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Tax Sting – Living/Moving Overseas

If you are living and conducting a business outside of Australia, you may still be liable to pay tax to the Australian Government if you are considered to be a “resident” for tax purposes.

Who is a Resident?

Essentially a “resident of Australia” or “resident” for the purposes of the Income Tax Assessment Act 1936 (1936 Act) is a person whose domicile is in Australia unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia.

What is a Permanent Place of Abode?

In the recent Federal Court of Australia decision of Harding v Commissioner of Taxation the concept of “permanent place of abode” was discussed at length.

The key features of that case were:

  • ✔ the appellant was an Australian citizen who had lived outside of Australia for 17 years of the previous 20 years (specifically in Bahrain to commute to his work in Saudi Arabia)
  • ✔ in the prior court decision, the primary judge:
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Purchasing off-the plan: is it the right way to go?

Purchasing off the plan

An off the plan contract refers to a contract for the sale of a residential lot (the subject lot) that has not been created at the time the contract is entered into. Essentially, a purchaser is buying a house or apartment before construction has finished. New laws set to commence on 1 December 2019 aim to provide stronger protection for purchasers in response to a number of concerns arising from recent off the plan developments. Whilst the process of buying a brand new property (as is the case with off the plan) can be exciting, it is prudent for purchasers to consider a number of matters and obtain legal advice before committing to the contract.

Contract terms and safeguards for purchaser

Firstly, purchasers should mindful that they are purchasing from a developer and that contracts (often lengthy), have been tailored to benefit the developer and protect their interests. For example, the contract may contain a clause permitting the developer to terminate the contract if a certain numbers of sales are reached. The clauses are often complex and lengthy making it harder to identify unfair contract terms.
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Changes to Property Transactions

IMPORTANT CHANGES TO PROPERTY TRANSACTIONS
The Conveyancing (Legislation) Amendment Act 2018 introduces changes that will provide better protection for purchasers buying property off the plan and more flexibility to those using electronic land contracts and deeds.

Off the plan Contracts:
An off the plan contract is used to sell a property such as a strata unit without its own separate title, given the property does not exist at the time contracts are exchanged.

Off the plan contracts can be beneficial to both property developers and purchasers. For property developers, finance is generally dependent on the percentage of lots that have been pre-sold.

For purchasers, these off the plan contracts are a popular way to enter the property market. This is because the construction and settlement periods can take years, providing extra time for buyers to save funds required for settlement.

However, due to the very nature of the transactions, off the plan purchasers are particularly vulnerable to the actions of developers. The new laws aim to address this vulnerability.
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Unjust Put and Call Options – When a developer Comes Knocking

When a developer approaches you to buy your home (and you’re interested), you need to ensure you get as many facts as you can and seek legal advice. Sometimes the developer may not wish to purchase your land straight away, and you may enter into an agreement to sell and purchase land in the future.

A ‘Call option’ is essentially an approved right granted to the buyer by the seller of a property. This right requires the seller to sell the property to this buyer on the agreed terms at a future point in time. For example, you agree to sell you home to the developer in 2 years for a million dollars. A call option is beneficial in that the price agreed upon will not change irrespective of pricing fluctuations in the property market. A ‘put option’ is an approved right granted to the seller by the buyer. This right enables the seller to request the buyer to buy the land at a future point in time.
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Commercial Law – Tips for Small Business

Commercial Law – Some tips for small business owners

Many people operate small businesses and many people are setting them up. From a commercial law perspective here are a few simple but effective tips:

  • It is well known that you should try and separate assets from business risk. That is why many people operate under a company structure. It follows that you should not use the trading company to acquire any assets, that is, other than the business itself. For example, premises should be purchased in another name and, if possible, any valuable assets such as intellectual property or even expensive equipment should be held in another name and licensed to the trading entity.
  • If a husband and wife operate a business under a company structure there is no need for both to be directors (as opposed to shareholders). The role of director carries considerable personal risk and there is no need to expose all the couple’s personal assets to that risk.

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AIRBNB – LEASE OR LICENCE?

Does an AirBnb arrangement create a lease or licence?

Due to the advent of online letting platforms such as AirBnb, short-term rentals have become increasingly popular. However, these kinds of arrangements present many legal ramifications.  The case of Swan v Uecker [2016] VSC 313 is a recent example of how AirBnb can create confusion about whether such arrangements can be classified as a lease or licence.

The Facts:

A landlord leased a two bedroom apartment to a tenant under a lease. The terms of the Lease permitted subleasing but required the consent of the landlord. . However, without consultation with the landlord, the tenant entered into what they classified as “licences” with Airbnb guests. These “licences” allowed AirBnb guests to stay in the apartment for between three and five days and occupy the entire apartment without the tenant being present. As part of the arrangement, all of the bookings were made online, the guests agreed to leave at the end of their stay and the premises were said to be the tenant’s principal place of residence.
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Property Law – Retail Leases Act Changes

Parties to retail leases need to be aware of amendments to the Retail Leases Act 1994 (NSW) (“RLA”) that have come into effect on 1 July 2017.

Some of the key changes to leasing of retail premises and their effects are identified below:
  • New Lessor Disclosure Requirements– Requires full disclosure in the lessor’s disclosure statement of any obligation of the lessee to contribute to the lessor’s outgoings and prevents recovery from outgoings that are not disclosed. This means a lessee will not be liable to pay any amount in respect of any outgoings unless the liability to pay the amount was disclosed in the disclosure statement for the lease.
  • Turnover Rent – Lessees may find shelter from turnover rent clauses in leases by utilising online transaction which now excludes online sales revenue, except where the goods are delivered from or at the premises (or the Centre) or where the transaction takes place while the customer is at the premises.

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Property Law – CBD Changes

Property Law – Background

The Commercial Building Disclosure (CBD) Program is a regulatory program that requires the mandatory disclosure of a building’s energy efficiency information to the market when commercial office space above a certain size is offered for sale or lease.

The CBD Program is an initiative of the Council of Australian Governments (COAG). It was established by the Building Energy Efficiency Disclosure Act 2010 and is managed by the Australian Government Department of the Environment and Energy.

Changes Made

In essence:

  • from 1 July 2017 the mandatory disclosure threshold on commercial office space will decrease from 2000 square metres to 1000 square metres
  • this means owners and landlords of smaller commercial office buildings may need to disclose the building’s energy efficiency when they sell or lease their property after this date

Tips

Our Matthews Folbigg Property Law team recommends building owners/landlords, tenants who sub-lease and real estate agents:

  • review these property law changes
  • seek the assistance of a property lawyer to understand the impacts of these property law changes

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