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.

 

Jun23

Review of Discretionary Trust Deeds

Amanda Quin - Tuesday, June 23, 2020

If you hold or intend to hold real estate in NSW via a Discretionary Trust and wish to avoid foreign persons surcharges then you need to review your Trust Deed and if necessary amend your Trust Deed before 31 December 2020.

Foreign person surcharge land tax is an annual tax and it applies to real estate in NSW which is held by foreign persons. Likewise, foreign person surcharge duty is an additional stamp duty which foreign persons pay, when they purchase property in NSW.

Even though you may be an Australian citizen or permanent resident, if you hold property via a discretionary trust, then you need to be aware that all discretionary trusts are deemed to be a foreign person unless the trust deed has specifically and irrevocably excluded foreign persons from being eligible beneficiaries of the trust.

The NSW Legislative Council passed the State Revenue Legislation Further Amendment Bill 2020 on 18 June 2020.

This legislation specifies that 31 December 2020 is the deadline for you to review your trust deed and potentially amend it to exclude foreign persons, in order to avoid the need to pay foreign person surcharge land tax and foreign person surcharge stamp duty.

Accordingly,  assuming you are prepared to exclude foreign persons from being a beneficiary of your trust, then  you should review and where necessary have your Trust Deed amended before the deadline of 31 December 2020.

Please contact Andrew Graham (email amg@peacockes.com ) or Jeremy Tooth (email jrt@peacockes.com ) or phone our office on 02 6882 3133 if you would like our assistance to review your Trust Deed.

Jun23

HomeBuilder Grant - new builds and renovations

Amanda Quin - Tuesday, June 23, 2020

 

If you are building a new home or substantially renovating an existing home which is or will be your principal place of residence then you may be eligible for a $25,000 grant under the HomeBuilder program.

You do not need to be a first home buyer to be eligible to receiver a HomeBuilder grant, but if you are first home buyer, then you may be able to obtain this grant on top of other first home concessions.

Eligibility Criteria in NSW

Each Applicant must be an Australian Citizen who is 18 years old or older (not a company or trust). 

The Applicant(s) must meet one of the following two income caps:

  • $125,000 per annum for an individual applicant based on their 2018-19 tax return or later; or
  • $200,000 per annum for a couple based on both of their 2018-19 tax returns or later.

The Applicant(s) must enter into a building contract between 4 June 2020 and 31 December 2020 to either:

  • build a new home as a principal place of residence, where the property value (house and land) does not exceed $750,000; or
  • substantially renovate their existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, and where the value of the existing property (house and land) does not exceed $1.5 million.

 

Construction must commence within three months of the building contract date.

The registered or licensed builder may need to demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at 1 July 2019.

If the contract is for renovations then the building works must improve the liveability, accessibility or safety of your home (ie swimming pools, sheds and similar structures not connected to the house will not count).
 

NB Owner-builders and those seeking to build a new home which will be used as an investment property, or renovate an existing home which is an investment property, are not eligible.


 

 

 

May13

Execution of Electronic Transactions

Amanda Quin - Wednesday, May 13, 2020

Blog authored by Andrew Cannon - Email: aac@peacockes.com
Electronic transactions, signing and the Electronic Transactions Act NSW and CTH

In these current uncertain times and restrictions with COVID-19, professionals are increasingly changing the way they think about communicating and transacting internally in the office and amongst wider colleagues electronically.

Electronic and digital documents and signing are, subject to legislative requirements, providing a real and flexible alternative to completing legal transactions electronically, particularly in the areas of conveyancing and real property. The convenience of near uniform legislation since 1999 known as the Electronic Transactions Act (theETA) ensures that a transaction under a state or Commonwealth law will not rendered invalid simply because a document was signed via electronic means. Courts are also increasingly aware of how electronic transactions and signatures are already a part of modern commercial life[1], as well as their significance to the future of “modern business practice”[2].

However, the ETA sets out three mandatory conditions in order for electronic signatures to be deemed effective. These conditions are:

1. Identity

- the person (signatory) must use a method to identify themselves and their intention;

2. Reliability

- the method used was as reliable as appropriate for the purpose of the electronic communication ( or proven in fact with further evidence); and

3. Consent

- the signatory (and any counter-signatories) must consent to the use of the electronic communication to fulfil the requirement and method of identification.

“Electronic” Signature and “Digital Signature” – What is the difference?

Whilst it is often the case that the terms “electronic signature” and “digital signature” are thought of and used interchangeably, it is important to note the distinction between them.

An electronic signature is essentially a signature on any electronic communication or document which DOES NOT have any physical verification or authentication on the document which it relates to. Such examples include inserting an electronic signature in a pdf letter or clicking an ‘I accept’ button online on a terms and conditions disclosure.

However, a “digital signature” is a type of electronic signature in which a verification element or authentication is provided on the document using specialised software integrated with a Public Key Infrastructure (PKI) system, to help ensure the security of the signatory’s identity, confidentiality and avoid issues surrounding document integrity and fraud.

An example of such a verification or authentication element is an DocuSign envelope ID or an AdobeSign transaction number, which are two well- known digital signing platforms. Most often, digital signing platforms provide a certificate of completion or similar certification or authentication after the completion of electronic signing. This certificate or authentication details and tracks the electronic ‘footprint’ of who, when and how a electronic document was created, sent, opened and signed, providing reassurance for clients and other signatories that the use of their electronic signature is confidential and secured.

Deeds and companies signing under s 127(1) of the Corporations Act – Issues?

Whilst NSW is currently the only state which permits deeds to be signed and witnessed electronically, regard should be had to the Law Society of NSW’s ‘FAQ on Electronic Witnessing of Signatures’. Witnessing electronic or digital signatures for deeds is legally and technologically complex, particularly also if one of the signatories is a company signing under s127(1) of the Corporations Act 2001 (Cth).

However, if electronic execution is required to occur pursuant to s 127(1) of the Corporations Act it may be prudent to consider some further practical measures such as:

  • Including an electronic execution clause and warranties as to the authority of the persons similar to the assumptions set out in s129(5) of the Corporations Act;
  • Requiring evidence of personal authentication of the officer signatories, and that a single electronic document was signed and witnessed; and
  • Requiring evidence of the identity and actual authority of the signatory or signatories to the relevant documents (eg board minutes or company resolutions).

In this respect, legal advice should be sought if you require either a document to be signed under section 127 (1) or a deed .

References

 

[1] C&P Syndicate Pty Ltd v Reddy [2013] NSWSC 643 [111].

 

[2] Stuart v Hishon [2013] NSWSC 766 [34].

Mar17

Coronavirus (COVID-19) update from REI NSW

Amanda Quin - Tuesday, March 17, 2020

 

Posted below is an update from REI NSW from 12 March 2020 in respect of Coronavirus (COVID-19) which sets out some information that may be of assistance in this time.

The information below has been reproduced with permission from REI NSW.

REI NSW may be contacted via phone on (02) 8267 0578 and their website is www.reinsw.com.au

Dear Colleague,

 

REINSW is monitoring the evolving situation in relation to the impact of Coronavirus Disease 2019 (COVID-19), previously known as Novel Coronavirus. Cases are currently increasing in Australia, although resulting deaths are thankfully extremely low. It is possible that the disease will continue to be spread through community transmission.

Real estate is a people business where agents deal closely with a wide range of people in many environments – workplaces, homes, shopping centres and so on. In doing so there are a few sensible precautions to take to aid the protection of yourself and others.

The situation is continually evolving, and individuals as well as those responsible for others need to stay informed and make decisions based on information from reliable sources, such as the Department of Health (Commonwealth) and NSW Ministry of Health. Please refer to these websites frequently for news on Coronavirus Disease 2019 (COVID-19) as they are updated regularly.

We are putting precautions in place here at REINSW so that the normal course of business may continue as usual. We are implementing sensible systems in case we need to work remotely and we are working to make sure we have increased hygiene procedures at all of our events and training courses for the foreseeable future.

It is important to make sure your business runs as smoothly as possible in these uncertain times.

If you’re wondering what you can do to prepare your business and staff, perhaps you might consider the following:

  • Follow up to date health and hygiene guidelines
    • Make sure hand sanitiser and tissues are available to all staff, clients and visitors
    • Properly wash your hands frequently and thoroughly. Click here for tips on the 20 second-hand wash.
    • Cover your nose and mouth when coughing or sneezing
    • Stay at home if you are sick
    • Isolate any staff members who show signs of possible symptoms and advise them to contact their doctor
    • Refrain from shaking hands or greeting others with a kiss
  • Prepare contingency plans in response to the virus
    • Review and adapt your agency practices and procedures as required
    • Have plans in place for staff to work remotely if needed
    • Make sure laptops are available to staff with access to office servers and drives
    • Make sure office phones can be diverted to staff mobile phones or to an answering service

NSW Health has provided this fact sheet: Frequently Asked Questions about COVID-19.

We cannot give specific advice to individual businesses but, as your peak industry body, we encourage you to consider:

  • Reviewing internal policies and procedures and adapting them if necessary
  • Cancelling unnecessary staff travel plans
  • Deferring open, periodic or other inspections if there is any concern
  • Not attending auctions or entering a property if you’re aware there is someone in there or has been in there self-isolating because of the virus (for instance, a tenant or vendor)
  • Encouraging auctions to take place in the agents’ office as opposed to on-site

It is business as usual here at REINSW. However, should REINSW events or training courses need to be cancelled, we will notify you at our earliest opportunity with information on cancellations and postponements.

We are carefully watching news alerts on Coronavirus Disease 2019 (COVID-19) and should government advice change we will notify you with updates.

In the meantime, here are some useful links providing information on the disease and how you can protect yourselves:

Rest assured that we are here to support you with the smooth running of your agency and we will alert you to any updates on the virus as and when required.

REINSW


Dec04

Deposit Bonds

Amanda Quin - Wednesday, December 04, 2019

Blog authored by Amanda Quin

What is a Deposit Bond?

A Deposit Bond is a document which a lender or an insurer or other entity issues which states that the issuer will guarantee the payment of the cash deposit in respect of a contract for sale of a property and will pay the deposit, if called on to do so. There may be other terms and conditions or restrictions noted in the Deposit Bond. For example many Deposit Bonds have an expiry date and will require the original Deposit Bond to be provided to the issuer prior to that expiry date in order for a claim to be made.

Is there a fee for a Deposit Bond to be issued?

Generally a Deposit Bond issuer will charge a fee to provide the Deposit Bond. A full credit application is also usually required to be made by the Purchaser.

When are Deposit Bonds used?

A Purchaser of a property may wish to provide a Deposit Bond if they do not have sufficient money at hand to pay a cash deposit. This may be because they have other investments that they do not wish to liquidate or perhaps because they are borrowing the full purchase price.

Does a Vendor have to accept a Deposit Bond?

A Vendor can refuse to accept a Deposit Bond and may instead insist on a cash deposit being paid.

However if the Purchaser does not have the money available to pay a cash deposit, then this may mean that the sale does not proceed.

Are there any risks if a Vendor accepts a Deposit Bond instead of a cash deposit?

Yes there are some risks including:

(a) That the Deposit Bond may be fraudulent. (NB this risk can be reduced by your legal practitioner or conveyancer checking the authenticity of the Deposit Bond directly with the issuer prior to exchanging contracts); and

(b) Although it has not happened often, there have been instances where a Deposit Bond issuer has been placed into administration/liquidation - which effectively makes the guarantee worthless. NB In such a case, the Purchaser does still remain liable to themselves pay the Deposit and to complete the Contract and in most cases, the Purchaser will proceed to settlement and the deposit will be paid on settlement.

However, there is a risk that if both the Deposit Bond issuer and the Purchaser are unable to pay the deposit, then the Contract will not complete and the deposit will not have been paid. Court action could still be taken against the Purchaser to recover the deposit - but that would only be practically viable if the Purchaser has financial resources to meet any judgement that may be handed down.

A prudent Vendor may need to carefully consider the reliability of the Deposit Bond issuer prior to deciding whether or not to accept a Deposit Bond instead of a cash deposit.

 

Sep18

Blog authored by Andrew Cannon   (email aac@peacockes.com )

Between the competing tensions of the all enveloping emergence and dependence of technology in modern Australian society, the innovation of legal firms to increasingly deliver digital services to clients’ against the fading abyss of traditional ‘paper’ conveyancing practices, the time for property and conveyancing transactions to be completed ‘paperless’ and electronically has come of age. Conversely, with the rise of the brave new world of breakthroughs consequence of technology’s introduction into the legal, property and conveyancing spheres, lawyers and conveyancers are also in equal measure becoming increasingly exposed to an unprecedented number and forms of cyber-risks, fraud and ethical dilemmas when transacting with clients and other parties digitally.

To date, such examples of the forms of cyber-risk and fraud omnipresent online are cited from, amongst others, Astell v Australian Capital Territory [2016] ACTSC 238, Infotrack’s ‘The Increasing Threat of Identity Crime – A guide to the VOI landscape’ and the Legal Practitioners’ Liability Committee ‘Security Warning for PEXA users’ in response to the well covered ‘Masterchef case’.

Subsequently, relevant government, law and policy makers have responded in kind to these examples of very real and present cyber threats of fraud and identity theft. As evinced in s12E of the Real Property Act 1900 (NSW) (“RPA”) practitioners must satisfy their professional obligations in conveyancing and property transactions for verifying a person’s identity or (“VOI”) of clients’ and/or their agents’ acting by either:

  1. Applying the “VOI standard”; or
  2. Verify the identity of a person “in some other way that constitutes reasonable steps”.

This requirement also applies to the identity verification of mortgagees.

Authorities and best practice guidelines derived from sources such as the Electronic Conveyancing National Law (NSW) section 23 and the Model Operating Requirements prescribed by the Australian Registrars National E-Conveyancing Council (ARNECC) Verification of identity confirm VOI is now a mandatory requirement for lawyers and conveyancing representatives in NSW, applicable to both traditional ‘paper’ and ‘new-age’ electronic settlements. VOI is also a mandatory requirement for all conveyancing transaction in Qld, SA, WA and VIC. However, NT, TAS and the ACT are yet to ‘get onboard’ and recognise formal requirements for VOI in conveyancing and property transactions.

Both electronic settlement platforms PEXA and Sympli also recognise the necessity for representatives to complete verification of identity for each of their client’s and/or acting agents’ in order to complete settlement, through the mandate of their respective participation rules and agreements with network users (ostensibly law firms).

Section 12E of the RPA, which also deals with the requirements of gaining client authorisation and certification, provides:

“…The Registrar-General may from time to time determine, in writing, rules for or with respect to the preparation and lodgment of documents to give effect to conveyancing transactions (the
"conveyancing rules" ), including rules for or with respect to the following:

(a) the verification of identity and authority, including:

(i) the standards to which identity and authority are to be verified, and

(ii) the classes of persons in respect of whom identity and authority are to be verified, and

(iii) the classes of documents in relation to which verification of identity and authority requirements apply, and

(iv) the classes of persons who can undertake verification of identity and authority, and

(v) any supporting evidence and retention requirements…”

Subject to s12 E of the RPA, the Office of the Registrar General’s Conveyancing Rules (“Conveyancing Rules”) sets out that a representative must take ‘reasonable steps’ to verify the identity of both:

  • Each client; and
  • Each agent that acts for the client (such as an adult child giving /taking instructions for their parents or a buyers’ agent etc).

The necessity for practitioners (lawyers and conveyancers) to verify the identity of clients and their agents’ applies to a broad range of conveyancing transactions and dealings with property to ‘cover the field’ including:

  • To create, transfer, dispose of, mortgage, charge, lease or deal with in any other way an estate or interest in land;
  • To register, note or record anything on the title to a property; or
  • To get the registration, note or record of something on title changed, withdrawn or removed.

As per rule 4.1.1, the Conveyancing rules took effect on 26 November 2016 and places the onus on lawyers and conveyancer representatives to take “reasonable steps”, which are imposed as a professional ethical obligation owed to each client and their agents’, for identity verification. Furthermore, rule 4.1.5 of the Conveyancing rules provides a higher standard of ‘reasonableness’ for representatives to make further inquiries’ to verify the identity of each client and their agents’ in dubious or suspicious situations where:

“the Representative knows or ought reasonably to know that:

(i) any identity Document produced by the Person Being Identified and/or any Identity Declarant is not genuine; or

(ii) any photograph on an identity Document produced by the Person Being Identified and/or any Identity Declarant is not a reasonable likeness of the Person Being Identified or the Identity Declarant; or

(iii) the Person Being Identified and/or any Identity Declarant does not appear to be the person to whom the identity Document(s) relate; or

(b) it would otherwise be reasonable to do so.”

In the event that representative cannot be satisfied of a person’s identity to a transaction, arguably legal practitioners are availed the benefit under the s12E of the RPA and chorus of VOI best practice guidelines from property and conveyancing institutions to cease acting any further in the conduct of the conveyancing/property transaction in lieu of the exercise of due diligence and professional responsibility owed.

The Australian Registrar’s National Electronic Conveyancing Council (ARNECC) provides some guidance to lawyers and conveyancers on what ‘reasonable steps’ means under RPA legislation and the Conveyancing Rules when taking a client’s or their agent’s VOI. However, whilst “reasonable steps” is not a defined term under either the RPA or the Conveyancing Rules in NSW, the concept of “reasonable steps” does allow practitioners to demonstrate professional judgment and exercise their discretion and independence to assess what is reasonable in the circumstances of each case and the client when applying the VOI standard.

What is the VOI standard ?

The VOI standard, which is one method for representatives to verify a person’s identity, can be read as a two-tiered process requiring that:

  • A “face-to-face” interview with the client/client’s agent to be identified; and
  • Examination of original identity documents, from the list of approved and acceptable documents, be tendered and produced by a person to be identified.

Face-to-FaceTime interview ? – Issues with video technology for “face-to-face” for VOI interviews

Pursuant to ARNECC Model Practice Rules Guidance Note 2, “face-to-face” interviews conducted via video technologies such as Zoom, skype, FaceTime and others can be “manipulated and forged” and carry inherent risks for legal representatives to be cautious and aware of. As advised by ARNECC, when applying the VOI standard, such modern video technologies “…do not constitute a face-to-face in person interview, nor does it allow identification of original documents, as required by the Verification of Identity standard…” .

Where a representative “uses some other way that constitutes the taking of reasonable steps” to verify a client’s or their acting agent’s identity, there is scope within this ‘less rigid’ method and it may be more suitable and appropriate in some circumstances, particularly where currently the Verification of Identity standard is not. Examples where the use of skype or other similar technologies may be appropriate include for remote/regional clients with no or limited access to VOI agent services or the ability to attend their legal representative’s office. However, given the currency of the VOI laws (in NSW and Australia wide), there is yet to be a ‘test-case’ in NSW or another Australian jurisdiction on this point, determining the legitimacy and suitability for video technology to be used to conduct “face-to-face interviews”. ARNECC arguably eludes to the latter point by stating that:

“use of the (Verification of Identity) Standard is not compulsory and may not be practical in some circumstances.”

However, this was qualified with its submission that:

“where the standard is not used and there is a dispute the subscriber will be required to establish that the method used to verify the identity of a Person constituted “taking reasonable steps” in the particular circumstances.”

How can I complete my VOI ? – Paper and Digital services

Despite the strict requirements on all parties including buyers, sellers and legal representatives to ensure compliance with VOI, identity verification in NSW can be satisfied in several ways such as:

  • In the office with your conveyancer/lawyer (usually at the time of, or just after the completion of exchange); OR
  • VOI agent services such as Australia Post Land Title verification, ZipID, ID Secure and MaxID. These services aim to provide quick and accessible services, paper-based or digital forms. Additionally, most practitioners now have accounts with these VOI agent providers which allows them the equal convenience to access secure and confidential portals which produces and stores a client’s verification of identity, usually sent to the representative as a report.
  • However, depending on the priority required/ordered, both your conveyancer/lawyer representative or VOI agent will likely charge a fee for the service of verifying your identity and authority (express or non-express) according to the standards prescribed by the RPA and the Conveyancing Rules.

To the latter point, only equal to the embrace of technology in the  conveyancing and property spheres has been the rising tide of tech enabled identity agents and providers, free from the constraint of legal ethical obligations, to make identity verification a viable ‘market’ and the ‘clients’ of law firms and conveyancing practices their ‘consumers’. In concert with settlements ever-increasingly being settled more efficiently electronically, VOI services today are arguably most popularly offered and delivered digitally, via tech enabled and online identity verification agents offering the convenience of well branded and trendy VOI apps. Most digital VOI agents’ services via apps are tailored for both apple and android powered tablets and smartphones, which comprise amongst other features, GPS mapping and sophisticated ‘real-time’ video and photographic technologies allowing identity verification to occur “some other way that constitutes reasonable steps” and in the broadest sense of the meaning, “face-to face”. As such, these digital VOI agent providers offer their services ‘anytime’, from either the convenience of work or from the comforts of home.

Who is required to complete VOI ? Natural/legal persons and Australian/foreign and overseas status

VOI in NSW is required to be taken for all applicable conveyancing and property transactions regardless of whether the entity is:

  • A natural or legal person; or

On the basis of citizenship status is:

  • Australian citizen or resident;
  • Foreign citizen or resident;
  • Overseas at the time of the relevant conveyancing/property transaction.

The Registrar General’s Guidelines for Verification of Identity on the NSW Land Registry Services (“LRS”) website sets out the minimum documents requires for persons who are Australian citizens or residents, including a identifier declaration, as well as the requirements for foreign persons and/or residents. The documents which most readily satisfy the identity verification standards in NSW include, but are not limited to:

  • A current valid Australian drivers’ licence;
  • Australian passport; and
  • Birth certificate.

During the conduct of the examination of the original documents to be verified, the (lawyer/conveyancing) representative or VOI agent must be satisfied, so far as reasonably possible, that the original documents tendered, photographs taken (if any) and/or searches conducted for verification are true and confirm the identity of the person to the transaction. A representative lawyer or conveyancer should also verify the identity of such entities like appointed individual acting for a company or as power of attorney. For a Company, VOI can be satisfied by:

  • Conducting and producing an ASIC search confirming such records of the existence and identity of the registered company name; and
  • The identity of the individual duly appointed Officers (Directors and Secretaries) whom are authorised to sign or witness documents on behalf of the Corporate body in such capacity, including the affixation of the Company seal.

Reasonable steps for taking VOI in NSW for a power of attorney can also be satisfied by:

  • Confirming the currency and validity of a certified original copy of the power of attorney appointing the person as power of attorney for another party to the property/conveyancing transaction; and
  • Verifying the identity of the person appointed to act as power of attorney.

In relation to overseas clients and/or their agents’, one method legal/conveyancing representatives may use to satisfy the requirements for VOI in NSW involves:

  • Instructing clients and or their agents’ acting to have their ID documents certified at their nearest Australian embassy or Australian Consulate office which will sign, date and endorse copies of the original identity documents; and
  • The certifying Australian embassy or Australian Consulate officer completing with the client and/or their agent acting the approved Australian Embassy/High Commission/ Consulate identity/ witnessing certification (certification) and client authorisation. Other methods may include, with the legal representative taking further ‘reasonable steps’, having overseas client verify their identity at an international law firm.

How long does my VOI last for once completed?

However, once a person’s VOI is confirmed, it need not be updated for a period of 2 years and should be held securely (either paper or electronically) by the representative (lawyer or conveyancer) for a period of 7 years.


 

Jun01

Over 65 and Thinking of Downsizing?

Amanda Quin - Friday, June 01, 2018

Over 65 and Thinking of Downsizing? Potential new superannuation benefits

From 1 July 2018, if you meet the eligibility requirements, you may be able to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

To be eligible to make a downsizer contribution of up to $300,000 into your super:

  • You will need to be 65 or older at the time of the contribution
  • Your house sale contract must have exchanged on or after 1 July 2018
  • You must make your downsizer contribution within 90 days of selling your home (unless the ATO grants you an extension on this time limit)
  • You can only make a contribution from the sale of one home (ie you cannot previously have used the downsizer contribution scheme). However you can make multiple contributions from the sale of that one home – but all contributions must be made within 90 days of the sale completing and cannot exceed the cap of $300,000 per person
  • You or your spouse must have owned your home for 10 years or more before selling it
  • Your home must be in Australia and you must apply the main residence exemption for CGT to the sale of the home (unless you acquired the home prior to 20 September 1985)
  • You must submit the downsizer contribution form to your super fund either before or at the same time as making your contribution
  • The contribution cannot be greater than the total proceeds from the sale of your home

If you choose to make a downsizer contribution then:

  • If you have a spouse, then each of you may be able to make your own contribution of up to $300,000
  • A downsizer contribution will not count towards your concessional contributions cap
  • A downsizer contribution can be made even if your superannuation balance is greater than $1.6 million
  • However a downsizer contribution will count towards your transfer balance cap of $1.6 million (nb the transfer balance cap applies when you move your super savings into the retirement phase)

You should carefully consider whether a downsizer contribution is suitable for you, as they are not tax deductible and will be taken into account for determining eligibility for the age pension.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home, however purchasing a new home is also permitted.

 



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

    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.