840
Property & Real Estate
Vanya Lozzi, Partner
T: +61 2 8083 0462
Workplace Relations & Safety
Charles Power, Partner
T: +61 321 9942
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.