Latest Legal Blogs : covid-19
COVID-19 Emergency Response Act 2020
It’s here: COVID-19 Emergency Response Act 2020 We previously issued an alert about the Mandatory Code of Conduct introduced by the National Cabinet on 3 April 2020. The next step in that process was to enable that Code to become the law in Queensland. That has almost occurred. On 23 April 2020 the Queensland Parliament assented to the COVID-19 Emergency Response Act 2020. You can access a copy of this Act here: https://www.legislation.qld.gov.au/view/pdf/asmade/act-2020-013 This important legislation was delivered after the Mandatory Code of Conduct was issued by the National Cabinet. This allows the State of Queensland to make regulations to assist landlords and tenants during the COVID-19 emergency. The main purposes of this legislation are: to protect the health, safety and welfare of persons affected by the COVID-19 emergency; to facilitate the continuance of public administration, judicial process, small business and other activities disrupted by the COVID-19 emergency, including by easing regulatory requirements and establishing an office of small business commissioner; to provide for matters related to residential, retail and prescribed leases affected by the COVID-19 emergency; and to support the Queensland rental sector during the COVID-19 emergency period. We will update you further when the relevant regulations are made.
Land Tax Relief for those Impacted by COVID-19
What is land tax Land tax is a state tax and is calculated on the freehold land that you own in Queensland at midnight on the 30th of June each year. The tax rate depends on what type of owner you are (an individual, a company, or a trust), the taxable value of your land, and if any exemptions apply. In these difficult times the Queensland Government has committed over $400 million to support landlords and tenants, both commercial and residential, impacted by the COVID-19 disaster. The land tax relief package Firstly, to be eligible for land tax relief, both residential and commercial landowners must commit to comply with a certain set of principles that will be introduced into Queensland law. We have listed these principles below. Eligible landlords can apply for up to three months waiver and three months deferral of land tax if either of the following circumstances applies: You are a landowner who leases all or part of a property to one or more tenants and the following apply: The ability of one or more tenants to pay their normal rent is affected by the COVID-19 pandemic; You will provide rent relief to the affected tenant(s) of an amount at least commensurate with the land tax relief; You will comply with the leasing principles even if the relevant lease is not regulated. You are a landowner and all of the following apply: All or part of your property is available for lease; Your ability to secure a tenant(s) has been affected by the COVID-19 pandemic; You require relief to meet your financial obligations; and You will comply with the leasing principles even if the relevant lease is not regulated. Where the lease provides that landlords can recover certain expenses (or outgoings) from tenants including state taxes such as land tax then any land tax relief provided to the landowner must be passed on to eligible tenants. Leasing Principles If you are a residential landowner, the principles are: You will negotiate in good faith with your tenant to seek a mutually agreeable resolution if their ability to pay is impacted by COVID-19; You will not evict your tenant if they are in financial distress and unable to meet their commitments due to the impact of COVID-19; You will not end a tenancy for any reason other than on an approved ground; this does not include the tenant’s inability to pay rent or the end of a fixed term lease; You will not charge break lease fees for tenants who need to end a fixed term tenancy early due to the financial, health or personal safety impacts of COVID-19; and You will allow a tenant to refuse entry for non- essential reasons, including routine repairs and inspections, particularly if a member of the household has a higher risk profile if exposed to COVID-19. If you are a commercial landowner, the principles are as follows: You will negotiate in good faith with your tenant to seek a mutually agreeable resolution if their ability to pay is impacted by COVID-19; You will not evict your tenant if they are in financial distress and unable to meet their commitments due to the impact of COVID-19; You will not increase rent, except where rent is linked to increased turnover; You will not penalise a tenant who stops trading or reduces opening hours; You will not charge any interest on unpaid or deferred rent; and You will not make a claim on a bank guarantee or security deposit for non-payment of rent. Where do I apply for land tax relief? The applications are being managed by the Office of State Revenue: https://www.qld.gov.au/environment/land/tax
COVID-19 a Timely Reminder to Review your Succession Planning
During the COVID-19 lockdown we all seem to have a lot more time on our hands. Some are exercising, some are baking banana bread and others are learning a new language or skill. But, perhaps our time in lockdown could be wisely spent reviewing our succession plans. Now is not the time to DIY Just because you can give yourself a haircut in lockdown, doesn’t mean you should. The same goes for making a will! Do-it-yourself will kits from the local post office or found on the internet may seem like a quick, cost-effective idea at the time. However a DIY will kit may cause more problems than it solves. You could end up with a will that is ineffective or invalid, or worse, you could end up with a will that is valid and legally binding but does not give effect to your wishes. Some of the most common pitfalls of making a DIY will include:- Failing to comply with legal formalities A will is a legal document and to ensure that a will is valid it must:- be in writing; signed by the testator; the testator’s signature must be acknowledged in the presence of two witnesses. To avoid any disputes over when the will was created it should also be dated. Leaving assets in your will that you don’t own The most common example is Superannuation. A direction given in your will to pay a member balance to a beneficiary is not binding on a trustee of a superannuation fund. This can only be done by executing a binding death nomination to the superannuation trustee. DIY will kits do not include a binding death benefit nomination form (which should not, in any event, be completed without reference to the rules of the fund). Life insurance is another example. You need to correctly identify who owns the policy and who is the correct beneficiary. Getting the right advice will ensure any superannuation or life insurance policies are paid to your intended beneficiary. Not updating your will when circumstances change A will isn’t a "set and forget" type of document. Circumstances change all the time and when they do, this usually calls for a review of your estate plan. For example, you may leave your house to a beneficiary in your will. If you sell your house without changing your will, that beneficiary would miss out on the gift and would ultimately be disappointed. Not including potential beneficiaries While a testator is free to do what they wish with their assets, some beneficiaries may be overlooked or simply forgotten in the estate planning process (including spouses and financial dependants). By not properly considering potential beneficiaries, your estate plan may end up being a family provision application trap (see Confessions of an Estate Planner Part 5 and Part 6). Undesirable tax consequences Generally, most assets can be transferred to beneficiaries without immediate tax consequences. However there are particular classes of assets directed to certain beneficiaries that may trigger a capital gains tax (CGT) event. CGT must be realised at the time it is transferred to the beneficiary and must be paid by the estate. Guardianship Who looks after the children when you are gone? This is a decision ultimately made by the court, however, the court will give consideration to your wishes expressed in your will. With the right advice, you can create a supporting document like a letter of wishes that explains why a guardian was chosen for your children. Where there’s a will, there’s a way Things are changing quickly and so are we. Connolly Suthers appreciates that times are challenging. We are still committed to providing our clients and the broader community with our usual level of service and support. Just because Covid-19 is affecting nearly everything we do does not mean you automatically have to do something about your estate planning. If there is an urgent need to review or change that is still possible. If you are worried about anything one phone call to us may put your mind at ease. With social distancing measures in place, it may be more difficult than usual to travel to see a solicitor in the presence of witnesses and execute your will. To dispense with the requirement of signing a will in the presence of two witnesses, the Supreme Court of Queensland released a Practice Direction which allows a testator to sign their will in the presence of two witnesses by way of video conference, or in the presence of one witness by way of video conference. The registrar must also be satisfied that the will was drafted by a solicitor, or a solicitor is one of the witnesses to the will, or the person supervising the execution of the will. The testator must intend for the document to take immediate effect as their will, alteration to their will, or full or partial revocation of their will. The witness or witnesses must be able to identify the document executed is in fact a will and that the reason why the testator was not able to execute the will in the usual manner was because of either government-enforced, recommended, or self-imposed isolation or quarantine arising from the COVID-19 pandemic. Please contact us for a free initial discussion via phone (07) 4771 5664, email or video-conference.
COVID-19 Providing Concessions for the LRBA in my SMSF
The economic impacts of the COVID-19 crisis are causing significant financial distress for many businesses and individuals. If your SMSF has a related party loan and is impacted due to the financial effects of COVID-19, you may be able to provide your LRBA with relief under an agreed commercial arrangement. Ordinarily, not paying market interest rates in an SMSF is usually a breach of superannuation laws. However, the ATO have provided guidance which allows SMSFs with an LRBA to negotiate a reduction in or waiver of interest payments because of the financial impacts of the COVID-19. If the repayment relief reflects similar terms to what commercial banks are currently offering for real estate investment loans as a result of COVID-19, the ATO will accept the parties are dealing at arm’s length and the NALI provisions do not apply. What do you need to do? There are some important things you should ensure are in place when you are providing a loan concession, especially when this is a related party. Ensure the relief only applies to the related party loan Any relief offered on the loan can only relate to that loan agreement. The ATO concession does not extend to other loans. Ensure that the concessions are temporary. This means it should have an agreed period of time or agreed date where the concessions are reviewed in light of the economic circumstances. The financial difficulty faced by the SMSF is linked to the financial impacts of COVID-19. Any negotiated concession will need to be measured against the COVID-19 financial impact suffered by your SMSF. Clear arrangements which detail the amount of discount, waiver or deferral of the concession. In evidencing that the concession is reasonable, it would be best practice if it is consistent with an approach taken by an arm’s length loan. For example, terms currently include temporary repayment deferrals for most businesses of up to 6 months, with unpaid interest being capitalised on the loan. It is also expected that there is evidence that interest continues to accrue on the loan and that the SMSF trustee will catch up any outstanding principal and interest repayments as soon as possible. Ensure you have proper documentation which allows your independent auditor to be satisfied that the concession satisfies all of the above. This may take the form of a signed minute, renewed loan agreement or anything deemed appropriate to amend the terms of the loan. The parties to the arrangement must also document the change in terms to the loan agreement and the reasons why those terms have changed. Even if you are both the lessor and lessee, the above should all be documented. These are extraordinary times and the ATO is providing this guidance to allow SMSF trustees to be flexible and agile. If trustees act in good faith in implementing a reasonable and measured reduction concession because of the impacts of COVID-19 they should not fall foul of the law. How can we help? If you need assistance providing loan concessions or whether this is the right action for you and your specific circumstances, please feel free to give us a call so that we can discuss in more detail.
Top 10 Tips For Separated Parents During COVID-19
You are separated, you don’t get on with your ex but you still have to talk to them about your children. Pretty stressful? You bet. Then pile on the upheaval and uncertainty of dealing with Covid-19, and watch your stress levels rise... I have been a lawyer for over 25 years, specialise in family law, and can say that separated parents have never had to deal with anything like this. I know it can be really difficult to deal with your ex at the best of times. The last thing you feel like doing is being patient and flexible. But if you can: stay calm, minimise conflict and then you won’t need to get lawyers involved to sort out arrangements for your kids. If in spite of your best efforts things are getting worse, not better, as you try to talk to your ex, give us a call. We can go through the issues with you and come up with a practical plan to try to sort things out quickly and without the stress and cost of going to Court. We’re helping a lot of people to deal with this and can work with you to find a solution. Our country is at war with this virus, but you don’t want war breaking out on the home front! It’s not good for you, and it’s not good for your kids. The Law Council of Australia has put together some tips for helping separated parents get through this, see below.
COVID-19 The National Cabinet Mandatory Code of Conduct for Landlords and Tenants
Landlords across the country are receiving requests for rent relief from tenants whose businesses have been impacted by the Coronavirus. In a lot of cases, the impact is clear. Hotels, beauticians, massage therapists, restaurants and a host of other businesses can no longer operate under mandatory shutdown regulations. In other cases, impacts are not as obvious. Partial shutdown of office premises with workers working remotely from home, food outlets continuing to trade by takeaway or home delivery are impacted by the virus but continuing to survive and in some cases even prosper in the post Coronavirus world. Landlords have generally been sitting on their hands awaiting Government direction subsidies or intervention. Confusing messages have been coming from property advocate groups warning landlords of the dangers of rushing into rental subsidy arrangements with tenants which may later disqualify the landlord or tenant from Government subsidy arrangements. The National Cabinet Mandatory Code of Conduct – What is it? The Federal Government has sought to give landlords and tenants direction by releasing the National Cabinet Mandatory Code of Conduct for SME Commercial Leasing Principals During COVID-19. The purpose of the Code is stated as being a code to impose a set of good faith leasing principals for application to commercial tenancies where the tenant is eligible for assistance under the JobKeeper program. The Code will be enacted through relevant State and Territory legislation or regulations over the coming weeks and provides a framework for landlords and tenants to negotiate rent relief. What does it mean for landlords and tenants? Our commercial landlord clients are already engaging closely with their tenants on ways to support them through the crisis. There is no one size fits all approach however the Code of Conduct provides useful direction to landlords and tenants on renegotiating their leasing arrangements in good faith to assist the cashflow of tenants and landlords on a proportionate basis. The key points to take away from the Code are:- Landlords must not terminate Leases for non-payment of rent during the COVID-19 pandemic period or a reasonable subsequent recovery period. Landlords must offer tenants reductions in rent payable in the form of waivers and deferrals up to 100%, on a case by case basis, proportionate to the reduction in the tenant’s trade during the COVID-19 pandemic period and a subsequent reasonable recovery period. Rental waivers (as opposed to deferrals) must constitute no less than 50% of the total reduction in rent and should make up a greater portion of the Landlord’s rental assistance package in situations where the tenant will be unable to fulfill their ongoing obligations under the Lease unless the rental is waived. Regard must also be had to the Landlord’s financial ability to provide such additional waivers. The code encourages arrangements such as a 100% rent reduction during the COVID-19 pandemic period and the recovery period being provided by way of a 50% waiver of rent and a 50% rent deferral amortised over the balance of the Lease term or a further extended lease term agreed between the parties. Self Managed Super Funds The Code also applies to self-managed super funds leasing premises to related parties. The ATO advises that they will not take action where a SMSF gives a related party tenant a temporary rent reduction or waiver during the COVID-19 pandemic period provided that the reduction is commensurate to the impact of COVID-19 on the tenant’s business. How can we help? Rental waivers and deferrals should be documented by the parties under a Deed of Amendment of Lease and a Form 13 – Amendment of Lease where the Lease is registered on title. If you are a landlord or a tenant requiring assistance with renegotiating the terms of your lease or documenting arrangements that you have already agreed with your landlord or tenant we can help you with that process. Please feel free to call us to discuss how we can assist.
Providing Rental Relief for the Tenant in my SMSF Property
COVID-19 – Providing rental relief for the tenant in my SMSF property The economic impacts of the COVID-19 crisis are causing significant financial distress for many businesses and individuals. If your SMSF has a property and a tenant in financial distress, you may be able to provide your tenant with rental relief under an agreed commercial arrangement. This may even be the case when the tenant is a related party or yourself. Ordinarily, charging a tenant a price that is less than market value in an SMSF is usually a breach of superannuation laws. However, the ATO has provided guidance which allows SMSF landlords to provide for a reduction in or waiver of rent because of the financial impacts of the COVID-19. For the 2019–20 and 2020–21 financial years, the ATO will not take action where an SMSF gives a tenant – who may also be a related party – a temporary rent reduction during this period. What do you need to do? There are some important things you should ensure are in place when you are providing a rent reduction to a tenant, especially when this is a related party. Ensure the relief only applies to rent. Any relief offered to a tenant can only relate to the rent component of the lease agreement. The ATO concession does not extend to other lease incentives. Ensure that the reduction in rent is only temporary. This means it should have an agreed period of time or agreed date where the rent is reviewed in light of the economic circumstances. The financial difficulty faced by the tenant is linked to the financial impacts of COVID-19. Any negotiated rent relief will need to be measured against the COVID-19 financial impact suffered by your tenant. Clear arrangements which detail the amount of discount, waiver or deferral of the rent. In evidencing that the rent relief is reasonable, it would be best practice if it is consistent with an approach taken by an arm’s length landlord. Ensure you have proper documentation which allows your independent auditor to be satisfied that the temporary rent relief satisfies all of the above. This may take the form of a signed minute, renewed lease agreement or anything deemed appropriate to amend the terms of the lease temporarily. Even if you are both the tenant and landlord, the above should all be documented. These are extraordinary times and the ATO is providing this guidance to allow SMSF trustees to be flexible and agile. If trustees act in good faith in implementing a reasonable and measured reduction in rent because of the impacts of COVID-19 they should not fall foul of the law. How can we help? If you need assistance providing rental relief or whether this is the right action for you and your specific circumstances, please feel free to call so that we can discuss it in more detail.
Signing of documents if you are in a COVID-19 related quarantine or isolation
PROPERTY ALERT: Signing of documents if you are in a COVID-19 related quarantine or isolation Our day to day practice is proving challenging due to the impact of COVID-19. Our office has adopted certain measures that have been developed by the Queensland Law Society that provide where our clients are experiencing symptoms associated with the virus or are otherwise feeling unwell they are not allowed to attend our office. This is ok. We want you to stay at home. The convenience of technology has allowed us to stay connected with our clients and keep our doors open. However, what does prove difficult is where an original document needs to be signed and witnessed. Thankfully this morning the Queensland Titles Registry issued directions to address the challenges to the way in which real property instruments are executed. We will explain these directions and ask that you consider how they may apply to you. IF YOU ARE IN A COVID-19 RELATED QUARANTINE OR IN ISOLATION: We can witnesses you signing the instrument or document live via some form of video link (for example, Zoom or Skype). The person signing the document should hold the instrument or document up to the video to enable us to confirm it is the relevant instrument or document and we will make a relevant note or take a screenshot of the terms of the instrument. The document then needs to be returned to us for witnessing by either delivery or post. EXTREME CASES: In circumstances where the witness is very ill or and cannot return the signed document a photograph of the signed instrument can only be used. In that instance the photograph can be printed, we will wet sign it and then lodged it as required. WHERE THE INSTRUMENT OR DOCUMENT CANNOT BE SIGNED: If the above methods are not possible then we can make submissions to the Registrar of Titles requesting that they exercise discretion under section 10A of the Land Title Act 1994 so that we can execute the instrument on behalf of the individual. Please note that we are still required to take steps to verify your identity and we still need copies of all relevant documents to prove your identity. We can do this via video link also. If you have any questions, please contact our Property Team. Remember #stayhome #staysafe #stayconnected
How to Enforce or Recover a Debt Owed to You in a Time of Coronavirus
With apologies to Charles Dickens (or “Charlie” as I better knew him), It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair… It may not be the French revolution we are living through – we are yet to introduce the guillotine – but on days it sometimes feels it. So, let us consider more weighty matters in a time of coronavirus – how to enforce or recover a debt owed to you. We will deal in this piece with liquidated debts only – that is to say, debts arising out of a contract and commencing as an outstanding tax invoice. We will examine firstly the pre-existing situation, and the situation as it now applies post-coronavirus and as a consequence of changes made by the Commonwealth Government in response to the coronavirus crisis. You need firstly to identify the category of the debtor who owes you money – are they either: A natural person; or A corporation. Different rules and processes may apply to whichever of the categories the debtor falls into. Then we need to identify the basis upon which the money is owed to you – is the debt: A judgment debt (that is to say, an order of a Court or Tribunal that the debtor pay you a fixed sum); or Other than a judgment debt – that is to say, an outstanding tax invoice yet to form the basis of a judgment of a Court or Tribunal. In terms of external administration, a corporation and a natural person ordinarily face two different scenarios: A corporation is placed into liquidation, and a liquidator appointed to conduct its affairs; A natural person is made bankrupt, and a Trustee in Bankruptcy appointed to take over his or her assets and conduct his or her commercial affairs. So, how does a corporation go into liquidation and how does a natural person go bankrupt? There are two separate ways. Where a corporation owes a creditor money, the creditor can prepare and serve on the corporation a Creditor's Statutory Demand for Payment of Debt (“Demand”). The Demand does not need to be filed with any Court or Tribunal or other Government authority – it is simply prepared by the creditor, signed by it or on its behalf and served on the debtor corporation. A Demand must be for an amount not less than $2,000. The corporation then has 21 days to do one of 2 things: To pay the debt the subject of the Demand; or Make application to the Supreme Court or the Federal Court for an order that the Demand be set aside. If the corporation does neither it is deemed to be insolvent and an application may be made to the Supreme Court or the Federal Court for an order that it be wound up (“liquidated”) and a liquidator appointed to it. With only a few technical exceptions a corporation cannot oppose that order being made. Unlike a Bankruptcy Notice directed to a natural person, a Demand need not have as its basis an outstanding judgment of a Court or Tribunal – an outstanding liquidated debt without a supporting judgment is sufficient to found a Demand. Where a natural person owes a creditor money, the creditor can apply to the Australia Financial Security Authority for the issue of a Bankruptcy Notice directed to that debtor. However, a Bankruptcy Notice can only be issued on the basis of an existing un-satisfied judgment debt of a Court or Tribunal against the debtor and in favour of the creditor – unlike a Demand directed to a corporation it cannot be served in the basis simply of an outstanding liquidated debt. A Bankruptcy Notice must be for an amount not less than $1,500. The natural person then has 21 days to do one of 2 things: To pay the debt the subject of the Bankruptcy Notice; or Make application to the Federal Court or the Federal Circuit Court for an order that the Bankruptcy Notice be set aside or that the time for compliance with the Bankruptcy Notice be extended. If the natural person does neither he or she is deemed to be insolvent and an application may be made to the Federal Court or the Federal Circuit Court for an order that he or she be made bankrupt (a "Sequestration Order" made in respect of his or her estate) and a Trustee in Bankruptcy appointed to take over his or her assets and his or her commercial affairs. With only a few technical exceptions a natural person cannot oppose that order being made. Unlike a Demand directed to a corporation, a Bankruptcy Notice must have as its basis an outstanding judgment of a Court or Tribunal - an outstanding liquidated debt without a supporting judgment is not sufficient to found a Bankruptcy Notice. So, thus far in summary: A Demand is directed to a debtor corporation by a creditor, claiming a debt due to the creditor, and need not be based on a judgment debt; and A Bankruptcy Notice is directed to a debtor natural person, claiming a debt due to the creditor, but it must be based on a judgment debt of a Court or Tribunal; The corporation must comply with the Demand, or within 21 days make application to set it aside, or it is deemed to be insolvent and may be wound up in insolvency and a liquidator appointed to conduct its affairs; The natural person must comply with the Bankruptcy Notice, or within 21 days make application to set it aside (or have the time for compliance extended), or he or she is deemed to be insolvent and may be made bankrupt (a "Sequestration Order") and a Trustee in Bankruptcy appointed to take over his or her assets and conduct his or her commercial affairs. What then if a debtor is served with a Demand (as a corporation) or a Bankruptcy Notice (as a natural person)? What rights does the debtor have? What if any steps must the debtor take to protect itself/himself/herself? In very general terms it is much more difficult to set aside a Bankruptcy Notice than it is a Demand - that is so simply because all Bankruptcy Notices must have as their basis a judgment debt, whereas most Demands do not have as their basis a judgment debt - ordinarily, a Court will not go behind the judgment of another Court and make a finding as to whether that judgment is proper or appropriate and capable of being enforced. The important first point to make is that if a recipient of a Demand (a corporation) or a Bankruptcy Notice (a natural person) does nothing and ignores the Demand or Bankruptcy Notice, then almost certainly liquidation (in the case of the corporation) or bankruptcy (in the case of the natural person) will be the consequence. The second point to make, then, is what if anything can a recipient of a Demand (a corporation) or a Bankruptcy Notice (a natural person) do when so served? There are essentially only 2 bases upon which a corporation can make application to set aside a Demand: There is a genuine dispute as to the existence or amount of the debt the subject of the Demand; The debtor corporation has an off-setting claim against the creditor. There are essentially only 3 bases upon which a natural person can make an application to set aside a Bankruptcy Notice: The debtor has made application to set aside the judgment the basis of the Bankruptcy Notice; The debtor can satisfy the Court that he or she has a Counter-claim, set-off or cross-demand exceeding the amount of the Bankruptcy Notice; On the basis of "other grounds". So, what has changed post-coronavirus? Essentially, 2 things designed for the benefit of a debtor (be it a corporation or a natural person). Firstly the minimum amount for both a Demand (previously $2,000) and a Bankruptcy Notice (previously $1,500) has been increased to $20,000. Secondly, the time to respond to both a Demand (previously 21 days) and a Bankruptcy Notice (previously 21 days) has now been increased to 6 months. The intent of these changes is plainly to impose a moratorium on debt recovery processes so as to enable a breathing space for debtors faced with the difficult if not dire financial circumstances brought about by the coronavirus. The changes mean that a creditor will not have to take into account very keen commercial consideration as to whether or not to pursue a debt by means of a Demand or a Bankruptcy Notice. If you need legal advice following the financial impacts of COVID-19, please contact Connolly Suthers.
Keepers, Seekers and Golden Snitches
COVID-19 continues to wreak havoc on the economy and health systems worldwide. Governments are splashing billions of dollars in an attempt to save lives and industries. The Australian Government has recently announced changes to the JobSeeker Allowance (unfortunately nicknamed the 'bludger' allowance) and introduced the JobKeeper Allowance. But which one is right for you? JobKeeper Allowance The JobKeeper Allowance aims to keep employees engaged with their employers so that the economy hits the ground running when COVID-19 passes. The scheme grants eligible businesses $1,500 per fortnight per employee to help pay wages for the next 6 months. Eligible businesses Turnover reduced by more than 30% (or greater if turnover was greater than $1B). Registered for the scheme via the ATO. Eligible employees On the books since 1 March 2020 and continue to be employed full-time, part-time or casual (if longer than 12 months), recently stood-down employees, or self-employed individuals who meet the business eligibility. Aged 16 or over, are Australian residents (or hold certain visas). Not receive the JobSeeker Allowance or JobKeeper Allowance from any other employer. If all boxes are ticked, payments to employers commence in May 2020 and staff who ordinarily received less than $1500 per fortnight will receive the full subsidy. Those who ordinarily earn greater than $1,500 per fortnight will continue to receive their regular income and the payments subsidise part of their wage. JobSeeker Allowance If you are ineligible for the JobSeeker Allowance and find yourself out of work, you may be eligible for the JobSeeker Allowance, if you are aged between 22 and pension age and meet the residency and income/asset limits. The fortnightly payment was recently increased by $550 per fortnight for the next 6 months, taking the maximum base rate to $1,115.70. Beaters Beware The above and other changes to the welfare system are being rolled out with reduced verification and approval measures. This is to get financial support to those who truly need it most as fast as possible. However, those who try to 'beat' the system - beware! Members of the public are always 'snitching' on fraudsters and government checks and balances will be carried out in due course. Those who defraud the Commonwealth will be reported to the Ministry of Magic and face serious criminal consequences. If you need legal advice following the financial impacts of COVID-19, please contact Connolly Suthers.
Accessing Your Superannuation Early
You may be aware that the Government recently announced measures that allow individuals affected by the economic impacts of COVID-19 to access a limited amount of their superannuation early. Making the decision to access your superannuation early is a significant one and if possible, should be encompassed by financial advice. The Australian Taxation Office have now released guidance on the process of accessing superannuation early from SMSFs to assist in cushioning the adverse economic effects of Coronavirus. How much can you take out? You will be able to apply online through the myGov website (https://my.gov.au/) to access up to $10,000 of your superannuation before 1 July 2020. You can access a further $10,000 of your super from 1 July 2020 until 24 September 2020. You will only be able to make one request for each financial year. For example, should you nominate for a lesser withdrawal amount in 2019/20, you will not be able to apply again before 1 July 2020 for the remainder nor will you be able to apply for more than $10,000 from 1 July 2020. If you access your superannuation you will not be required to pay tax on amounts released and any amounts withdrawn will not affect your Centrelink or Veterans’ Affairs payments. These amounts will also not be included in your assessable income for the financial year the withdrawal is made. Satisfying early release requirements The intention of the legislation is that you are adversely affected by the economic impacts of COVID-19 and require early access to your superannuation which is ordinarily preserved until your retirement. To apply for early release of your superannuation, you must satisfy one or more of the following requirements: You are unemployed. You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance. On or after 1 January 2020, any of the following happened: You were made redundant. Your working hours were reduced by 20% or more. You were a sole trader and your business was suspended or your turnover decreased by 20% or more. These are the only requirements that must be considered. How to apply to access your superannuation From today, those affected can register their interest to access through the myGov website (https://my.gov.au/). If you satisfy one or more of the requirements entitling you to access your superannuation early, you will be able to do so from mid-April. After applying through myGov, the ATO will issue you with a determination advising of your eligibility to release an amount. Only once your SMSF receives the determination from you, will the trustee be authorised to make the payment. If you apply to access superannuation benefits from a non SMSF, the determination will be issued by the ATO direct to the APRA regulated funds and the trustee will proceed to release your benefits to a nominated bank account. Other ways to access superannuation You may be allowed to withdraw some of your super due to other reasonings, such as Access on compassionate grounds Access due to severe financial hardship Access due to a terminal medical condition Access due to temporary incapacity Access due to permanent incapacity Your super balance is less than $200 I would recommend getting in touch with me to discuss your specific circumstances in more detail to ensure you aren’t breaching any regulations. How can we help? If you need assistance with the early access of your superannuation or whether this is the right action for you and your specific circumstances, please feel free to call.
Entitlement to workers' compensation during a pandemic (Coronavirus/Covid-19)
Most employers are doing what they can to prevent an employee contracting coronavirus. However risks are difficult for employers to guard against at the best of times, particularly invisible ones. WorkCover Queensland is already seeing a rise in claims resulting from workers contracting the virus and this raises an interesting question - will employees be entitled to workers’ compensation in the short-term or beyond? What is required to lodge a workers’ compensation claim in Queensland? If you have been diagnosed with Covid-19, in order to lodge a claim that is capable of acceptance you would need to provide: Medical confirmation of the diagnosis; Evidence to demonstrate that you were exposed to the virus within your workplace; to be confirmed by your treating doctor or some other way. What will WorkCover consider when assessing a claim? In deciding whether to accept any claim WorkCover will require: a diagnosis of Covid-19; the claim to be made within six months of diagnosis; confirmation that you are a ‘worker’ (as defined by the applicable legislation); proof that your work was a significant contributing factor to the diagnosis. Currently, with limited cases in Australia and rigorous contact-tracing now underway, proving a connection to your employment will be possible in many instances, but not all. And with the virus continuing to spread throughout the community this will become increasingly problematic for those unfortunate enough to contract it. For workers with limited exposure points (such as front line medical providers, teachers or those working in other high risk or remote areas) demonstrating a connection to your employment will be much easier. For others where there is an unknown source of infection or for those with multiple exposure points (both inside and outside of the workplace) this will be difficult and each claim would be considered on its merits. These considerations will apply to any permanent injury or death claims stemming from Covid-19. Will you be covered if working from home? Over recent weeks businesses have scrambled to create remote-work practices to help their employees set up shop in dining rooms, living rooms and bedrooms across the country. Given that working from home isn’t an entirely new concept the workers’ compensation legislation already provides cover to remote workers, provided however that any injuries “arise out of, or in the course of, employment” and “if the employment is a significant contributing factor to the injury”. So while you may now be covered while performing your duties while at home, this unlikely extends to walking Fido over lunch. Also relevantly, for those directed to ‘self-isolate’ over the coming months, it seems unlikely that WorkCover will come to the rescue in the absence of a Covid-19 diagnosis. For clarification or any assistant please reach out; we are receiving all sorts of unusual enquiries during this time and we wish to support our community wherever we can.
How does COVID-19 affect Parenting Arrangements?
Even before the World Health Organisation (WHO) declared it a pandemic on 11 March 2020, COVID-19 has been on the world stage. When we are being told to stay at home, not gather in groups, borders are being closed and quarantine and isolation is being imposed, what does this mean for children going between households of separated parents? Where there are Parenting Orders in place, parents are still required to comply with those Parenting Orders, unless there is a reasonable excuse, or there is an agreement between parents for other arrangements. The current ever-changing situation relating to COVID-19 may make it difficult, or even impossible, for parents to comply with Parenting Orders, Parenting Plans or informal parenting agreements. For instance if changeover is to occur at a school, but schools are closed, or if there is to be travel between States for children to spend time with a parent, but travelling between States requires a self-isolation period. Effective co-parenting can help children, and parents, navigate through and deal with these uncertain times. The responsibility of parents is to do what is in the best interests of their children. This may mean that the normal week about arrangement be suspended for a period, or children not travel interstate to spend time with a parent during school holidays. If complying with Parenting Orders, Parenting Plans or informal parenting agreements, becomes difficult or it is in the best interests of children for other arrangements to be put in place, parents should communicate and work together to reach agreement for practical and reasonable alternative arrangements. If an agreement can be reached between parents for arrangements that differ to the usual parenting arrangements, then the agreement should be in writing, even if it is only by email or text message. This is particularly important if parenting matters end up before the Federal Circuit Court of Australia or Family Court of Australia. It is not always easy for separated parents to reach agreement however, and in those situations parents can seek legal advice, engage in Family Dispute Resolution (FDR), or seek assistance of family/friends to mediate between parents.
The Novel Coronavirus and the Commercial World
The Novel Commercial World The Novel Coronavirus has turned the commercial world on its ear. The commercial contracts that we all take for granted (and that keep the economy humming along) are under the biggest pressure test they will ever face. No one is not affected. Whatever the strict legal position of a party to a contract may be (as you will see and probably expected what might seem clear never is – reasonable minds often differ – and the law libraries around the world are mostly full of reports about contractual dispute cases) we are urging our clients to take a common sense and commercial approach. The starting point is trying to negotiate an acceptable outcome in the short term. The doors of the courts will be closed for the foreseeable future and if you try to obtain relief there you may very well be bankrupt by the time your case is won, lost or drawn. If you have not done so already done so, bite the bullet and start discussing the situation with the other party to the contract. They will be going through and thinking about, all of the things you are. The clear message is to get on the front foot and deal with it. Leaving your head buried in the sand won’t achieve anything (apart from, perhaps, avoiding breathing in the virus). I thought it would be helpful for our clients to see the (what I think is practical) advice we have been providing in main areas of inquiry we have encountered since things became serious. Before doing so an explanation of the legal concepts of “Force Majeure” and “The Doctrine of Frustration of Contract” which may relieve a party to a contract from performing their obligations is necessary. Force Majeure You may have already guessed that “Force Majeure” is a concept of French (Civil) Law. The term translated from French is “Superior Force” and most English dictionaries describe it as “irresistible force or compulsion such as will excuse a party from performing his or her part of a contract.” Sounds simple enough but it is not part of the common law (which, essentially is the all law in Australia that has not been legislated for). In Australia, parties to a contract can, however, agree that Force Majeure applies. Here is a fairly generic “Force Majeure” clause used in contracts:- Force Majeure means an event beyond the reasonable control of either party or, as the case may be, which is unavoidable notwithstanding the reasonable care of the party affected. If either party is rendered unable wholly or in part by Force Majeure to observe or perform any of its obligations under this Agreement, upon such party giving notice and reasonably full particulars of the Force Majeure to the other party promptly after the occurrence of the Force Majeure, the obligations of the party giving notice, so far as they are affected by the Force Majeure, will be suspended and any time limits or requirements imposed on the party, so far as they are affected by the Force Majeure, will be extended for the continuance of the Force Majeure, provided always that as far as possible the cause of the Force Majeure will be remedied with all reasonable despatch by the party whose performance under this Agreement is adversely affected. Of course parties can go into a lot more detail than this (to define specifically what events enliven the operation of the clause). For example “civil disturbance”, “war”, “strike”, “earthquake”, “flood”, and (dare I say) “pandemic” etc may be included or excluded. It all depends on the fine print and how that is interpreted. So, if your contract does not have a Force Majeure clause go straight to “The Doctrine of Frustration” below. If your contract does have such a clause you should get advice about what it might mean and you should be taking steps (amongst other things) to:- give any notice if that is required – time limits may apply; mitigate the effect of the Force Majeure; determine if your contract is to be suspended the length and terms of that suspension; determine if you are lawfully able to terminate your contract. The Doctrine of Frustration In essence, for the doctrine (which is part of our common law) to apply there must be and a supervening, unforeseen, uncontrollable and completely unanticipated event that is not the fault of either party that significantly changes the nature of contractual rights and/or obligations such that it is unjust to hold the parties to the strict terms of the contract. There must also be no Force Majeure clause in the contract. If there is the ‘event’ was foreseen and the Doctrine does not apply. If the ‘event’ just results in one party having to spend more money on performing the contract or its terms become more onerous or impractical to perform the doctrine will not be successfully applied. For the doctrine to apply the ‘event’ must have severe consequences. There must be a radical change. It must be shown that:- there has been a fundamental change in the basis of the contract; the contract cannot proceed as envisaged; the law has changed such that the contract cannot be performed; the event is not just a passing inconvenience; it is unfair and unreasonable to uphold the contract given the gravity of the ‘event’ and the impact on the entirety of the contract. Every contract and every situation is different. We are entering the uncharted waters of the effect of a global pandemic, government intervention with daily changes in laws about public gathering and social distancing, closure of non-essential businesses and state borders, lack of cash flow, and commercial contracts in the State of Queensland. It’s hard to believe I just typed those combination of words in a sentence. No one should just assume they will be released from their liability under a contract and no one should simply just terminate a contract based on the concepts set out above. If you get it wrong and damages flow you could be in even worse trouble. Specific advice is a must before doing anything. Landlord and Tenant Landlords are calling me and saying “my tenant isn’t paying the rent”. Tenants are calling me and saying “I’ve got no way of paying the rent” (mostly because no one is coming in the doors or they have been ordered to shut down because they are a café or restaurant etc). Leases in Queensland (including retail shop leases) generally do not include Force Majeure clauses. They usually include clauses about the total or partial destruction of premises by fire, flood, cyclones and other acts of god. These clauses allow for rent abatement in the case of partial destruction and termination by either party in the case of total destruction. They do not apply in the case of a pandemic as, you guessed it, the premises remain intact. S43 of the Retail Shop Leases Act implies a term in all retail leases that compensation is payable by the landlord if the landlord:- substantially restricts the tenant’s access to the premises; takes action (other than action under a lawful requirement) that substantially restricts or alters the access of customers to the premises; causes a significant disruption to trading; The key words here are “if the landlord”. Landlords generally have not done anything and what has happened is beyond their control (note the use of the words “other than action under a lawful requirement”). Tenants in shopping centres may be caught in a situation where they want to trade on but the centre has been closed by the landlord. Tricky indeed but I don’t think s43 can be successfully relied on in these circumstances. This leaves the Doctrine of Frustration as the only thing a tenant might hang their hat on. In the context of a long lease term (of say years) and the duration of the supervening event (of say months) it will be very difficult for tenants to successfully argue the Doctrine applies. There is authority for this. During the SARS outbreak in 2003/4 a tenant in Hong Kong (the subject of a 10 day isolation order) terminated a lease claiming it was frustrated by the making of the isolation order. The court rejected the tenant’s argument on the basis that the period of about 10 days of which the tenant was not allowed to stay in the premises by virtue of the isolation order was insignificant in terms of the overall use of the premises. Hong Kong is a common law jurisdiction but the decision is not binding in Queensland. It is indicative of how the law could be applied here. If the situation were different and the premises could not be used for more than say half of the lease term then the outcome might be different. So what does all this mean? You best bet is to approach the other party and negotiate a suspension of rent or rent reduction so that everyone knows where they stand and can budget and act accordingly. Most leases have dispute resolution provisions. If you are not able to have a commercial or any discussion with your landlord or your tenant you can probably force them to have a without prejudice meeting with or without a mediator. At the time of writing this (lunchtime Friday 27 March 2020 the Federal Government announced that it is considering a suite of measures to effectively put the economy into hibernation. The statement included this:- “Banks, lenders and landlords would all be asked to wear some of the pain, waiving all overheads including rents and mortgage repayments for at least the next six months.” COVID-19 The National Cabinet Mandatory Code of Conduct for Landlords and Tenants Employer and Employee “Coming Soon” Banker and Customer “Coming Soon” ATO and Taxpayer “Coming Soon” Supplier and Customer “Coming Soon” Insurer and Insured “Coming Soon”