Monthly Archives: December 2016

ATO guidance

ATO guidance on foreign resident capital gains withholding tax

The ATO amended its instructions to taxpayers seeking a reduced withholding tax rate on the sale of property on 6 December 2016.

The amended instructions include examples of the supporting information that should be included in an application, which is dependent on the reasons for variation of rate.

Non-portfolio dividend exemption participation test

The ATO has released two draft taxation determinations regarding the application of Subdivision 768-A of the Income Tax Assessment Act 1997 (Cth) (ITAA97) to Australian corporate tax entities which are either a partner of a partnership (TD 2016/D6) or a beneficiary of a trust (TD 2016/D7). The determinations consider the same issue, being whether these partners or beneficiaries can hold a direct control interest within the meaning of section 350 of the ITAA97.

The draft determinations state that partnerships and trusts can be taken to ‘hold’ a direct control interest in a foreign company for the purpose of satisfying the 10% participation test in s 768-15.

Accordingly, depending on their own participation in the partnership or trust, if a partner or beneficiary Australian corporate tax entity receives a distribution from a foreign company, section 768-5 may deem the distribution is non-assessable non-exempt income.

Legislation

Every year the festive season brings a spike in claims against employers and employees, with claims around health and safety, bullying, sexual harassment, inappropriate behaviour and more.

How can employers minimise their risks and avoid the festive season becoming the silly season?

Most claims arise from work social functions, including Christmas parties, and often have far-reaching consequences. Claims often take many months to resolve, with a great deal of stress experienced from all sides. People might lose their jobs, and employers may take a significant financial or reputational hit.

First step – policies

Proper policies on work-related social activities are most critical and must be in place. Policies are most effective when using examples of inappropriate behaviour.

Policies need to be known and understood throughout the organisation; there’s no point in having them at the bottom of a drawer somewhere.  Workplace behaviour training in conjunction with the policies is an important step to take and can be conducted in person or online, via intranet, webinars and so on.

Good policies will include clear complaint handling procedures. Experience shows that when staff know how to make a complaint they are more likely to make it earlier, resulting in swift action, rather than letting the issue fester and become worse.

It is a serious matter to interfere with the rights of parties to agree between themselves, to whatever contractual terms they chose. Recent amendments to the Queensland workers’ compensation legislation¹ have effected a significant change to the way businesses are allowed to contract with each other and allocate risk for injury to workers. The amendments render void and unenforceable, certain contractual clauses where an employer, effectively indemnifies another entity against contribution claims the employer might otherwise have had for damages for injury to a worker. It is doubtful the full ramifications of this proposal have been adequately considered.

The utility of the reform is questionable and has the potential to cause great uncertainty and dispute. Parties who think they have agreed on certain carefully crafted or well understood terms may find the validity of those terms stripped or challenged. Insurance arrangements placed on the basis of agreed risk allocations may prove inadequate or erroneous, causing overlap or gaps in cover, increased premiums and increased litigation. Is this aspect of the reform necessary, economically sound and wise?

The relevant amendments to the legislation stem from the recent judgment in Byrne v People Resourcing (Qld) Pty Ltd & Anor². Byrne confirmed a long line of court authority that if WorkCover is liable directly to the claimant in negligence or contract, then it must pick up and indemnify all related liabilities of the employer. Therefore contractual variations of the employer’s negligence liability that alter contribution apportionments between defendants will still be indemnified by WorkCover.

Understandably WorkCover Queensland took issue with insuring this additional contractual liability. Its premiums are not based on a careful review of all contractual risk allocation arrangements and it is effectively funding its insured’s contractual concessions out of its own coffers.