The Law Society of NSW Specialist Accredititation 

BLOGS

Any information contained in a blog on this website is general in nature only. The content of any blog posted below reflects information which is known to us as at the date of the posting of the blog. Please be aware that the law regularly changes. Please do not rely on the general information contained in the below blogs, instead we recommend that you contact us to obtain legal advice tailored to your own specific situation.

 

Aug07

Australian Financial Complaints Authority

Amanda Quin - Monday, August 07, 2017

The Financial Ombudsman Service, the Credit & Investments Ombudsman and the Superannuation Complaints Tribunal are to be merged into a single entity called the Australian Financial Complaints Authority (AFCA).

AFCA will be overseen by ASIC.

It is proposed that this new complaints authority will commence on 1 July 2018.

Aug07

Changes to Retail Leases Act

Amanda Quin - Monday, August 07, 2017

 

On 1 July 2017 a number of changes to the Retail Leases Act (NSW) (“the Act”)commenced including:

Removal of 5 year term

Section 16 of the Act was removed. As a result there is no longer a minimum term for a Retail Lease and no requirement for a solicitor’s certificate to be executed for short term leases.

Lease registration

  • The Landlord must supply the Tenant with a copy of the fully signed lease within three (3) months of the tenant returning the signed lease to the Landlord.
  • In addition, where the term of a lease is three years or more then the lease must be registered within 3 months of the Tenant returning the signed lease to the Landlord. This period may however be extended where any mortgagee delays in consenting to the lease.
  • The Landlord cannot require the Tenant to pay any mortgagee consent fees.
  • The maximum fine that may be imposed is 50 penalty units (which is currently $5,500).

Disclosure Statements

  • If the estimated amount of an outgoing is not disclosed in a Lessor’s disclosure statement, then the Tenant does not need to pay the outgoing.
  • Where the estimate for any outgoings is less than the cost of the actual outgoing – then unless there was a reasonable basis for the estimate, then tenant does not need to pay more than what was estimated.
  • If a Landlord fails to provide a Tenant with a disclosure statement (which is to be supplied at least 7 days before the lease is entered into) or has served a defective disclosure statement (ie an incomplete or misleading disclosure statement), then the Tenant may terminate the lease during its first 6 months.
  • If the Tenant does exercise its right to terminate the lease then the Tenant will be entitled to claim compensation for costs such as their expenditure on fitout. (Although the Tenant cannot terminate the lease under this section in relation to a defective disclosure statement if the Landlord had acted honestly and reasonably when issuing the disclosure statement and if the Tenant is in substantially as a good a position as they otherwise would have been if the disclosure statement had been correct).
  • Lessor disclosure statements are now required for Agreements for Lease.

Bonds and Bank Guarantees

Bank Guarantees must be returned to the Tenant within two months after the Tenant has performed all of its obligations under the lease.

Whilst it has not yet started, there is now provision for the Retail Tenancy Unit to move to an on-line bond lodgment system.

Assignment Process

When a Tenant is seeking consent to assign its lease to an assignee, then the Tenant may ask the Landlord for an updated lessor’s disclosure statement.

If the Landlord fails to provide the Tenant with an updated lessor’s disclosure statement within 14 days of it being requested to do so, then the Tenant may prepare its own updated lessor’s disclosure statement for service on the assignee.

If the Tenant then serves an assignor’s disclosure statement and the updated lessor’s disclosure statement on the assignee and the Landlord AND if the Landlord consents to an assignment of the lease (or is deemed to have consented, where the Landlord fails to respond within 28 days) then the Tenant and its guarantors will be released from liability under the lease from the assignment date.

NCAT jurisdictional limit increase

NCAT can now hear retail lease dispute matters up to $750,000.


 

Aug07

What is stamp duty?

Transfer of land duty (formerly known as stamp duty) is a duty payable on the sale or transfer of land, including improvements in NSW.

Put simply, stamp duty is a tax imposed on the purchaser of land in NSW. The tax is payable to the Revenue NSW (formerly known as the NSW Office of State Revenue).

How is stamp duty calculated? 

Stamp duty is calculated on an ad valorem basis – meaning the amount of stamp duty payable is proportional to the value of the land.

Revenue NSW has a calculator to assist you with your calculations and you may access this on the Revenue NSW website at:

https://www.apps08.osr.nsw.gov.au/erevenue/calculators/landsalesimple.php 

When am I required to pay stamp duty?

You are required to pay stamp duty prior to land being transferred (acquired by you). However there are some exemptions for First Home Buyers.

Who is a First Home Buyer:

Eligibility criteria:

An eligible purchaser is a purchaser who has not, and whose spouse has not:

  • At any time owned (either solely or with someone else) residential property in Australia other than property owned solely as a trustee or executor;
  • Previously received an exemption or concession under the First Home Buyers Assistance Scheme
  • Furthermore an eligible purchaser must:

  • Be over the age of 18 years;
  • Must be an Australian citizen or permanent resident;
  • Must be a natural person - not be a company or trust;
  • Must purchase the whole of the property; and
  • Acquire an interest of at least 50% of the property.
  • First Home Buyers:

    The NSW State Government established the First Home Buyers Assistance Scheme on 1 July 2017 to assist First Home Buyers with acquiring land in NSW by providing them with an exemption from stamp duty in certain circumstances:

  • First Home Buyers Assistance Scheme:
  • Provides an exemption on stamp duty on new and existing homes valued up to $650,000.00;
  • Provides a concession on stamp duty on new and existing homes valued between $650,000.00 - $800,000.00;
  • Provides an exemption on stamp duty on vacant land valued up to $350,000.00;
  • Provides a concession on stamp duty on vacant land valued between $350,000.00 - $450,000.00;
  • Allows purchasers to receive an exemption or concession (as per the above values) if they are purchasing the property with someone that is not a first home buyer and they are purchasing at least 50% of the property. ( Note: this does not apply to spouses). These are called Shared Equity Arrangements and would apply if the first home buyer was purchasing with a relative (other than a spouse) or friend for example. Duty is calculated with reference to the proportion of the property purchased by other parties.
  • First Home Owner Grant (New Homes) Scheme:
  • The First Home Owner Grant (New Homes) Scheme was established to assist eligible first home owners to purchase a new home or build their home by offering a grant.
  • The grant amount is determined based on the date of the eligible transaction:
  • For eligible transactions made on or after 1 January 2016, the grant amount is $10,000.00;
  • For eligible transactions made on or after 1 October 2012 and 31 December 2015, the grant amount is $15,000.00
  • What is a new home?
  • A home that has not been previously occupied or sold as a place of residence.

    Residence Requirement:

    Both the First Home Buyers Assistance Scheme and the First Home Owner Grant (New Homes) Scheme require the home purchased or built to be occupied by at least one of the eligible purchasers as his/her principal place of residence for a continuous period of at least 6 months with that occupation commencing within 12 months after settlement.

    Should you have any queries regarding the abovementioned Schemes, please do not hesitate to contact our office or review some further information on the Revenue NSW website:

    http://www.revenue.nsw.gov.au/grants

    May02

    Security Interests

    Amanda Quin - Tuesday, May 02, 2017

    SELLING AGRICULTURAL GOODS AND REGISTERING A PERSONAL PROPERTY SECURITY INTEREST

    It is not unusual for a farmer/grazier to sell grain or wool or other products on terms that payment shall occur at a later date.

    A risk which arises in this scenario is the possibility of the buyer becoming bankrupt or entering into liquidation prior to paying the farmer for the grain or wool.

    In such cases, the farmer could potentially not be paid at all for the farmer’s produce.

    Where a person or entity becomes bankrupt or is liquidated, then secured persons, such as a bank with a registered mortgage will always be entitled to receive payment from a liquidator prior to unsecured creditors.

    It is possible however for a farmer who has sold agricultural products on terms for payment in the future, to become a secured creditor and this can be done by utilising the Personal Property Security Interests Act 2009 (“the PPSA”).

    WHAT DO YOU NEED TO EFFECTIVELY REGISTER A SECURITY INTEREST

    Firstly, for a security interest to be registered and to be effective, then you need to ensure that:

    (a) You have the right to register a security interest; and

    (b) You need to know sufficient information about the buyer of your produce to be able to register a security interest; and

    (c) The security interests needs to be “attached” to the collateral; and

    (d)The security interest needs to be perfected.

    The simplest way to ensure that you have the right to register a security interest is to have a written agreement with the buyer of your produce that grants you the right to retain title in your produce until you receive payment for it AND a right to register a security interest on the Personal Property Securities Register. If required we can assist with preparing such an Agreement.

    The information that you need to know about the buyer includes:

    • The full and correct legal name of the buyer of your produce (ie whether they are a company, trust, partnership or an individual);
    • The buyer’s ABN (where they have one); and
    • The date of birth of the buyer (but only where the buyer is an individual or a partnership of individuals).

    The security interest attaches to the grain or wool or other produce (“the collateral”) in a number of different ways, but the simplest way to meet the requirement for “attachment” is to ensure that the written security agreement is completed and signed prior to delivering your goods to the buyer.

    The easiest way to “perfect” an interest in the collateral and to therefore become a secured party, is to register your interest electronically on the Personal Property Securities Register at https://www.ppsr.gov.au/ and we can also assist you with that process, if required.

    Feb03

    Changes to Strata Laws

    Amanda Quin - Friday, February 03, 2017

    Strata legislative changes

    On 30 November 2016 the Schemes Management Act (2015), Strata Schemes Management Regulations (2016) and the Strata Schemes Development Act 2015 commenced.

    There are over 90 changes to the Strata Laws and not all of them are significant. For example, Executive Committees are now called Strata Committees. However, some of the main changes to Strata laws are:

    Collective Sale/demolition of strata property

    • There is a new process which could allow the whole building to be sold or demolished or replaced, if 75% of the owners agree to this occurring.
    • This new power does give greater flexibility to replenish an old crumbling building, but could mean that some owners may be forced to relocate regardless of whether they want to or not.
     

    By-laws

     

     

     

    • There are new standard by-laws for new schemes. As previously, the by-laws may be modified or amended.
    • All pre-existing schemes must review their by-laws by 30 November 2017, but the new by-laws will not apply to the pre-existing schemes unless the pre-existing schemes choose to use them and register them.
    • Changes to by-laws will not be effective until they are officially registered with the Registrar General.
    • An owners corporation may pass a by-law that limits the number of occupants of a unit (to stop overcrowding). However any such by-law must permit a minimum of 2 people for each bedroom in the unit.
     

    Renovations or other works by Owners

     

     

     

     

     

    • Under the previous strata laws, all works required approval from the Owners Corporation.
    • The new laws now divide works into cosmetic, minor and major.
    • If a change is cosmetic, a lot owner only needs to notify the committee and the committee does not need to approve the cosmetic change. Cosmetic works include: installing or replacing hooks, nails or screws for hanging paintings or other things on walls, installing or replacing handrails within the lot, painting, filling minor holes and cracks in internal walls.
    • If the works are minor, then approval may be granted by a vote of the committee ( which does not need to be at a general meeting. Minor works might include renovating a kitchen (but only if no structural work is required), installing or replacing wood or other hard floors, installing environmental measures (such as a clothesline or reverse cycle air conditioner). Whether these types of work are minor will depend on whether or not there is any structural work and whether any changes to the lot will be externally visible.
    • Major works, such as structural alterations, will require approval by a special resolution at a general meeting.
     

    Strata Managers

     

    • When a new scheme is created, the initial Strata managers can only be appointed for the first year – to allow the new owners to determine if they are happy with the manager.
     

    Abandoned Goods

     

     

    • There is a new process to follow that permits the Owners Corporations to sell or dispose of goods which have been abandoned on common property.
    • A disposal notice may be required to be placed on the goods (although this is not required for perishable food).
    • The owner of the goods is entitled to apply to NCAT for payment of the net proceeds from the sale of such abandoned goods, otherwise, the proceeds go to the administrative fund.
     

    Unpaid levies

     

    • The Owners Corporation may either enter into payment plan with a non-paying lot owner or the Owners corporation can take recovery action by applying to the Local Court.
     

    Fines

     

     

    • Higher upper limits on fines for breaches of general by-laws and new fines for overcrowding offences may be levied by NCAT.
    • The Owner’s corporation is to receive the money from such fines. The Owner’s corporation may enforce the fines in the Local Court.
    • Strata schemes are encouraged to arrange medication prior to taking proceedings at NCAT.
     

    Meetings

     

     

    • If registered tenants make up more than 50% of the occupants of a Scheme, they can nominate a tenant to be their representative on the strata committee. However, in practice, hardly any owners register their tenants with the scheme, so it is unlikely that this new law will be of any practical value.
    • New limits on the number of proxies that any one person may hold. If the scheme has 20 lots or less, then only one proxy vote may be held per person. For larger schemes, the maximum number of proxies that may be held by one person is 5% of the total number of lots in the scheme.

     

    Dec20

    Rental Bonds Online

    From 30 January 2017, it will be mandatory for landlords and real estate agents to invite residential tenants to lodge their residential rental bonds in NSW using Rental Bonds Online (RBO).

    When a new residential tenancy agreement is entered, then the landlord (or the landlord's real estate agent) must be registered with RBO and must invite the new tenant to provide their email address for the purpose of initiating the RBO bond lodgement process.

    A landlord or agent who fails to invite a new tenant to lodge their bond using RBO, prior to accepting a bond, will be in breach of the Residential Tenancies Act.

    Tenants who do not have internet access can continue to give their bond directly to the landlord or landlord's real estate agent. The landlord or agent is then required to lodge the bond with the Rental Bond Board using the current paper based method.

    More information is available athttp://www.fairtrading.nsw.gov.au/rentalbondsonline

     


    Dec12

    Surcharge Land Tax

    Amanda Quin - Monday, December 12, 2016

    SURCHARGE LAND TAX

    Surcharge Land Tax is payable by foreign persons in addition to any other land tax that may be payable on land held in NSW. The surcharge is 0.75% of the value of the land held by the foreign person.

    There is no principal place of residence exemption or tax free threshold for the foreign persons land tax surcharge.

    All other normal land tax exemptions do apply (ie the land tax surcharge is not paid on primary production land).

    As per traditional land tax, the surcharge is only payable on the proportion owned by the foreign person.

    Given the 200 day rule for permanent residents (see below paragraph titled WHO IS A FOREIGN PERSON), a person may be a foreign person one year, but not the next and so on.

    If you or any company or trust that you control is a foreign person, then you may need to register with the OSR NSW in relation to surcharge land tax.

    WHO IS A FOREIGN PERSON

    FOREIGN PERSONS ARE:

    • Any natural person who is not ordinarily resident in Australia or does not have a right to reside in Australia.
    • Any natural person with only a temporary right to reside in Australia (irrespective of how long that temporary right may be or how long they have lived here).
    • Any natural person holding a permanent visa, who has not been in Australia for at least 200 days during the 12 months prior to the relevant liability date. (NB there are special rules for off the plan though).
    • Any discretionary trust where any foreign person (including foreign companies or foreign trusts) are a potential beneficiary (irrespective of whether any distributions have ever been made to them).
    • Any company or unit trust in which a foreign person (whether natural or otherwise) and the associates of that foreign person (even where the associates are Australian citizens) has at least a 20% interest in the entity.(For example, if your spouse was a UK citizen and if he or she held 5% of the shares in a company and you held 18% of the shares in that company, then because you are an associate of your spouse, then that makes that company a foreign person. Likewise with units trusts).
    • Any company or unit trust in which multiple foreign persons (and the associates of those persons) hold at least a 40% interest.

    PEOPLE WHO ARE NOT FOREIGN PERSONS:

    • Australian Citizens, no matter whether they currently reside in Australia or not.
    • Any natural person holding a permanent visa, who has been in Australia for at least 200 days during the 12 months prior to the relevant liability date.
    • Any citizen of New Zealand who entered Australia legally and has resided in Australia for at least 200 days during the 12 months prior to the relevant liability date.
    • Any discretionary trust where none of the potential beneficiaries are foreign persons.

    HOW TO MEASURE INTERESTS IN A COMPANY OR UNIT TRUST

    A person holds an interest in an entity if that person, either alone or with one or more of their associates:

    • Controls that percentage of the voting power; or
    • Holds interests in that percentage of the issues securities in the entities (ie shares or units); or
    • Holds options which would give them that percentage of interest if the options were exercised.

    Associates are a person’s spouse, parents, lineal descendants (including adopted children), siblings, aunts, uncles, nephews, nieces and grandparents AND all those people for their spouse as well.

    Dec12

    SURCHARGE STAMP DUTY

    Amanda Quin - Monday, December 12, 2016

    SURCHARGE STAMP DUTY

    Surcharge Stamp Duty is payable on residential property in NSW (at a rate of 4% of the value of the property) – where residential property in NSW is transferred or sold to foreign persons (including foreign trusts and companies). The surcharge duty is payable by the foreign person or entity.

    Residential property includes vacant lots of land that are designated for residential purposes AND any land on which there are one or more dwellings (including buildings which are being constructed).

    It is payable on all transfers of property, not just on purchases – unless an exemption applies.

    There are some exemptions for break-up of marriages, corporate reconstructions, partitions, deceased estates etc.

    Normally when a person buys property "off the plan" in NSW, they are granted 12 months to pay stamp duty. However, where a foreign person buys property "off the plan", then the stamp duty must be paid within 3 month of exchange of contracts.

    Where a foreign person purchases land jointly with a non-foreign person, then the surcharge duty is only charged on the proportion of the value that relates to the interest which the foreign person bought.

    WHO IS A FOREIGN PERSON

    FOREIGN PERSONS ARE:

    • Any natural person who is not ordinarily resident in Australia or does not have a right to reside in Australia.
    • Any natural person with only a temporary right to reside in Australia (irrespective of how long that temporary right may be or how long they have lived here).
    • Any natural person holding a permanent visa, who has not been in Australia for at least 200 days during the 12 months prior to the relevant liability date. (NB there are special rules for off the plan though).
    • Any discretionary trust where any foreign person (including foreign companies or foreign trusts) are a potential beneficiary (irrespective of whether any distributions have ever been made to them).
    • Any company or unit trust in which a foreign person (whether natural or otherwise) and the associates of that foreign person (even where the associates are Australian citizens) has at least a 20% interest in the entity. (For example, if your spouse was a UK citizen and if he or she held 5% of the shares in a company and you held 18% of the shares in that company, then because you are an associate of your spouse, then that makes that company a foreign person. Likewise with units trusts).
    • Any company or unit trust in which multiple foreign persons (and the associates of those persons) hold at least a 40% interest.

    PEOPLE WHO ARE NOT FOREIGN PERSONS:

    • Australian Citizens, no matter whether they currently reside in Australia or not.
    • Any natural person holding a permanent visa, who has been in Australia for at least 200 days during the 12 months prior to the relevant liability date.
    • Any citizen of New Zealand who entered Australia legally and has resided in Australia for at least 200 days during the 12 months prior to the relevant liability date.
    • Any discretionary trust where none of the potential beneficiaries are foreign persons.

    HOW TO MEASURE INTERESTS IN A COMPANY OR UNIT TRUST

    A person holds an interest in an entity if that person, either alone or with one or more of their associates:

    • Controls that percentage of the voting power; or
    • Holds interests in that percentage of the issues securities in the entities (ie shares or units); or
    • Holds options which would give them that percentage of interest if the options were exercised.

    Associates are a person’s spouse, parents, lineal descendants (including adopted children), siblings, aunts, uncles, nephews, nieces and grandparents AND all those people for their spouse as well.

    POSSIBLE REFUND CIRCUMSTANCES

    If a person was a foreign person at the time of entering into the contract for sale, but is not a foreign person at the time of completion of the transfer/settlement, it may be possible to apply for a refund of the surcharge duty.

    This might occur where a Permanent Resident had only lived in Australia for less than 200 days at the time of signing an off-the-plan contract, but by the time it settled, they had met the 200 days requirement.


    Dec02

    Mandatory Energy Efficiency ratings for Commercial Office Space

    Amanda Quin - Friday, December 02, 2016

    As at 1 July 2017, the threshold for reporting energy efficiency ratings pursuant to the Building Energy Efficiency Disclosure Act 2010  will be reduced from 2,000 square metres to 1,000 square metres.

    Where the said legislation applies, then a Building Energy Efficiency Certificate (BEEC) needs to be obtained and registered. A BEEC incorporates both a National Australian Built Environment Rating System (NABERS) Energy star rating and a Tenancy Lighting Assessment (TLA) of the relevant area of the building.

    Where the BEEC requirements apply, then the BEEC must be registered prior to approaching the market regarding a proposed sale or lease and the Energy star rating must be included in any advertising for the sale or lease or sublease. Therefore if you do need a BEEC for a building, then you need to obtain the BEEC and register it before you advertise the office space for sale or for lease.

    This legislation does not apply if:

    • The proposed lease is for less than 12 months;
    • The building is a strata titled building;
    • The occupancy certificate for the building is less than 2 years old; or
    • The building is a mixed use building and the office space is less than 75% of the building’s net lettable area.

     

    In addition the disclosure requirements only apply where either:

    (a) the office space is owned by a corporation/company; or

    (b) where the tenant is a corporation/company (and in this case, only where the tenant or purchaser asks for a BEEC).

    That is, this law does not apply to office space that is owned by natural persons and leased or sold to natural persons.

    You can also apply for an additional exemption, if you are approached by someone who is seeking to buy or lease the building (as opposed to you as the owner advertising it for sale or for lease).


     

     


     


     



    Jul25

    NEW WITHHOLDING TAX ON TRANSFERS OF PROPERTY

    Amanda Quin - Monday, July 25, 2016

    From 1 July 2016 every person or entity who acquires land in Australia which has a value of $2 million or more must withhold money on account of the transferor’s potential Capital Gains Tax liability. The person acquiring the property is then required to remit any such amount to the ATO.

    In addition, entering into an option to purchase (regardless of the value of the underlying property) and acquiring interests in certain landholding companies and trusts will also be caught by this new tax requirement.

    If the transferee (ie purchaser) fails to withhold the correct amount of tax, then the purchaser will be penalised. Significant penalties will apply.

    Generally, the amount to be withheld will be 10% of the purchase price or the value of the property, but this may be varied if the vendor obtains a variation notice from the ATO and serves a copy of the notice on the purchaser prior to completion of the sale.

    The transferee is also not required to withhold or remit any money if an exception applies.

    Accordingly, unless an exception or variation notice applies, all persons selling land or interests in land for $2 million or more must be aware that the purchaser will withhold 10% of the purchase price from completion.

    Any withheld amount will be credited to the Vendors when the Vendors next lodge their tax return with the ATO.

    Exceptions to the new withholding regime

    There is no requirement for a purchaser to withhold any money on account of the vendor’s potential CGT liability if:

    1. The market value of the property is less than $2 million; or

    2. A clearance certificate has been obtained from the ATO by the vendor (or all of the vendors when there is more than one vendor) and provided to the purchaser before settlement; or

    3. In relation to an option or an interest in a landholding company, the vendor gives the purchaser a declaration that the vendor is or will be an Australian resident for a period which covers the transaction (and the purchaser is not on notice of the declaration being false), or

    4. The vendor is under external administration or in bankruptcy.

    Who is eligible for a Clearance certificate

    Australian residents are eligible for clearance certificates.

    Foreign residents are not eligible for clearance certificates, but they may be able to obtain a variation notice to reduce or eliminate the need formoney to be withheld from the sale, if they can show that a CGT exemption or other exemption will apply.