The State Insurance Regulatory Authority (SIRA) is now reporting COVID-19 related workers compensation claims using data provided to SIRA daily by insurers.
SIRA will update and expand its report as more information becomes available.
As at 4.45pm, Thursday 26 March 2020, SIRA has been advised of 57 claims / notifications of the following injury types:
• Claims: 1 confirmed.
• Notifications: 2 confirmed, 45 exposure cases, 7 mental disorder, 2 other injuries/diseases.
Source: SIRA workers compensation claim statistics dated 26 March 2020
The post SIRA now reporting COVID-19 related workers compensation claims appeared first on Wolters Kluwer | Central.

My Business Health, a web portal to support small business owners, now features a dedicated section to assist those struggling with the COVID-19 crisis.
The dedicated section includes the latest information on government support measures as well as assistance with tax, employer obligations, finances, available government payments and loans.
Source: Australian Small Business and Family Enterprise Ombudsman media release, 26 March 2020.
The post COVID-19: dedicated section in My Business Health to assist small businesses appeared first on Wolters Kluwer | Central.

Contributed by Luke Hooper, Partner, Superannuation and Funds Management, Holding Redlich
In this article, we provide a high-level overview as to what superannuation payments/claims could conceivably arise under COVID-19, or how certain payments may change. Very little law, apart from some Government announcements, changes. However, given the likelihood of significant and wide-reaching economic and financial uncertainty and the impact on employment as well as the obvious health impacts associated with COVID-19, many trustees will have (high volume) payment claims high up on what may be a very long list of priorities.
In all cases, various security and compliance requirements need to be met and it is likely that trustees are equipped and experienced to deal with these, as a result of the 2008 Global Financial Crisis (the GFC). One obvious point to make, though, is that trustees should consider disclosing any taxation implications to members seeking to make any form of withdrawal.
1. Government response — withdrawal of up to $20,000
The Government has just announced that certain individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months.
There are eligibility criteria. However, this is a matter between the member and the Government — trustees are not required to determine eligibility. Once the ATO has processed a member’s application, it will issue both the member and the trustee with a determination, which will advise the trustee to release payment.
It goes without saying that a trustee needs to review and satisfy itself that is has received all correct documentation.
2. Pensions
The Government announced that it will halve the minimum superannuation income stream drawdown requirements over the 2019/2020 and 2020/2021 financial years. Trustees will remember that this strategy was utilised during the GFC and we assume they would be prepared as how to administer this. Clearly trustees should notify pension members of this change.
Requests by preservation-aged members to enter into transition to retirement income streams could increase as more senior members of the workforce take what may be enforced (or otherwise may decide to) reduced hours of work that may require them to seek to supplement their incomes.
3. Termination of employment
It is unfortunately very clear that termination of employment will occur, and some sectors may be particularly hit by this more than others (or certain sectors that are hit are likely to expose some funds to more potential claims than others).
In some cases, termination of employment may lead to a member deciding that they have retired. Retirement is taken to occur:
• in the case of a member aged preservation age to 59 years — if:– his/her gainful employment arrangement has come to an end, and– the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis, or• in the case of a member aged 60 years or above — his/her gainful employment arrangement has come to an end, and either:– the member attained that age on or before the ending of the employment, or– the trustee is reasonably satisfied that the member intends never to again become gainfully employed, either on a full-time or a part-time basis.
In these cases, trustees need to protect themselves by ensuring they have robust processes in place in order to satisfy themselves that members from these cohorts have had their employment terminated and that there is no intention ever to seek employment for at least 10 hours per week. Having advised on both sides, this may be an avenue that many in this cohort of members take, as that intention is taken at a certain point in time — intentions change.
For those who are below preservation age, the options are minimal. However, one condition of release that arises is where a member’s gainful employment with a standard employer-sponsor (ie a participating employer) is terminated and that member has less than $200 in preserved benefits.
There may be very low take-up of this — but it would be remiss not to point it out. One of the issues to consider here is “is the member’s employer a participating employer of this fund?” I have been involved in unravelling that in respect of a franchisee (in respect of an insurance claim) and sometimes the answer may seem at odds with what may have been expected.
Further, certain preserved and all restricted non-preserved benefits can be released where a member’s gainful employment has been terminated and the member’s employer-sponsor (does not have to be a participating employer) or an associate contributed to that particular fund.
In both of the above cases, there is no requirement for trustees to satisfy themselves that the member has no intention of ever seeking employment again.
4. Turning 65
It may be that very little turns to this, or that current trends of those aged 65 years and above are either seeking lump sums, converting to pension income stream payments, or continuing to work and contribute changes significantly due to the COVID-19.
5. Rollovers
The cynic in us says that rollovers will likely go to self-managed superannuation funds as members take the view that losses are somehow the superannuation industry’s fault — yes, we do understand the irony, but it comes from experience.
The key issues will be rollover timeframes and security protocols.
6. Death and terminal illness claims
Sadly, it seems that this goes without saying. The key exposure consideration will be claims and disputes by beneficiaries and potentially in respect of any pandemic exclusions in the group life insurance policy.
7. Total and permanent disability (TPD) claims/permanent incapacity/temporary incapacity
It is clear that TPD claims/permanent incapacity/temporary incapacity claims are likely to increase, whether these be legitimate or false. The type of exposure to trustees is likely to be one they are used to with the key difference being the volume of these may grow significantly.
8. Severe financial hardship
If the trustee is satisfied that:
• based on written evidence provided by at least one Commonwealth department or responsible agency, the member has received Commonwealth income support payments for a continuous period of 26 weeks and was in receipt of payments of that kind on the date of the written evidence, and• the member is unable to meet reasonable and immediate family living expenses, it may (for each 12 month period) pay a single lump sum of between $1,000 and $10,000 (except if the amount of the person’s preserved benefits and restricted non-preserved benefits is less than that amount) and not more than $10,000. Please note that this evidence is of no effect if it is dated more than 21 days before the date of the member’s application.
If the member has reached preservation age plus 39 weeks and the trustee is satisfied:
• based on written evidence provided by at least one Commonwealth department or responsible agency – that the member received Commonwealth income support payments for a cumulative period of 39 weeks after reaching preservation age, and• that the member was not gainfully employed on at least a part-time basis on the date of the application for cashing of his/her preserved benefits, or restricted non-preserved benefits, the trustee may pay out an amount subject to no cashing restrictions.
9. Compassionate grounds
The Department of Human Services may determine that an amount may be released from a specified fund in order to pay or meet expenses related to:
• medical treatment or medical transport for the member or a dependant• the payment on a loan, to prevent:– foreclosure of a mortgage on the member’s principal place of residence, and– exercise by the mortgagee of an express, or statutory, power of sale over the member’s principal place of residence.• to modify the member’s principal place of residence, or vehicle, to accommodate the special needs of the member, or a dependant, arising from severe disability• to pay for expenses associated with the member’s palliative care, in the case of impending death, or• to pay for expenses associated with a dependant’s palliative care, in the case of impending death, death, funeral or burial.
It is the Department of Human Services, and not the trustee, who makes a decision on whether a payment on compassionate grounds is to be made. However, it goes without saying that a trustee needs to review and satisfy itself that is has received all the correct documentation.
10. Departing Australia superannuation payments (DASP)
Temporary residents that have departed Australia and have had their visas cease to be of effect may request trustees to cash their benefits within 28 days of request, if:
• the cashing amount is less than $5,000, the trustee must receive evidence demonstrating that the member was a temporary resident and the temporary visa has ceased to be in effect along with a copy of the member’s passport demonstrating that the member left Australia, or• the member is cashing in a larger amount, the trustee must be satisfied, based on a written statement from the Department of Immigration that the member was a temporary resident, the temporary visa has ceased to be in effect, and that the member left Australia.
With borders closing, this may not seem to be such an exposure, but this will be an option available for temporary residents who have already departed (or who depart before the closing of a border).
11. KiwiSaver transfers
This may be an option for New Zealand residents who have headed back home across the ditch.
12. Voluntary contributions clawback
It is foreseeable that a member may seek a clawback of voluntary contributions made. Trustees need to be mindful of what circumstances permit a return of mistaken contributions (in other words the mistake of law versus mistake of fact rules).
13. Unclaimed money legislation
Dependent upon how the market goes, we could see more low balance accounts than what may have been anticipated over the next year or so. We may also see more of those accounts become inactive (it does take 16 months to be inactive, but it seems natural that there may be a spike over the next few quarters).
Inactive low-balance accounts will need to be transferred to the ATO, bi-annually.
Depending upon how long society and the economy is in limbo, expect more lost accounts. It will be interesting to see if claims on what could be unclaimed money accounts increases.
14. Protecting Your Superannuation Package (PYSP) exit fees and fee refunds
Assuming account balances devalue, trustees may find that the PYSP fee cap rules impact a wider membership. However, it may be that the absence of performance fees payable to some investment or fund managers may mean that investment costs are reduced.
It is our view that s 99G of the SIS Act currently reads to only require trustees to refund excess amounts to current members and not exiting members. Amendments proposed by the Treasury Laws Amendment (2019 Measures No 3) Bill 2019 (which is yet to be passed) and the explanatory memorandum to that Bill support that view. If the Bill is passed before 30 June 2020, trustees will also need to refund exiting members.
15. Any other condition under s 62(1)(b)(v) of the SIS Act
It is possible that the APRA may provide such other ancillary benefits that superannuation funds are maintained for and on what terms. This differs to the Government’s proposals which are to be legislated.
16. First Home Super Saver Scheme refunds
Withdrawals are subject to Government determination. It is unlikely that a member could seek to withdrawal amounts other than for the purchase of a first home.
Takeaway
What is happening is unprecedented in living memory and great pressure will be placed in trustees and their funds’ systems. Clearly, all of the above are subject to rules contained in the trustee’s governing documents including, but not limited to, the fund’s trust deed, any defined benefit fund funding and solvency rules, the risk management framework (having regard to cash flow and liquidity requirements, and unit pricing along with the volume of withdrawal requests that may arise), any administration agreement, the fund’s liquidity management plan, and the fund’s group insurance policies.
The post Superannuation payments in a time of COVID-19 appeared first on Wolters Kluwer | Central.

The Tax Practitioners Board (TPB) has assured members that it is taking steps to support them through the COVID-19 pandemic, and is continuously recalibrating its business continuity plans, as the situation develops every day.
Though a number of staff are operating under work from home arrangements, the level of service the TPB provides to its members will not be impacted. It will continue to update its members with the latest information via social media or its website.
As part of its support for members due to COVID-19, the TPB asks those members who are experiencing difficulties in meeting their TPB obligations or registration renewals to get in touch. Further, the members, whose annual declarations are due on or before 31 December 2020, will not have to complete it until 2021 or, if renewals are due in 2021, until 2022.
The CPE requirements have also been revised due to COVID-19. The current policy of a 25% cap for technical or professional reading has been removed for the next six months. While the 25% professional reading cap has been temporarily lifted, the TPB expects practitioners to “first and foremost explore” online CPE offerings. All other elements of the CPE requirements remain unchanged and members are reminded to keep a logbook of their activities.
The post COVID-19: Tax Practitioners Board response appeared first on Wolters Kluwer | Central.

Contributed by Stephen Gethin, Director, Fortuna Legal
Estate planning challenges of passing super to non-dependants
Passing superannuation to adult children upon a superannuation member’s death poses estate planning challenges. Adult children will not usually be dependants, as defined in the Income Tax Assessment Act 1997 (Cth) (ITAA Dependant) of the deceased. As a result, the taxable component of a death benefit paid to adult children is normally taxed at 17%1.
This article proposes that – while it may appear to be a death benefit – a superannuation lump sum paid after a member’s death in response to a withdrawal request made during their lifetime (a post-death withdrawal) is in fact a member benefit. It is, therefore, non-assessable, non-exempt income2 (NANE) of the fund member, even though they are deceased. Potential succession opportunities are then considered involving intentionally incorporating the possibility of a post-death withdrawal into an estate plan, in contrast to the accidental way in which payments of this kind have largely (if not entirely) arisen to date.
A post-death withdrawal is a member benefit
The tax treatment of a post-death withdrawal as a member benefit follows from the Income Tax Assessment Act 1997 (Cth) (ITAA 97) definitions below, as modified by s 307-15. Member benefit means:
“A payment to you from a superannuation fund because you are a fund member”3.
Death benefit means:
“A payment to you from a superannuation fund, after another person’s death, because the other person was a fund member”4.
But for s 307-15, a post-death withdrawal would have the legal character of a payment to the deceased’s legal personal representative5 (LPR) or their bank6. The reason that the payee (the “you”) in the definition of member benefit receives the payment is not because they are a fund member. Therefore, the payment would not appear to meet the definition of member benefit. As the deceased and the payee are different persons, a post-death withdrawal is a payment to the payee after another person’s death because they were a fund member. The payment would, therefore, appear to be a death benefit.
ITAA97 s 307-15, however, alters the operation of these definitions, with the result that a post-death withdrawal is a member benefit. It states:
(1) This section applies for the purposes of:(a) determining whether a payment is a superannuation benefit; and(b) determining whether a *superannuation benefit is made to you, or received by you.
(2) A payment is … made to you, or received by you, if it is made:(a) for your benefit; or(b) to another person or to an entity at your direction or request.
The post-death withdrawal payment is to either another person or an entity at the deceased’s direction, within s 307-15(2)(b). That provision thus treats the payment as made to the member, despite them having died. The payment thus falls outside the definition of death benefit and within the definition of member benefit.
From private rulings it appears that ATO will accept that post-death withdrawals are member benefits when s 307-15 is cited7, but will otherwise treat them as death benefits8. No public ruling or court decision has addressed s 307-15 in this context.
Despite the favourable rulings, it remains necessary to establish a solid basis for that proposition. Because s 307-15 is a deeming provision, the fact that the member has died does not exclude that interpretation. That interpretation makes the payment taxable as if made to the member while still alive. There is another instance where an ITAA achieves a similar result. A payment to a deceased’s estate which would have been income of the deceased if made during their lifetime is taxable as if so made9. This establishes that the proposed interpretation is not inconsistent with the scheme of the ITAAs.
This interpretation is also consistent with a plausible dichotomy under which the taxation of a superannuation lump sum depends on whether it is paid in response to the “death” condition of release in the Superannuation Industry (Supervision) Regulations 1994 or another condition of release, rather than on the accident of whether it was made before the member’s death. This interpretation avoids the injustice which would otherwise occur where a member makes a withdrawal request but dies before it is processed.
Estate planning opportunities involving post-death withdrawals
On the basis of this argument, a post-death withdrawal is thus a de-facto death benefit, but without liability for death-benefit tax. The question then arises of how a post-death withdrawal can be included in an estate plan? Incorporating the possibility of this kind of withdrawal improves on the well-known arrangement under which a fund member withdraws their super just before their death, rendering death-benefit tax inapplicable (referred to as basic timed withdrawal). A basic timed withdrawal has inherent risks, however, outlined below. Allowing for a post-death withdrawal on a certain contingency can be used as part of a strategy which eliminates them – referred to here as modified timed withdrawal.
A basic timed withdrawal may be made for legitimate estate-planning and personal reasons. The member may wish to remove their superannuation from potential will challenges under the Family Provision Act 1972 (WA) (or equivalent10) by giving it to their chosen relatives during their (the member’s) lifetime. The member may wish to witness the joy which such gifts would give to family members, instead of simply passing their super to beneficiaries after their death with a binding death-benefit nomination (BDBN). They may use some of their super to take one last cruise, or pre-pay their funeral to reduce the administrative burden on their loved ones and ensure that they get the send-off they desire.
In a basic timed withdrawal, the member risks withdrawing their super too early. If a prudent fund member survives significantly longer than expected after cashing out, they will need to invest the proceeds. Investment income would then be earned in a higher-tax environment than if they had left their super in the fund. They may pay the super proceeds to their children, to avoid them falling into their estate and becoming the subject of a possible challenge to their will. If they live significantly longer than expected after the withdrawal, however, they will still need access to the money, but will have given it away too soon. In attempting to avoid the risk of an early withdrawal request, they may put it off for too long and die without having made it.
Delaying the lump-sum payment instead of the withdrawal request
The inherent risks of basic timed withdrawal could be avoided by the member making a lump-sum payment direction as soon as they satisfy a condition of release, but which instructs the trustee to delay the payment until a time which it judges to be as close as possible to, but before, the member’s death. The direction would also permit the trustee to make the payment after the member’s death (a post-death withdrawal) as a “back-stop”, in case it has insufficient warning of that event to make the payment beforehand. This avoids the risk under basic timed withdrawal of the member not making the payment direction before their death.
The payment direction may also instruct the trustee to pay the lump to the fund member’s discretionary trust. The payment standards in the Superannuation Industry (Supervision) Regulations 1994 permit the payment of superannuation benefits to a third party at the member’s direction11 . The member would establish a mechanism to pass control of the trust on their death to those relatives to whom they wished to leave their super.
Paying the super proceeds to a discretionary trust leaves the member in control of them until their death via their control of the trust. This avoids the necessity for the member to pay them to their children while they are alive while still ensuring that they cannot fall into their estate and hence into any potential will challenge. It allows income splitting to ameliorate the higher tax rate on ex-super investment returns, if the member survives significantly longer than expected after the withdrawal. That is, it largely avoids the risks in a basic timed withdrawal of cashing super too soon.
Potential application of Part IVA
The author is unaware of any ATO view on whether Part IVA may apply to basic timed withdrawal. It is proposed that the substantial non-tax benefits of the strategy outlined above should be a sufficient defence to any challenge on that basis. Modified timed withdrawal however involves additional elements: intentional delay between the payment direction and the payment and the payment of the super proceeds to a trust.
It must be considered whether the same result as achieved by modified timed withdrawal could be achieved by simpler, alternative means – without the tax benefit (a “counterfactual”). The potential counterfactuals to modified timed withdrawal are:
A basic timed withdrawal, involving minimal delay between the withdrawal request and the lump-sum payment; orThe member making a BDBN, directing the trustee to pay their superannuation death benefit to their LPR or their superannuation-law dependants.
Where the member makes a withdrawal request, if the payment is made before the member’s death the result under the first counterfactual will be the same as under a modified timed withdrawal. In either case the payment would be a member benefit. This counterfactual is untenable, however, because of the risk of the member dying without making a withdrawal request. In that scenario, the super proceeds would then be distributed by their successor(s) as director(s) of the fund trustee; potentially not being passed on according to the member’s wishes.
In this counterfactual, avoiding that risk would require the member to also make a BDBN. That would, however, in effect be unnecessary duplication. A prudent fund member would make a BDBN at the earliest opportunity – not try to leave it until they can (if they can) predict that their death is imminent. Under a modified timed withdrawal, a payment direction made at an early stage, the trust succession plan and possibility of the trustee paying the lump-sum after the member’s death together serve the same purpose as a timely BDBN: ensuring that the member’s super is passed on according to their wishes.
The requirement in the counterfactual for the trustee to pay the lump-sum promptly after the withdrawal request fails, because the member does not need the money at that time. It hardly needs stating that a member may legitimately retain their super inside the fund for as long as possible. This desire would usually have the same well-accepted, non-tax justification as contributing money to super in the first place: provision for retirement. The member’s instruction to the trustee to delay paying the lump sum until just before the member’s death meets that objective. Given, as shown above, the legitimate non-tax reason for the member to make the payment direction itself at a much earlier time, the extended delay between the payment direction and the payment is arguably, entirely appropriate.
The BDBN counterfactual is valid only if the fund member has no legitimate interest in receiving a lump sum before their death. There are, however, various genuine reasons why a member may wish to withdraw their super at that time, as stated above.
Taxation of member benefit paid to trust
If the lump sum is paid to a trust, s 307-15 will nevertheless deem it to have been paid to the member. It follows that the payment will not be a payment to the trust and, therefore, cannot be trust income. As a deemed member benefit, it will have the same tax status as if actually paid to the member. If they were over 60 at their death, the payment will be NANE.
If, despite that, the payment is treated as having being to the trust, it will be either NANE, on the basis that it has the same tax character as if paid to the member, or it will be a capital amount, because a superannuation lump sum is not income according to ordinary concepts. No provision of either ITAA makes a payment in these circumstances statutory income. The proceeds will also be either NANE or a capital amount when distributed to beneficiaries of the trust. Trust distributions will thus be non-assessable to the beneficiaries.
Conclusion
The above analysis expands the current understanding of member benefits significantly. A person otherwise liable for death-benefit tax where a post-death withdrawal is made may thus wish to obtain a favourable private ruling before filing a tax return on this basis. The principal objective of the strategy is for the member to withdraw their super during their lifetime, not for a post-death withdrawal to occur. Statistics on manner of death show that this will be achievable in a substantial majority of cases. If the deceased member’s superannuation beneficiaries cannot obtain a private ruling and do not wish to challenge that, they would be in no worse a position than if the member simply made a BDBN in their favour.
The views expressed in this article represent the opinions of the author and not those of CCH. Fortuna Legal is a business and tax law practice in Perth.
Footnotes
1 This article assumes no untaxed element or insurance premium deductions in the fund, when a 32% rate would apply.
2If paid to a member who has attained 60 – see ITAA97 s 301-10.
3See ITAA97 s 307-5(1); s 307-5(2).
4See ITAA97 s 307-5(1); s 307-5(4).
5LPR refers to either an executor or the administrator of an intestate estate, but not an attorney (which is also included in the definition of LPR in the Superannuation Industry (Supervision) Act 1993).
6It is unnecessary to determine which for the purposes of this argument.
7PBRs 1051598540809 (2019), 1051525346142 (2019), 1051437446368 (2018) and 1012754382264 (2015).
8PBRs 1051556580076 (2019), 1013094364952 (2016), 1012828904612 (2015), 1012447922734 (2013) and 1012396130339 (2012).
9Where the deceased died within three years before the end of the relevant income year – Income Tax Assessment Act 1936 ss 99 and 101A and Income Tax Rates Act 1986 s 12(6).
10Except potentially NSW, due to the notional estate provisions in the Succession Act 2006 (NSW). Future references to inheritance claims are subject to this exception.
11Asgard Capital Management Ltd v Maher [2003] FCAFC 156.
The post When is a super “death benefit” not a death benefit? appeared first on Wolters Kluwer | Central.

A new National COVID-19 Coordination Commission (NCCC) has been created to coordinate advice to the Government on actions to anticipate and mitigate the economic and social effects of the global coronavirus pandemic.
Mr Neville Power has been appointed the Chairman. An Executive Board of Commissioners will advise the Prime Minister on all non-health aspects of the pandemic response. The Board includes Mr Greg Combet AM, Ms Jane Halton AO, Mr Paul Little AO, Ms Catherine Tanna and Mr David Thodey AO (Deputy Chair). They will be joined by the Secretaries of the Department of the Prime Minister and Cabinet, Mr Philip Gaetjens and Home Affairs, Mr Mike Pezzullo.
The National Cabinet, comprising State Premiers and Territory Chief Ministers, continues to lead the national response at a government level. The Government’s National Security Committee of Cabinet’s COVID-19 Taskforce and the Expenditure Review Committee of Cabinet continue to take decisions that determine the Commonwealth’s response to the global COVID-19 pandemic.
The existing National Coordination Mechanism, based in the Department of Home Affairs which coordinates the cross-jurisdictional response to non-health aspects of the pandemic, will report to the Commission, as will the Coronavirus Business Liaison Unit based in the Treasury Department.
Source: Prime Minister media release, 25 March 2020.
The post COVID-19: National COVID-19 Coordination Commission created appeared first on Wolters Kluwer | Central.

The ATO has set up a dedicated site ato.gov.au/coronavirus as a “one stop shop” with essential information on tax and superannuation changes that have now become law following the passage of the Government’s Economic Support Package through the Parliament.
The Commissioner said that the ATO is ready to help all those who are being heavily affected by the challenging economic conditions created by the COVID-19 outbreak. The ATO’s coronavirus webpage provides information on what people need to know or do to access the COVID-19 tax or superannuation measures. These measures include:
giving individuals early access to their superannuationproviding cash flow assistance for employersincreasing the instant asset write-off, making more businesses eligible, andbacking business investment by accelerating depreciation deductions.
Each measure has different timing, eligibility and processes.
Other options are also available to assist impacted businesses. They include:
deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, FBT assessments and exciseallowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in to get quicker access to GST refundsallowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September and December 2019 quartersremitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities, andworking with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.
Businesses wanting to utilise any of these options can contact the ATO over the coming weeks; it is not necessary for businesses to contact us immediately. Employers will still need to meet their ongoing super guarantee obligations for their employees.
The ATO will also work with individuals experiencing financial hardship, and their tax agents, and will apply appropriate tax relief measures for serious and exceptional circumstances. Those impacted by COVID-19 requiring immediate assistance can contact the ATO on its Emergency Support Infoline 1800 806 218.
Source: ATO media release, 24 March 2020.
The post COVID-19: ATO releases dedicated webpage appeared first on Wolters Kluwer | Central.

Each of APRA and ASIC will redirect its resources to focus on facing challenges arising from the coronavirus/COVID-19 outbreak.
APRA’s primary supervision focus will be on monitoring the impact of COVID-19 on the financial and operational capacity of regulated institutions. It has suspended all substantive public consultations and actions to finalise revisions to the prudential framework that are currently underway or upcoming. In particular, its supervision priorities outlined in January 2020 will be largely suspended until at least 30 September 2020, where they involve intensive engagement with regulated entities.
In coordination with the Council of Financial Regulators, ASIC will also focus its regulatory efforts on challenges created by the COVID-19 pandemic. Until at least 30 September 2020, the other matters that ASIC will afford priority are where there is the risk of significant consumer harm, serious breaches of the law, risks to market integrity and time-critical matters. It has immediately suspended several near-term activities which are not time-critical, including consultation, regulatory reports and reviews. Further, ASIC will work with financial institutions to accelerate the payment of outstanding remediation to customers.
The post APRA and ASIC to focus on COVID-19 challenges appeared first on Wolters Kluwer | Central.

A legislative package to implement the Government’s economic response to the spread of COVID-19 (coronavirus), announced between 12 and 20 March 2020, has become law.
The legislative package contains the following Bills, which received assent on 24 March 2020:
the amended Coronavirus Economic Response Package Omnibus Bill 2020 as Act No 22 of 2020 (the Omnibus Bill — see below)Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Bill 2020 as Act No 23 of 2020Assistance for Severely Affected Regions (Special Appropriation) (Coronavirus Economic Response Package) Bill 2020 as Act No 24 of 2020Appropriation (Coronavirus Economic Response Package) Bill (No 1) 2019–2020 as Act No 25 of 2020Appropriation (Coronavirus Economic Response Package) Bill (No 2) 2019–2020 as Act No 26 of 2020Structured Finance Support (Coronavirus Economic Response Package) Bill 2020 as Act No 27 of 2020Australian Business Growth Fund (Coronavirus Economic Response Package) Bill 2020 as Act No 28 of 2020, andGuarantee of Lending to Small and Medium Enterprises (Coronavirus Economic Response Package) Bill 2020 as Act No 29 of 2020.
Schedule 11 of the Omnibus Bill was amended by Parliament as follows:
the Coronavirus Supplement is extended to full-time students on Youth Allowance, Austudy and Abstudy, andthe Minister for Families and Social Services has been granted the additional power to amend the stimulus payments in response to circumstances relating to COVID-19 by legislative instrument up until 31 December 2020.
The post COVID-19 Bills now law appeared first on Wolters Kluwer | Central.

The Commissioner has reassured the tax profession that the ATO will be able to support them and their clients to deal with COVID-19 challenges. Further, the ATO has redirected some of its resources to deal with COVID-19 and hence may not meet all of its usual service standards.
The ATO has been working closely with individual tax agents and the Tax Practitioners Stewardship Group to identify how they can best respond in light of the COVID-19 outbreak. Those who are struggling to meet lodgment or payment obligations, or tax debts, could either access a range of tools and measures or get in touch with the ATO. If coping with COVID-19 is causing theoretical tax issues, tax professionals should contact the ATO, which will strive to give pragmatic, practical advice.
Meanwhile, the ATO has redirected some of their efforts to assist with the delivery of the Government’s economic response to coronavirus and hence may not be able to meet all of its usual service standards. In particular, it is increasing the number of staff available on its phone lines to assist users, and keeping them updated through the Frequently Asked Questions section on its COVID-19 webpage.
The post COVID-19: Commissioner’s message to the tax profession appeared first on Wolters Kluwer | Central.

ASIC recognises that the outbreak of COVID-19, may temporarily impact on a company’s ability to hold an annual general meeting (AGM) or comply with financial reporting obligations. On 20 March 2020, ASIC released guidelines to assist companies in understanding their legal obligations when it comes to holding AGMs or producing financial reports, as a result of the COVID-19 emergency.
AGMs
Under section 250N(2) of the Corporations Act 2001 (Cth), companies are legally required to hold an AGM at least once every calendar year and within five months after the end of the company’s financial year.
With COVID-19 showing no signs of abating, this
obligation is the most pressing for listed and unlisted companies with 31
December 2019 balance dates, who are required to hold an AGM by 31 May 2020 at
the latest. This may prove difficult given the prevailing restrictions on large
public gatherings, domestic and international travel, as well as concerns from
board members with regards to attending large meetings whilst the COVID-19
situation is still ongoing.
ASIC’s guidelines:
Confirm
that ASIC will take no action if AGMs are postponed for two months, to 31 July
2020, andSupport the
holding of AGMs online using appropriate technology.
ASIC does not have the power to grant extensions of time
to hold an AGM on a “class basis”, that is to all entities with a financial
year end of 31 December 2019; instead they have provided a two-month “no
action” position on all upcoming AGMs that will need to be deferred or
alternatively held online. As a result, entities will now have until 31 July
2020 to hold their AGM. However, this situation remains under continuous review.
This “no action” position means that ASIC will not take any action against an entity with a financial year end of 31 December 2019 for failing to comply with section 250N(2) of the Corporations Act, provided that the entity holds the AGM by 31 July 2020 or such later date as ASIC may advise.
Public health and safety remains the key priority.
Hence, ASIC cautions against entities holding an AGM whilst there are
restrictions in place on large, public gatherings. The exception to this is if
the entity can provide members with a reasonable and “safe” opportunity to
participate in an AGM, for example by holding a virtual AGM.
ASIC Commissioner John Price said “flexible pragmatism”
was required to deal with the evolving situation.
“Consistent with
the Council of Financial Regulators’ statement that they would move to adjust
the timing of regulatory initiatives so financial institutions could
concentrate on their businesses and assist their customers, we will focus on
helping entities with the difficulties created by this situation”.
Mr. Price stressed that the situation is under
continuous review and that ASIC is liaising closely with advisors and industry
bodies to understand stakeholder needs and respond accordingly.
Virtual
AGMs
Some entities may wish to proceed with holding their
AGM by 31 May 2020 using technology in order to comply with the current COVID-19
restrictions. This may include a:
“Hybrid” AGM, providing both a physical location and less participants, as well as an online option, orA virtual AGM which is conducted solely online.
ASIC understands the benefits of hybrid and virtual
AGMs in the current climate. This includes encouraging participants to vote by
proxy.
If a notice of meeting has already been distributed to members, ASIC permits entities to send supplementary instructions to their members on any changed format for the meeting. ASIC will adopt a “no action” policy on any contravention of the Corporations Act if an entity has dispatched a notice for a meeting to be held on or before 31 May 2020 and, at least two business days before the meeting is held, the entity sends their members supplementary instructions for online participation at the meeting. This “no action” position covers any failure of the supplementary instructions to comply with section 249J of the Corporations Act.
Entities that have a company constitution which
restricts participation in a virtual AGM, or that cannot otherwise provide
effective online participation for their members, can also rely on ASIC’s “no
action” position for the deferral of AGMs. Postponing an AGM where an entity
has made advanced preparation may cause significant cost and inconvenience.
However, holding an AGM where few members can participate either physically or
online may result in breach of the Corporations Act. Essentially, it is safer
for companies to rely on the temporary relief being offered by ASIC.
Legal
status of virtual AGMs
ASIC considers that hybrid AGMs are permitted under the
Corporations Act. However, entities still need to confirm whether their company
constitution contains any restrictions on meetings being held that way.
There is some doubt as to whether the Corporations Act
permits virtual AGMs. There may also be doubt as to the validity of resolutions
passed at a virtual AGM. Entities should again consider whether they are
permitted to hold a virtual AGM under their company constitution.
Entities that are concerned about the legal validity of virtual AGMs should seek appropriate legal advice on section 1322 of the Corporations Act. Any irregularities associated with meetings are not invalidated unless the Court makes a declaration to the contrary. A party may also be able to apply to the Court for an order addressing any irregularities associated with a meeting.
ASIC does not have the power to modify the Corporations
Act to facilitate hybrid or virtual AGMs.
However, ASIC is also adopting a “no action” position on non-compliance with provisions of the Corporations Act which may restrict the holding of virtual AGMs. This “no action” position will apply in situations where an entity elects to hold a virtual AGM in order to comply with the statutory deadline of 31 May 2020. This “no action” position is conditional on the technology used for the virtual AGM providing members with a “reasonable” opportunity to participate, as per section 249S of the Corporations Act. In ASIC’s view, this includes:
Members
being able to ask questions of the auditor and about management, and being
heard; andVoting
occurring via an online poll, as opposed to a show of hands.
Entities should assess the ability of their technology
to comply with these guidelines prior to holding any online meeting. If there
are any concerns as to the ability of the technology to meet these needs,
entities should consider postponing the AGM to a later date, in reliance on
ASIC’s “no action” position for deferred AGMs.
A note on
ASIC’s “no-action” position for AGMs
ASIC’s general policy on “no-action” positions and their status is set out in ASIC’s Regulatory Guide 108 – No-action letters. A “no-action” letter is a letter in which ASIC states to a particular party that it (ASIC) does not intend to take regulatory action over a particular state of affairs or particular conduct. It should be noted that:
A
“no-action” letter is an expression of regulatory intention with regards to how
to exercise ASIC’s powers. The purpose of a “no-action” letter is to provide an
indication as to the future regulatory action which ASIC may take, and
An ASIC
“no-action” letter does not necessarily prohibit third parties, including the Office
of the Director of Public Prosecutions (ODPP) from taking legal action in
relation to the same conduct, and ASIC will not intervene in any proceedings
brought by any third parties in respect of such conduct. It also does not
prevent a Court from holding that a particular conduct infringes the relevant
legislation in the circumstances.
Financial
reporting
ASIC is continuing to closely monitor developments
which may affect financial reporting. This includes engaging with market
participants and auditors and considering possible impacts and responses.
For entities with 31 March 2020 or 30 June 2020 balance
dates, ASIC will carefully monitor the prevailing market conditions and how
COVID-19 is affecting financial reporting for these entities and will update this
guidance as need be.
For entities with 31 December 2020 balance dates, ASIC
does not envisage any near-term impact to this timeframe but continues to
monitor the evolving situation closely.
Practical
guidance for corporations
Companies should continue to monitor the COVID-19
situation closely as it develops. This includes official government mandates as
well as ASIC guidance. It is important for companies to be aware that the
current situation is extremely fluid and is changing on an almost daily basis.
Some practical steps for company directors include:
Ensure that you are clear on the exact date by which you are required to hold your AGMIf required, engage ASIC’s “no action” policy earlyReview your company constitution to determine if it permits hybrid and/or virtual AGMs to be heldReview your corporate technology and infrastructure to ensure it can adequately support a hybrid and/or virtual AGM pursuant to section 249S of the Corporations Act, and Ensure you are clear on your balance date for financial reporting so that you can be prepared early.
Further
reading and sources
ASIC Media Release 20-068MR – Guidelines for meeting upcoming AGM and financial reporting requirements, 20 March 2020.
ASIC Regulatory Guide 108 – No-action letters, 18 December 2009
Statement by the Council of Financial Regulators, 16 March 2020.
The post ASIC updated guidelines for corporate AGMs and financial reporting due to COVID-19 appeared first on Wolters Kluwer | Central.

Business help line: 13 28 46 or business.gov.au 
The Federal government’s business hotline will expand its hours of operation to support small and medium businesses impacted by the coronavirus/COVID-19 pandemic.
Operations at the business.gov.au 13 28 46 contact centre will increase from five days to seven days per week. Further, the hours of support will be increased for at least one month, answering calls from 7 am to 11 pm AEST.
Source: Minister for Industry, Science and Technology and Minister for Employment, Skills, Small and Family Business joint media release, 23 March 2020
The post COVID-19: expanded business helpline appeared first on Wolters Kluwer | Central.

A package of Bills to implement the Federal government’s economic response to the spread of the coronavirus/COVID-19, announced between 12 and 22 March 2020, has been introduced into Parliament.
Key tax and income support as well as superannuation measures are in the following Bills:
Coronavirus Economic Response Package Omnibus Bill 2020 (the Omnibus Bill) Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Bill 2020 (the Cash Flow Boost Bill)
Enhancing the instant asset write-off
Schedule 1 of the Omnibus Bill will:
increase the cost threshold below which small business entities can access an immediate deduction for depreciating assets and certain related expenditure (the instant asset write off) from $30,000 to $150,000, from 12 March 2020 to 30 June 2020provides access to an instant asset write-off to entities with an aggregated turnover of $10m or more but less than $500m (up from the existing cap of $50m), andmake the instant asset write-off available for depreciating assets and certain related expenditure costing less than $150,000, from 12 March 2020 to 30 June 2020.
These measures will take effect on or after 12 March 2020.
Accelerating depreciation deductions
Schedule 2 of the Omnibus Bill temporarily allows businesses with aggregated turnovers of less than $500m pa to deduct capital allowances for depreciating assets at an accelerated rate.
Generally, to be eligible to apply the accelerated rate of deduction, the depreciating asset must satisfy several conditions including that the asset:
is new and has not previously been held by another entity (other than as trading stock or for testing and trialling purposes)is an asset for which an entity has not claimed depreciation deductions, including under the instant asset write-off rules, andis first held, and first used or installed ready for use, for a taxable purpose between 12 March 2020 and 30 June 2021 (inclusive).
There are different rules that apply depending on whether an entity is using the simplified rules for capital allowances for small businesses. These measures will take effect on or after 12 March 2020.
Boosting cash flow for employers
The Cash Flow Boost Bill provides for the Commissioner to make payments referred to as cash flow boost payments comprising the first cash flow boost and the second cash flow boost payments.
The Commissioner will be required to make the first cash flow boost payments to eligible entities from March 2020 to June 2020. Entities are eligible if:
the entity makes a payment that is subject to withholding obligations under Subdiv 12-B, 12-C or 12-D of the Taxation Administration Act 1953 (broadly, a payment of wages or salary or similar remuneration), whether or not any amount is actually withheld, in the periodeither:the entity was a small or medium business entity, or a charity or other not-for-profit (NFP) entity of equivalent size, for the most recent income year of the entity for which an assessment of income tax has been made by the Commissioner, orthe Commissioner is reasonably satisfied that it is likely that the entity is a small or medium business entity, or a charity or other NFP entity of equivalent size, for the income year that includes the periodthe entity has notified the Commissioner of their entitlement in the approved formthe period is one of the following:the quarters ending in March 2020 or June 2020, orthe months of March 2020, April 2020, May 2020 or June 2020if the entity is not an Australian Charities and Not-for-profits Commission registered charity, it both:held an ABN on 12 March 2020, andeither derived assessable income from carrying on a business in the 2018/19 income year or made one or more supplies for consideration in the course of an enterprise it carried on within Australia in tax periods commencing after 1 July 2018 and ending before 12 March 2020 and notice of the income or supplies was held by the Commissioner on or before 12 March 2020 or within such further time as the Commissioner allows, andthe entity (or an associate or agent of an entity) has not engaged in a scheme for the sole or dominant purpose of seeking to make the entity entitled to the first cash flow boost or increase the entitlement of the entity to the first cash flow boost.
The Cash Flow Boost Bill also provides for the Commissioner to make the second cash flow boost payments upon lodgment of activity statements for periods from June to September 2020 to entities that were entitled to the first cash flow boost. Schedule 3 of the Omnibus Bill makes consequential amendments to various Acts arising from the Cash Flow Boost Bill.
The Cash Flow Boost Bill provides for the Commissioner to make payments to eligible entities in respect of periods from March 2020 and the quarter ending March 2020.
Stimulus payments to households
Schedule 4 of the Omnibus Bill provides for the payment of the first economic support payment of $750 to Social Security and Veterans’ income support recipients, Farm Household Allowance recipients, Family Tax Benefit recipients and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Commonwealth Gold Card.
Schedule 4 also provides for the payment of a second economic support payment of $750 to Social Security and Veterans’ income support recipients, Family Tax Benefit recipients and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Commonwealth Gold Card who receive a qualifying payment or hold a qualifying concession card on 10 July 2020, unless they are eligible to receive the Coronavirus Supplement.
These measures will take effect on the day after the Omnibus Bill receives assent.
Superannuation drawdowns
Schedule 10 of the Omnibus Bill amends the SIS Regulations and RSA Regulations to reduce the minimum payment amounts for account-based pensions (and for the equivalent annuity products) by half for the 2019/20 and 2020/21 financial years.
These measures will take effect the day after the Omnibus Bill receives assent.
Additional support for income support recipients
Schedule 11 of the Omnibus Bill amends the Social Security Act 1991 to provide additional financial assistance to Australians financially impacted by the coronavirus. Australians can claim Jobseeker Payment or Youth Allowance (other) if they are an Australian resident (or exempt from the residence requirements) and satisfy the requirements outlined in a legislative instrument. If qualified, a person receives the current rate of Jobseeker Payment or Youth Allowance (other) along with a fortnightly supplement of $550 or such other amount determined by legislative instrument.
The supplement is also available to existing recipients of Jobseeker Payment, Youth Allowance (other), Parenting Payment, Special Benefit, and the Farm Household Allowance. The Minister for Families and Social Services (the Minister) may extend the supplement to other social security payments by legislative instrument.
The supplement is available for an initial six-month period, commencing on 27 April 2020. The Minister may extend the six-month period and extend the supplement to other social security payments.
Recipients of Jobseeker Payment or Youth Allowance (other) (which includes new and existing recipients) will be exempt from the assets test, liquid assets waiting period, ordinary waiting period, newly arrived resident’s waiting period and seasonal worker preclusion periods. Parenting Payment recipients will also be exempt from the assets test, ordinary waiting period, newly arrived resident’s waiting period and seasonal worker preclusion period.
The exemption from the newly arrived resident’s waiting period also applies to special benefit.
Schedule 11 also amends the Farm Household Support Act 2014 to apply the supplement and exemptions to recipients of the Farm Household Allowance.
These measures will take effect on 27 April 2020.
Schedule 11 also delays the commencement of the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Act 2020 by 12 months to 1 July 2021. That Act amends the Social Security Act 1991 to ensure that employment income is assessed once it is paid to a social security recipient.
Early release of superannuation
Schedule 13 of the Omnibus Bill amends the SIS Regulations and RSA Regulations to allow individuals affected by the coronavirus to have up to $10,000 released from their superannuation or retirement savings account on compassionate grounds. Each person is permitted to have up to two releases — one for an application made during the 2019/20 financial year and another for an application made during the 2020/21 financial year. This means a person may have up to $20,000 released in total.
Schedule 13 also amends the Income Tax (Transitional Provisions) Act 1997 to ensure that any such amounts that are released are not subject to tax.
These measures will take effect on the day after the Omnibus Bill receives Royal Assent.
Medicare levy and Medicare levy surcharge low-income thresholds
Schedule 14 of the Omnibus Bill amends the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999 to increase:
the Medicare levy low-income thresholds for individuals and families (along with the dependent child/student component of the family threshold) in line with movements in the consumer price index (CPI)the Medicare levy low-income thresholds for individuals and families eligible for the Seniors and Pensioners Tax Offset (along with the dependent child/student component of the family threshold), in line with movements in the CPI, andthe Medicare levy surcharge low-income threshold in line with movements in the CPI.
These measures apply to the 2019/20 income year and later income years.
Remaining measures
The legislative package also deals with the following measures:
Delegation power for the Director of Human Biosecurity. Schedule 5 of the Omnibus Bill enables the Director of Human Biosecurity to delegate their function or powers under Pt 3 of Ch 2 (human biosecurity control orders) of the Biosecurity Act 2015.Environmental Management Charge. Schedule 6 of the Omnibus Bill amends the Great Barrier Reef Marine Park Regulations 2019 to temporarily waive the environmental management charge from 1 April 2020 to 31 December 2020.Assistance for apprentices and trainees and the aviation sector. Schedule 7 of the Omnibus Bill establishes legislative authority for government spending on new measures to assist employers to retain apprentices and trainees, and to provide financial assistance to participants in the Australian aviation sector to assist with the impact on the sector of the coronavirus.Providing flexibility in the Corporations Act. Schedule 8 of the Omnibus Bill establishes a temporary mechanism to provide regulatory relief to classes of persons that, due to the coronavirus, are unable to meet their obligations under the Corporations Act or the Corporations Regulations.Childcare. Schedule 9 of the Omnibus Bill provides limited flexibility to manage the impact of the coronavirus, as well as future disasters, on families and on business continuity for childcare services.Temporary relief for financially distressed individuals and businesses. Schedule 12 of the Omnibus Bill provides temporary relief for financially distressed individuals and businesses.Delaying the next intergenerational report to 2021. Schedule 15 of the Omnibus Bill delays the next intergenerational report from 2020 to mid-2021 to ensure there is adequate time to produce long-term projections that are based on robust budget estimates.Deferral of sunsetting. Schedule 16 of the Omnibus Bill allows the relevant Minister for an Act or legislative instrument that is scheduled to sunset on or before 15 October 2020 to determine a new day on which the legislation sunsets.Guarantee of Lending to Small and Medium Enterprises (Coronavirus Economic Response Package) Bill 2020. This Bill authorises the relevant Minister to grant guarantees to financial institutions in connection with loans made, or to be made, to small and medium enterprises (SMEs) if granting the guarantee is likely to assist in dealing with the economic impacts of the coronavirus.Australian Business Growth Fund (Coronavirus Economic Response Package) Bill 2020. This Bill increases the availability of patient capital for SMEs by authorising the contribution of $100m to invest in an Australian Business Growth Fund.Assistance for Severely Affected Regions (Special Appropriation) (Coronavirus Economic Response Package) Bill 2020. This Bill allows the Government to set aside $1b to support regions, communities and industry sectors most severely affected by the coronavirus.Structured Finance Support (Coronavirus Economic Response Package) Bill 2020. This Bill establishes the Structured Finance Support (Coronavirus Economic Response) Fund, initially consisting of $15b.Appropriation Bills. The Appropriation (Coronavirus Economic Response Package) Bill (No 1) 2019–2020 and the Appropriation (Coronavirus Economic Response Package) Bill (No 2) 2019–2020 propose appropriations from the Consolidated Revenue Fund for certain services of the Government.
At the time of writing, the package of legislation was before the Senate.
The post Coronavirus/COVID-19 legislation appeared first on Wolters Kluwer | Central.

The Federal government released the second phase of its economic response to the coronavirus/COVID-19 outbreak, which includes measures to support workers and households, boost cash flow for employers, and provide regulatory protection and financial support for businesses. Details of this stimulus package are below (Note legislation to give effect to the response to the outbreak have been introduced: https://www.wolterskluwercentral.com.au/covid-19/coronavirus-covid-19-legislation/ ).
The $66.1b second phase economic support package forms part of an injection of $189b (or 9.7% GDP) into the economy. The remaining components include $17.6b from the first economic stimulus package on 12 March 2020, $90b from the RBA and $15b from the government to deliver easier access to finance.
1. Support for workers and households
The government will support households including casuals, sole-traders, retirees and those on income support by:
providing the Coronavirus Supplementproviding payments to support householdsproviding for early release of superannuationtemporarily reducing superannuation minimum drawdown rates, andtemporarily reducing social security deeming rates.
Income support for individuals: Coronavirus Supplement
Over the next six months, the government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus Supplement to be paid at a rate of $550 per fortnight.
This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. The Coronavirus Supplement and expanded access for payments will commence from 27 April 2020.
Expanded access
For the period of the Coronavirus Supplement, there will be expanded access to the income support payments listed above.
Expanded access — Jobseeker Payment and Youth Allowance Jobseeker criteria will provide payment access for permanent employees who are stood down or lose their employment, sole traders, the self-employed, casual workers and contract workers who meet the income tests as a result of the economic downturn due to the coronavirus. This could also include a person required to care for someone who is affected by the coronavirus.Reduced means testing — asset testing for JobSeeker Payment, Youth Allowance Jobseeker and Parenting Payment will be waived for the period of the Coronavirus Supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.Reduced waiting times — to further accelerate access to payments, the Liquid Asset test Waiting Period (LAWP) and the Seasonal Work Preclusion Period (SWPP) will also be waived for recipients eligible for the Coronavirus Supplement. Income Maintenance Periods and Compensation Preclusion Periods will continue to apply, as payments under these arrangements are treated as income.
Individuals will not be permitted, and will need to declare that they are not, accessing employer entitlements (such as annual leave and/or sick leave) or income protection insurance, at the same time as receiving Jobseeker Payment and Youth Allowance Jobseeker under these arrangements.
Flexible jobseeking arrangements
There will be greater flexibility and safety for individuals receiving Jobseeker payment.
Jobseekers who have caring responsibilities, or who need to self-isolate, are able to seek an exemption from their mutual obligation requirements without the need for medical evidence.
Activities can be rescheduled if the job seeker is unable to attend as a result of the coronavirus. Job Plans will be adjusted to a default requirement of four job searches a month (or one a week) to reflect softening labour market conditions.
Payments to support households
Two separate $750 payments will be provided to social security, veteran and other income support recipients and eligible concession cardholders. The first payment (previously announced in the government’s first response on 12 March 2020) will be made from 31 March 2020 and is available to those who are eligible payment recipients and concession cardholders at any time from 12 March 2020 to 13 April 2020 inclusive.
The second payment will be made from 13 July 2020 and is available for eligible payment recipients and concession cardholders on 10 July 2020.
A person can be eligible to receive both a first and second support payment. However, they can only receive one $750 payment in each round of payments, even if they qualify in each round of the payments in multiple ways. The payment will be tax-free and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.
Early release of superannuation
Individuals in financial stress as a result of the coronavirus will be allowed to access up to $10,000 of their superannuation in 2019/20 and a further $10,000 in 2020/21.
Eligible individuals will be able to apply online through myGov from mid-April 2020 for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months (exact timing will depend on the passage of the relevant legislation).
To apply for early release, the applicant must satisfy at least one of the following requirements:
the applicant is unemployedthe applicant is 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, andon or after 1 January 2020:– the applicant was made redundant– the applicant’s working hours were reduced by 20% or more, or– if the applicant was a sole trader — their business was suspended or there was a reduction in its turnover of 20% or more.
People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
Applicants can apply directly to the ATO through the myGov website. The ATO will then issue the applicant a determination and provide a copy of it to the superannuation fund. The fund will then make the payment to the applicant directly. Different arrangements apply to members of self-managed superannuation funds (SMSFs).
Temporary reduction in superannuation minimum drawdown rates
The superannuation minimum drawdown requirements for account-based pensions and similar products are being reduced by 50% for 2019/20 and 2020/21.
AgeDefault minimum drawdown rates (%)2019/20 and 2020/21 reduced rates (%)Under 654265–7452.575–796380–8473.585–8994.590–94115.595 or more147
Further reduction in social security deeming rates
From 1 May 2020, the social security deeming rates will be further reduced by 0.25%. The upper deeming rate will be 2.25% and the lower deeming rate will be 0.25%.
This reduction is additional to the previously announced 0.5% in both the upper and lower deeming rates the government first announced on 12 March 2020.
2. Boosting cash flow for employers
The government is providing tax-free payments to eligible entities that employ workers. Eligible entities are small and medium business entities or Not-for-Profits (NFPs) entities (including charities) with aggregated annual turnover under $50m.
Under the enhanced scheme from the first package announced on 12 March 2020, employers will receive payments delivered as an automatic credit in the ATO’s activity statement system. The initial payment, to be made from 28 April 2020, will equal to 100% of their salary and wages withheld (up from 50%), with the maximum payment of $50,000 (up from $25,000) and the minimum payment of $10,000 (up from $2,000).
Entities that continue to be active may be eligible for additional payments. For monthly activity statement lodgers, the additional payments will be equal to a quarter of their total initial payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000). For quarterly activity statement lodgers, the additional payments will be equal to half of their total initial payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).
3. Regulatory protection and financial support for businesses
The government will establish a Coronavirus SME Guarantee Scheme and provide temporary relief for financially distressed businesses.
Coronavirus SME Guarantee Scheme
The Coronavirus SME Guarantee Scheme will be established to guarantee 50% of new loans issued by eligible lenders to small and medium enterprises (SMEs). It will guarantee up to $20b to support $40b in SME loans.
Temporary relief for financially distressed businesses
The government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time that companies have to respond to any statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.
Sources: Prime Minister and Treasurer’s joint media release and Treasury website, 22 March 2020.
The post Second phase economic stimulus package for COVID-19 appeared first on Wolters Kluwer | Central.

The Office of the
Commissioner for Body Corporate and Community Management has issued some guidance on how a body corporate can
manage the fallout from the coronavirus.
An extract from the guidance is as follows:
“Committee
meetings

It may be prudent for
committees to avoid face-to-face meetings unless they are essential, and
to practice appropriate hygiene and social distancing when meetings are
held.There is no legislative
reason why meetings cannot be held remotely; for example, by telephone,
video conference, skype and similar technologies.The need for a quorum at
meetings does not mean that committee members need to be present in the
same room.A committee can also decide
to vote outside committee meetings.
General
meetings
Bodies corporate,
particularly in larger schemes, can consider deferring calling general
meetings unless there is urgent or essential business to consider.Bodies corporate are able to
seek approval from an adjudicator for annual general meetings to be held
outside the legislative timeframe, and this may be an option to consider.
Please read Practice
Direction 19 for
further information.Where meetings are held, it
may be appropriate to encourage owners to only submit voting papers (or
vote electronically in those bodies corporate that have approved
electronic voting) rather than attending the meeting personally.While the legislation
requires a minimum number of persons to be ‘present personally’ at a
general meeting to form a quorum, this will generally only be one or two
persons (depending on the size of the scheme).All other voters could
submit written votes and potentially also participate in the meeting
remotely (for example, by telephone, video conference, skype or similar
technologies) if the body corporate is able to facilitate such
participation.Provided that bodies
corporate make reasonable endeavours to comply with the legislative
requirements for holding general meetings, instances of non-compliance
that do not affect the voting outcomes will be unlikely to affect the
validity of meetings.The statutory capacity to
approve expenditure above the committee spending limit with the written
consent of all owners, may reduce the need to call a general meeting in
some cases, particularly in smaller schemes.In schemes registered under
the Small Schemes and Commercial Modules there is also a capacity to
approve any general meeting motion with a vote outside a meeting.
Maintenance
of common property
A body corporate must
maintain common property in good condition. The body corporate may need
to consider the need for additional cleaning of common areas and
facilities if necessary.”
The post Coronavirus guidance from the Office of the Commissioner for Body Corporate and Community Management appeared first on Wolters Kluwer | Central.

By Bradley Stringer (Partner) [WJ1] and
Layal El-Khatib (Lawyer) at Moray & Agnew[WJ2] .
This article was originally published on the Moray &
Agnew website and has been reproduced in full with permission.
What are the workers compensation implications in respect of
Coronavirus disease (COVID-19)?
We identify the following relevant considerations:
Liability under the Workers Compensation Act
1987 (NSW) (the ‘1987 Act’), including compensation payable for deathLiability at common law (work injury damages).
Can COVID-19 be an Injury?
Coronaviruses are a large class of viruses that cause
illnesses ranging from the ‘common cold’ to more severe diseases such as
Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome
(MERS). COVID-19 is a new strain of that class of viruses which was identified
in 2019 when a higher than normal number of people in Wuhan, China, presented
with symptoms of pneumonia after having an illness similar to the flu. Testing
revealed this new strain of Coronavirus.
To be eligible for benefits under the workers compensation
legislation it is necessary for a worker to demonstrate that he or she suffered
an injury in accordance with s4 of the 1987 Act. Whether such an injury
is a personal injury or a disease is largely irrelevant but the terms are not
mutually exclusive in any event.
The contraction of an infectious disease due to a virus
entering a worker’s body in the course of his or her employment has been held
to constitute an injury within the meaning of the 1987 Act (Favelle
Mort Ltd v Murray (1976) 133 CLR 580).
The important conclusion is that it is undoubtedly the case
that COVID-19, if contracted in the course of a worker’s employment, can
constitute an injury within the meaning of s4 of the 1987 Act.
Substantial / main contributing factor
Compensation for an injury can only be received if
the employment concerned was a substantial contributing factor to the injury
in accordance with s9A of the 1987 Act.
Historically, contraction of a viral illness has been a ‘personal
injury’ but if COVID-19 is found to be a ‘disease’ within the
meaning of s4(b), the employment concerned must be the main contributing factor
to the contraction of the disease pursuant to s4(b) of the 1987 Act. In the
recent Workers Compensation Commission (WCC) presidential decision of AV v
AW [2020] NSWWCCPD 9 Deputy President Snell stated that the ‘test of
“main contributing factor” involves consideration of whether there were
competing causal factors (both work and non-work related) of the aggravation,
and whether on a consideration of relevant causal factors the employment
represented the main contributing factor’.
DP Snell then noted this was a test of causation, which
required ‘consideration of the evidence overall, it is not purely a medical
question. It involves an evaluative process, considering the causal factors to
the aggravation, both work and non-work related’.
For the purpose of s9A, the question is whether the
connection between the injury and the employment concerned was ‘real and of
substance’ (Badawi v Nexon Asia Pacific Pty Ltd [2009] NSWCA 324)
bearing in mind that it is not necessary for a worker to prove the employment
was the sole contributing factor (Hallet v Cmr of Police (2004) 1 DDCR
580).
Section 9A(2) provides a range of matters which may be (but
not exclusively) considered by the WCC to determine the question, such as ‘the
time and place of the injury’, ‘the nature of the work performed and the
particular tasks of that work’ and ‘the probability that the injury or a
similar injury would have happened anyway, at about the same time or at the
same stage of the worker’s life, if he or she had not been at work or had not
worked in that employment’.
If a worker comes into contact with COVID-19 (through an
infected person or any other means) in the performance of his or her duties and
contracts the disease as a result, the worker’s employment will most certainly
be found to be a main and/or substantial contributing factor to the injury.    
Proving the disease was contracted at work
Probably the most important consideration when determining
liability for a condition such as COVID-19 (which can be transmitted in many
ways through the population generally) is whether the alleged injury was
contracted arising out of or in the course of the worker’s employment.
The issue of causation is determined based on the facts in
each case and in a manner which has been described as ‘a common sense
evaluation of the causal chain’ (Kooragang Cement Limited v Bates
(1994) 35 NSWLR 452).
For a tribunal of fact to be satisfied, on the balance of
probabilities, of the existence of a fact, ‘it must feel an actual
persuasion of the existence of that fact’ (Nguyen v Cosmopolitan Homes
[2008] NSWCA 246).
Where the medical and factual evidence confirms that a
worker was involved in duties requiring clear exposure to an infected person
and subsequently contracts COVID-19, the ‘common sense’ conclusion would
be that the worker probably contracted the disease in the course of
his/her employment.
Without such a clear causal chain, it will be more difficult
to establish that the disease was contracted at work. However, the WCC or a
Court may determine that the worker’s public duties lead to a greater risk of
exposure than normal, and so to a finding that the burden of proving the injury
is discharged.
Common law
The common law duty of care owed by an employer to a worker
requires that the employer takes reasonable care to ameliorate the foreseeable
risk of injury by providing a reasonably safe place and system of work.
Employers ought to keep themselves informed as to the
appropriate response to the disease and monitor whether the systems of work
remain safe as the impact of COVID-19 alters. This may require an employer to
take expert advice as to the appropriate response in the specific circumstances
of their worksite to discharge the duty of care owed to employees.
Depending upon the circumstances and expert advice, workers
should be provided with adequate warning, instructions and training in the
manner in which to minimise the risk of harm and, in need and where possible,
relevant safety attire and equipment.
Conclusion
COVID-19 represents a potentially significant and difficult
operational challenge for employers.
It is imperative that workers receive training and advice on
minimising the risk of contracting the disease in order to reduce the risk of
harm.
Employers should stay abreast of any directives issued by
the state and federal governments, including recommendations regarding local
and international travel and implement policies and procedures in line with
these directives. If those directives do not address the specific circumstances
of an employer’s workplace, it may be necessary for that employer to obtain and
implement expert advice as to how to provide a safe system of work.

 [WJ1]Hyperlink
https://insurance.moray.com.au/person/bradley-stringer/
 [WJ2]Hyperlink
https://www.moray.com.au/
The post Workers compensation considerations for coronavirus appeared first on Wolters Kluwer | Central.

The state and territory governments have announced support packages for businesses including immediate payroll tax relief measures. The measures for payroll tax and certain loans and grants are summarised below.
Western Australia
Relief or benefit Who is eligible? How to access? More info One-off grant of $17,500 Business or payroll group with annual taxable wages between $1m and $4m Automatic payment from July 2020 https://www.wa.gov.au/government/multi-step-guides/payroll-tax-employer-guide/covid-19-relief-payroll-tax-employer-guide Defer payment of 2019/20 tax liability until 21 July 2020 Business or payroll group with annual taxable wages less than $7.5m or are directly/indirectly affected by COVID-19 Lodge application with Commissioner
https://www.wa.gov.au/government/publications/application-defer-payroll-tax-covid-19
Payroll tax threshold increased from 1 July 2020 Business or payroll group with annual taxable wages up to $1m will not be liable to payroll tax Eligible employers can cancel registration but wait until annual reconciliation function is available in August 2020 to reflect adjustment to liability https://www.wa.gov.au/government/multi-step-guides/payroll-tax-employer-guide/covid-19-relief-payroll-tax-employer-guide
Queensland
Relief or benefit Who is eligible? How to access?
More info
6-month payroll tax deferral from 1 Feb 2020 Businesses with payroll of up to $6.5m Register via OSR website    
https://www.business.qld.gov.au/running-business/employing/payroll-tax/lodging/coronavirus-tax-relief
6 month payroll tax deferral (presumably also from 1 Feb 2020) All businesses Register via OSR website  
https://www.business.qld.gov.au/running-business/employing/payroll-tax/lodging/coronavirus-tax-relief
Low interest loans of up to $250,000 (interest free for 12 months) Impacted Queensland businesses Register expression of interest with Qld Rural and Industry Development Authority by emailing [email protected]  
http://www.qrida.qld.gov.au/current-programs/covid-19-business-support/queensland-covid19-jobs-support-scheme

New South Wales
Relief or benefit Who is eligible? How to access? More info Payroll tax waiver Business or payroll groups with payrolls of up to $10m Annual tax liability will be reduced by 25% when lodging annual reconciliation by 28 July 2020 Monthly payers need not pay for March, April and May 2020
https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax
Payroll tax threshold increased from 1 July 2020 Business or payroll group with annual taxable wages up to $1m Eligible businesses will not be subject to payroll tax in 2020/21
https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax

Tasmania
Relief or benefit Who is eligible? How to access? More info Payroll tax waiver for March, April, May and June 2020 Employers in hospitality, tourism and seafood industry businesses Employers will not be required to lodge payroll tax returns for March, April and May 2020 Annual Adjustment Returns still due by 21 July 2020
https://www.sro.tas.gov.au/Documents/Coronavirus%20payroll%20tax%20measures%20factsheet.pdf
Payroll tax waiver for March, April and May 2020 Other affected small and medium businesses with annual payroll of up to $5m (need to demonstrate business affected by Coronavirus) Employers will not be required to lodge payroll tax returns for March, April and May 2020 Annual Adjustment Returns still due by 21 July 2020 Details of application process will soon be available at https://www.sro.tas.gov.au/  
https://www.sro.tas.gov.au/Documents/Coronavirus%20payroll%20tax%20measures%20factsheet.pdf
1 year payroll tax rebate for employing youth from 1 April 2020 Employers that pay payroll tax and employ youth employees aged 24 years and under Details of application process will soon be available at https://www.sro.tas.gov.au/  
https://www.sro.tas.gov.au/Documents/Coronavirus%20payroll%20tax%20measures%20factsheet.pdf
One-of $5,000 grants to hire apprentice or trainee Business that hire an apprentice or trainee No further details currently available
 

ACT

Relief or benefit

Who is eligible?

How to access?

More info
6-month payroll tax waiver     Employers in hospitality, creative arts and entertainment industries   Monthly payers: First credit from April payroll tax liability usually due 7 May   Annual payers: credit will be applied when assessment received at end of 2019/20   Online application form will be available soon at www.revenue.act.gov.au
https://apps.treasury.act.gov.au/budget/covid-19-economic-survival-package/local-business-and-industry
Deferral of 2020/21 payroll tax interest free up to 1 July 2022 All businesses with group Australia-wide wages up to a payroll threshold of $10m Online application form will be available soon at www.revenue.act.gov.au
https://apps.treasury.act.gov.au/budget/covid-19-economic-survival-package/local-business-and-industry

Article correct as of 20 March, 2020. Government announcements and legislative changes that occur after this date will not be included in this article.
The post Payroll tax relief and other business cashflow support to counter coronavirus impact appeared first on Wolters Kluwer | Central.

By Jacky Campbell, Partner
at Forte Family Lawyers
Courts:– It is possible that the COVID-19 pandemic will at some stage cause the Family Law Courts to close for a while and at short notice. Presumably, they will give priority to more urgent matters, not hearings that can wait. Telephone hearings will become more frequent. Clients should, where appropriate, try to settle their cases through negotiation, family dispute resolution, mediation or arbitration and not rely on the already under-resourced courts being able to hear their cases promptly. Alternative dispute resolution is always sensible, but even more so now. Parenting time:- Parenting orders were made without pandemics in mind. They may not fit the changed circumstances. For example, if sporting activities are cancelled is there an alternative activity where the child can see the parent? Interstate travel may be impacted at some stage – how can communication between a parent and a child living in different States or Territories be maintained?Changeovers:- Many changeovers take place at locations which may close, such as schools and take-away outlets. Think about alternative venues now. If the separation was some time ago and tensions have reduced, it may be time to re-think whether changeovers can occur at parents’ homes. Family violence:- As couples may spend more time together and be more anxious, family violence may increase.  Lawyers should be alert to this and encourage appropriate referrals for police, therapeutic and other assistance.  Alternate caregivers:- If child care facilities and schools close, parents (or other younger family members) may be a better option than grandparents who may be more at risk of serious illness due to their ages. If one parent is working from home maybe they can increase their time with the children? What if one or both parents are sick and unable to care for the children for an extended period? Discuss back-up plans now.Breaching parenting orders:- A party may be held in contravention of a court order if they do not have a reasonable excuse for breaching the order. Predicting what a court will consider to be a reasonable excuse is difficult, but a complaint that one parent does not have the same standards of hygiene as the other parent is unlikely to be a reasonable excuse. What if one parent has contracted the coronavirus but has few symptoms or has been in close contact with someone who has it? Parents should try to work out how they will deal with these situations in advance. Different families will have different views and different solutions.  If a parent proposes to breach a parenting order by not handing over a child because of the risk of infection in the other household, specific medical and other evidence about the risk to the child will be required to defend any contravention application.Intervention orders:- These are unaffected by the coronavirus. If the terms of the order don’t allow parties to re-negotiate between themselves changes to parenting arrangements such as the location of changeovers, the parties should seek legal advice.Child support and spousal maintenance:-There may be grounds to seek an increase or decrease if a parent has no work, is made redundant or has a reduced income.  DHHS – Child Support may be able to assist or legal advice may need to be sought, particularly if there is a binding child support agreement.Property settlements:- Court orders and financial agreements which set out the terms of a property settlement but have not yet been implemented may seem unworkable or unfair due to changes in personal circumstances and/or the economy. It may be worthwhile obtaining legal advice as to whether the order or agreement can be reviewed, but the test for impracticability is a high one. It is not enough that it has become unjust or difficult for the order or agreement to be carried out. Superannuation splits:- These are often expressed in dollar terms. Given the volatility in the share markets, percentage splits might be preferred in the next few months. Also, if allowed by the fund, matching the operative date gives greater protection to clients. Splitting orders and agreements should be served upon the trustees of superannuation funds promptly. Business valuations:- Consider putting these on hold. Many businesses will be adversely affected by reduced demand, staff absences and the like. A valuation that takes into account the 2018/2019 financial year but not the 2019/2020 financial year may wildly over-state value.Overseas travel:- It is a parent’s decision as to whether that parent can travel overseas – subject to being allowed to do so by the relevant governments. However, if that parent wants to take the children overseas, don’t expect the court to prioritise time for hearing that dispute or that the application will be successful. The parent should also be aware that if they are not permanent residents or Australian citizens, then they may not be allowed back into Australia at all. As of midnight on 15 March 2020, if they are allowed back into Australia they will be required to self-isolate for 14 days which means not seeing the children for that time. There may be fines or other penalties for not self-isolating. Court orders already made which permit overseas travel by children may not be practical or enforceable.Changing parenting arrangements:- Any agreed changes to parenting agreements should be documented informally by exchange of SMS messages, emails, in a parenting app or letters between lawyers. In some situations the orders should be formally changed.  It is probable that even if the courts are closed, consent orders will be able to be processed by registrars working remotely.  Legal advice should be sought about the best way to document any changes.Problems of electronic communication:- Communication between parties or between lawyers and their clients that is solely by email or text message can result in misunderstandings.  If face to face meetings cannot take place, encourage calls by videolink, such as Skype and Facetime.Anxiety:- In times of uncertainty about personal health, employment, family well-being and the purchase of essentials such as food, medication and toilet paper, clients are likely to be more anxious than usual, leading to more parenting disputes. Encourage your clients to try to see the other party’s perspective, recognise the pressures the other party is under and access therapeutic help individually or as a couple.
The post Family law – 15 tips for advising family law clients in a coronavirus pandemic appeared first on Wolters Kluwer | Central.

A recent decision by the Full Federal Court in Clifton (liq) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 (Clifton), provides guidance on the discovery obligations placed on liquidators when pursuing unfair preference claims, and the relationship between payment plans and a company’s debt to the ATO.
What is an unfair preference claim?
An unfair preference is a payment or transfer of assets which provide a creditor, or creditors, with an advantage over other creditors. Liquidators appointed to the administration of assets can recover such unfair preferences in order to distribute the assets or funds equally amongst the creditors.
An unfair preference can only occur within the context of an insolvent transaction involving an unsecured debt.
What is a payment plan?
A payment arrangement with the ATO is administered under s 255-15 of the Taxation Administration Act 1953 (Cth). It allows a company to pay certain agreed tax debts by instalments over a period of time. These debts may include GST, PAYG or FBT liabilities. However, despite the payment arrangement, the tax debt remains “due and payable”. Unlike a commercial agreement, it is not open to the company, in assessing its solvency, to treat the tax debt as being deferred.
The case
In Clifton, the liquidators of the company, Solar Shop Australia Pty Limited (Solar), commenced unfair preference claims against Kerry J Investment Pty Ltd trading as Clenergy, Wuxi Suntech Power Co Limited and SMA Solar Technology AG (collectively the respondents).
Preliminary trial
A preliminary trial held that Solar became insolvent by 31 July 2011. The liquidators appealed this finding, claiming that Solar was insolvent earlier, by 31 January 2011 or in the alternatives, by 30 April 2011 or 22 May 2011. The Full Court of the Federal Court queried the trial judge’s assessment of Solar’s insolvency on 31 July 2011, in relation to other debts, given the inadequacy of the discovery of documents relevant to the litigation.
The question of discovery
The respondents’ argued on appeal that the liquidators’ failed to discover approximately 1,000 documents at first instance. In countering this claim, the liquidators’ argued that:
The discovery documents were unorganised, deteriorated and difficult to locate.The liquidators were unable to access Solar’s full email record which was stored in a cloud-based server and, further, had no reason to believe that those emails contained any information pertinent to the issue of insolvency.The discovery failure was minor and did not affect the relief sought by the respondents.
The Full Court of the Federal Court rejected these arguments. The liquidators failed to show that they undertook a “reasonable” search of the documents within their control and of which they were aware. As a result, the liquidators’ appeal was dismissed.
The payment plan and ATO debt
Between 14 January 2011 and 30 June 2011, Solar entered into several payment plans with the Australian Taxation Office (ATO). The respondents argued on appeal that these payment plans meant that Solar’s debt to the ATO was not due and payable and hence was not relevant to any finding of insolvency.
Solar had GST, PAYG and FBT liabilities to the ATO. Solar’s inability to pay these liabilities in full meant that the company received several legal “warnings”. As a result, the ATO entered into a payment agreement with Solar whereby the company could pay their liabilities in instalments. The liquidators were successful in establishing that these payment arrangements were made under s 255-15 of the Taxation Administration Act 1953 (Cth), but that such arrangements did not vary the time at which Solar’s liabilities to the ATO were due and payable.
In reaching this conclusion, the Full Federal Court concluded that although both s 255-10 and 255-20 of the Taxation Administration Act 1953 (Cth) expressly grant the Commissioner of Taxation the discretion to defer the date on which payment becomes due, there was no reason to suggest that the instalment arrangement put in place under s 255-15 be interpreted as a deferral. The law of deferred payments is clear and is supported by the authorities in Hall v Poolman [2007] NSWSC 1330 and Smith v Bone [2015] FCA 319.
The payment arrangements did also not constitute any waiver by the Commissioner of Taxation of Solar’s obligation to pay their tax debts.
Key takeaways
The Clifton decision provides guidance to legal practitioners, liquidators and administrators in practice. Specifically:
1. Discovery obligations and unfair preference claims — Substantial failure by a liquidator to comply with his or her discovery obligations may result in dismissal of an otherwise valid unfair preference claim. Liquidators have an obligation to make “reasonable” efforts to locate all pertinent documents related to the liquidation process.
2. Payment arrangements with the ATO — A company’s debt to the Australian Commissioner of Taxation remains due and payable despite the existence of a payment agreement under s 225-15 of the Taxation Administration Act 1953 (Cth).
Sources and further reading
A warning and opportunity for liquidators pursuing unfair preference claims, Aathreya P & Romanin J, Johnson Winter & Slattery, March 2020.
A deferred tax debt can remain due and payable, Murray M, Murray’s Legal, 8 February 2020.
You can access the full judgment for Clifton (liq) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 here.
You can read more about the nature of unfair preference claims in our Bankruptcy & Insolvency commentary.
You can read more about the deferral of payments in our Income Taxation commentary.
The post Bankruptcy & Insolvency – Unfair preference claims, discovery and payment plans appeared first on Wolters Kluwer | Central.

By June Ahern, Bankruptcy & Insolvency law content specialist at Wolters Kluwer (CCH)
A recent decision by the Full Federal Court in Clifton (liq) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 (Clifton), provides guidance on the discovery obligations placed on liquidators when pursuing unfair preference claims, and the relationship between payment plans and a company’s debt to the ATO.
What is an unfair preference claim?
An unfair preference is a payment or transfer of assets which provide a creditor, or creditors, with an advantage over other creditors. Liquidators appointed to the administration of assets can recover such unfair preferences in order to distribute the assets or funds equally amongst the creditors.
An unfair preference can only occur within the context of an insolvent transaction involving an unsecured debt.
What is a payment plan?
A payment arrangement with the ATO is administered under s 255-15 of the Taxation Administration Act 1953 (Cth). It allows a company to pay certain agreed tax debts by instalments over a period of time. These debts may include GST, PAYG or FBT liabilities. However, despite the payment arrangement, the tax debt remains “due and payable”. Unlike a commercial agreement, it is not open to the company, in assessing its solvency, to treat the tax debt as being deferred.
The case
In Clifton, the liquidators of the company, Solar Shop Australia Pty Limited (Solar), commenced unfair preference claims against Kerry J Investment Pty Ltd trading as Clenergy, Wuxi Suntech Power Co Limited and SMA Solar Technology AG (collectively the respondents).
Preliminary trial
A preliminary trial held that Solar became insolvent by 31 July 2011. The liquidators appealed this finding, claiming that Solar was insolvent earlier, by 31 January 2011 or in the alternatives, by 30 April 2011 or 22 May 2011. The Full Court of the Federal Court queried the trial judge’s assessment of Solar’s insolvency on 31 July 2011, in relation to other debts, given the inadequacy of the discovery of documents relevant to the litigation.
The question of discovery
The respondents’ argued on appeal that the liquidators’ failed to discover approximately 1,000 documents at first instance. In countering this claim, the liquidators’ argued that:

• The discovery documents were unorganised, deteriorated and difficult to locate.
• The liquidators were unable to access Solar’s full email record which was stored in a cloud-based server and, further, had no reason to believe that those emails contained any information pertinent to the issue of insolvency.
• The discovery failure was minor and did not affect the relief sought by the respondents.

The Full Court of the Federal Court rejected these arguments. There was no evidence of any attempt by the liquidators to access the cloud-based server or to ascertain the nature of the documents stored there and their relevance to the liquidation proceedings. Hence, the liquidators failed to show that they undertook a “reasonable” search of the documents within their control and of which they were aware. They also failed to inform the Court of their intention not to search the cloud-based server.
This breach of the liquidators’ discovery obligations became evident during the appeal process whilst the liquidators were seeking to set aside the orders at first instance as to the date of Solar’s insolvency. As a result, the liquidators’ appeal was dismissed. The Court felt it would be unfair for the respondents to re-litigate the issues, in light of the liquidators’ failure to engage in proper discovery.
The payment plan and ATO debt
Between 14 January 2011 and 30 June 2011, Solar entered into several payment plans with the Australian Taxation Office (ATO). The respondents argued on appeal that these payment plans meant that Solar’s debt to the ATO was not due and payable and hence was not relevant to any finding of insolvency.
Solar had GST, PAYG and FBT liabilities to the ATO. Solar’s inability to pay these liabilities in full meant that the company received several legal “warnings”. As a result, the ATO entered into a payment agreement with Solar whereby the company could pay their liabilities in instalments. The liquidators were successful in establishing that these payment arrangements were made under s 255-15 of the Taxation Administration Act 1953 (Cth), but that such arrangements did not vary the time at which Solar’s liabilities to the ATO were due and payable.
In reaching this conclusion, the Full Federal Court concluded that although both s 255-10 and 255-20 of the Taxation Administration Act 1953 (Cth) expressly grant the Commissioner of Taxation the discretion to defer the date on which payment becomes due, there was no reason to suggest that the instalment arrangement put in place under s 255-15 be interpreted as a deferral. The law of deferred payments is clear and is supported by the authorities in Hall v Poolman [2007] NSWSC 1330 and Smith v Bone [2015] FCA 319. The Court was also reluctant to infer the existence of a deferral in the absence of any clearly written communication, as required under s 255-10 of the Taxation Administration Act 1953 (Cth).
The payment arrangements did also not constitute any waiver by the Commissioner of Taxation of Solar’s obligation to pay their tax debts.
Key takeaways
The Clifton decision provides guidance to legal practitioners, liquidators and administrators in practice. Specifically:

1. Discovery obligations and unfair preference claims — Substantial failure by a liquidator to comply with his or her discovery obligations may result in dismissal of an otherwise valid unfair preference claim. Liquidators have an obligation to make “reasonable” efforts to locate all pertinent documents related to the liquidation process.
2. Payment arrangements with the ATO — A company’s debt to the Australian Commissioner of Taxation remains due and payable despite the existence of a payment agreement under s 225-15 of the Taxation Administration Act 1953 (Cth).

Sources and further reading
A warning and opportunity for liquidators pursuing unfair preference claims, Aathreya P & Romanin J, Johnson Winter & Slattery, March 2020.
A deferred tax debt can remain due and payable, Murray M, Murray’s Legal, 8 February 2020.
You can access the full judgment for Clifton (liq) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 here.
You can read more about the nature of unfair preference claims in our Bankruptcy & Insolvency commentary.
You can read more about the deferral of payments in our Income Taxation commentary.
The post Bankruptcy & Insolvency – Unfair preference claims, discovery and payment plans. appeared first on Wolters Kluwer | Central.