December 2018 | General

AustAsia Group advises that our office will be closed for the Christmas and New Year holidays from 5:00pm on Wednesday 19th December 2018 and we will reopen on Wednesday 9th January 2019.

From all of us at AustAsia Group, we would like to take this opportunity to thank you for your valued business throughout 2018 and look forward to supporting your financial needs in 2019 and beyond.

We wish you and your families Season’s Greetings and prosperity throughout the New Year.

See you in 2019!

November 2018 | General

In part one on this topic we looked at the polices that Labor is likely to take to the Federal Election in 2019. In this article we look at the potential effect of these policies on the economy and what you should be considering regarding your own investment portfolio.

Confidence and Spending

Labor propose lowering taxes for low to middle earners, but will increase taxes for high income earners. That could provide a boost to consumer spending (positive for retailers), however on the flipside, higher taxes for the higher income earners is typically a drag on growth.

The greatest impact would be on already weakening property prices. If house prices continue to fall, and the proposed reforms are net negative for house prices, that too would weigh on confidence, spending, and ultimately economic growth in Australia.

Taking stock

Depending on individual circumstances, one or more of Labor’s proposed policies may dent financial plans. While it is worthwhile taking stock now, anyone contemplating changes should note that even if Labor wins, the final policy(s) might be modified.

Just for the record, 8 months can be a very time in politics and we should not completely discount the Liberals. We saw the polls get it wrong with BREXIT and President Trump being elected. Having said that, considering the implications of a new style of government is always prudent.

What about my portfolio?

We have had some clients ask what they should do about the potential impact of these changes, here are a few points on that:

  1. Firstly, and most importantly, when it comes to your portfolio don’t get emotional – it will not help. The emotion over this issue is unprecedented. So much as mention the removal of cash refunds in polite company and prepare yourself for an hour’s worth of indignant lecturing about how unfair it is;
  2. It may never happen. Labor may not win the next election;
  3. Even if Labor does win, they may have to water down the somewhat unforgiving stance they have taken so far. They can afford to play tough right up until they lose the votes of 660,000 SMSF superannuants. If they need them, this policy will be reviewed and may even be forgotten. Forgiving it might even win them votes they weren’t going to get, such will be the relief;
  4. Even if Labor does win and pushes ahead with an uncompromised policy on this issue, they still have to get it legislated. If there is a hung parliament, even if there isn’t, they may still struggle to achieve it;
  5. Even if Labor does win and get the changes legislated, the current intention is that it would be introduced from June 2020 onwards. In which case, you still have the next few years to collect franking credits and have them refunded (depending on whether Labor changes the timetable). That 22-month window of opportunity may boost stocks with fully franked dividends, while you can still utilise the imputation credits. Companies will have this small window of opportunity to empty any bloated franking accounts through share buybacks, with a large dividend component and/or through special dividends with franking attached. It may just be the case that the 22 months before June 2020 end up being a super bumper year of franking giveaways by corporate Australia. So, don’t jump out of the big fully franked high yield stocks yet;
  6. Don’t get too concerned about the “whole market” turning its back on the high yielding fully franked stocks, like the banks and Telstra. The section of the population that won’t be able to utilise franking credits, and may desert such stocks is the minority in a zero-tax environment with less than $1.6million in superannuation. The international institutions that hold up to 40% of many stocks will not be affected at all. They never got the franking anyway – they won’t be selling anything because of the change. It is not positive for the stocks involved, but it is not universal, and the adjustment will not be made until the legislation passes and even then, probably not until it comes into effect. In other words, the bank sector will not be dominated by this issue, there are plenty of other sentimental and fundamental issues that will overwhelm this one;
  7. Predictable recommendations – For those that do get caught by this change, then some advisers will look to replace the lost income with some other return. Hence the predictable recommendation to buy stocks that do not pay franking credits. These include real estate investment trusts, infrastructure stocks, or global equities. In the end, there is no one answer, and you will have to choose between a low-risk yield or a higher risk investment with a focus shift from income to capital. This will involve a focus on share price growth rather than income and franking, and that will scare many retiree investors who pay little attention to share prices;
  8. Watch out for predators with fancy new products – Beware predators creating products tailored to your insecurity and anger, and marketed as a solution to the loss of franking credits. There is nothing for nothing in this world. Someone will come up with a product to fill the gap, while they market something that may appear to meet that want or need. This is a huge marketing opportunity for product creation. Beware someone promising a franking substitute while they have their other hand in your back pocket;
  9. Property – Some investors might decide to abandon equities and to look at property. They are very different investments. You don’t have to mend the toilet at BHP or worry about whether your tenant is going to trash the place. You can sell shares on the click of a mouse but property is illiquid. Ultimately, your choice though;
  10. Moving money out of super is not the answer – Super still offers the most tax effective structure for your investments, irrespective of how annoyed we might become. Don’t throw the baby out with the bath water;
  11. Some margin loans will no longer fund themselves – Margin loans will become less popular for those people wanting to use franking credits to pay the interest; and finally;
  12. If it’s gone it’s gone – don’t blow the nest egg trying to get it back – The main point to take on board is that if the franking goes, it’s gone. If you need to replace it you will need to take more risk, otherwise you can keep a lower-risk profile in something that has an acceptable yield. Those investments might still include the banks, Telstra and other high yielding stocks, even if you can’t get the franking back. Better you accept lower returns than you blow your capital trying to get back what has been taken away.

What can you do about it?

The best chance to stop this is before the next election. If the number of disenchanted voters swells, there’s a possibility that these changes will be wound back or scrapped altogether.

You can get in touch with your local member of parliament and make your voice heard. What have you got to lose? The one thing that politicians like more than free travel, is being re-elected.

In conclusion

We have dealt with many changes in the past and we will continue to adjust to any changes that will occur in the future. We don’t like change and that’s OK – but getting overly annoyed won’t help.

We will adapt and carry on – just like we did last year, just like we will do next year.

If you have any further enquiries, please don’t hesitate to contact us on (08) 9227 6300 or clientservices@austasiagroup.com

Important information and disclaimer

This publication has been prepared by AustAsia Financial Planning Pty Ltd AFSL 229454, AustAsia Accounting Services Pty Ltd, Registered Tax Agent No 7587 3005 and AustAsia Finance Brokers Pty Ltd, Australian Credit Licence No 385068.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.

Information in this publication is accurate as at the date of writing, 23 November 2018. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.

Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of AustAsia Group, nor their employees or directors give any warranty of accuracy, not accept any responsibility for errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

November 2018 | General

A lot of clients would have recently heard about the Royal Commission into the banking sector. While many may think this doesn’t affect them, as they don’t have a loan, or they don’t have dealings with a bank, this isn’t correct.

The Banking Sector affects the whole economy in a number of ways, including but not limited to:

  • As a superannuation investor – many funds own bank shares either directly (by holding CBA, Westpac, ANZ, NAB) or indirectly with managed funds, or Exchange Traded Funds which hold banks in their portfolio
  • As an investor in general – the big four banks make up over 20% of the ASX 200 by value, which means that their share price fluctuations have an effect on the share market in general
  • As an investor in property markets – the big four banks have the majority of the market share. Interest rates are being dictated to all investors by the banks, under the guise of increase cost of funds
  • As an investor in property markets – it is difficult to obtain funds for any rental or residential property investment
  • As a home owner, looking to upgrade your house – it is more difficult to obtain funds and meet the new lending requirements
  • As a developer of property – it is more difficult to obtain funds now
  • In the general economy – a number of projects cannot proceed or move ahead, which fuels demand for the following industries:
    • Construction
    • Mining
    • Mining Services
    • Services industry in general – most businesses need capital to invest to grow their businesses and the economy.

Below is an extract from a recent article that was written by Denise Locantro, our Associate Director, Wealth Accumulation and Wealth Protection, for our clients in our Premium Investment Portfolio Service Quarterly Review and Report.


On 28th September, Commissioner Kenneth Hayne handed down the interim findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The final report is scheduled for February 2019.

Hayne’s Interim Report has exposed questionable (at best) lending practices and conflicts of interest that arise from a vertically integrated model of financial advice.

The last two years have been tough for the banks and financial services companies that form a large portion of the ASX.

Currently, the banks and financial services companies are being priced by the market under the assumption that draconian legislation will be enacted. Such legislation is likely either to reduce the profitability of their core business or to force them to divest business units, to make their financial advice more independent.

For the banks, the recommendations expected are unlikely to change the actual demand for mortgages, but what it is likely to do is change the processes around getting a loan and make applications harder. These additional processes are likely to slow down credit growth in the near future and increase the costs of originating a loan.

This slowed growth and increasing costs will not damage the long-term profitability of the banks. Raising the bar for compliance towards the end of a long housing boom is not necessarily a bad outcome for shareholders, as it will reduce the level of bad debts in a downturn.

One of the more significant considerations for investors will be what the Commission actually recommends for vertically integrated wealth management businesses.

What is vertical integration in the financial services industry?

A very simple explanation is that vertical integration occurs when personal advice is provided to a retail client who is then channelled into investing in financial products manufactured by the same entity. For example, an AMP adviser recommends clients invest in AMP investment products and AMP platforms. Sometimes the Approved Product List (the list of investments from which an adviser must choose from) is weighted towards in-house products and sometimes higher fees can be paid to advisers for recommending those in-house products.

However, these types of interlinked remuneration strategies and conflicts of interest have been exposed to have not been managed appropriately.

We expect the final report to target the separation of the product provider from the product seller (that is, the separation of the adviser/advisory service from the product manufacturer/provider).

In the area of financial advice, recommendations around limiting vertical integration are likely to impact AMP to a much greater extent than the banks, who have either been divesting, or have plans underway, to divest their funds management and insurance divisions.

What about the shares?

The vortex of negativity is hitting bank stocks. We’ve had ANZ taking an earnings hit from the Royal Commission and CBA has announced $270m is remediation to customers of their wealth business.

Without sounding flippant, putting these numbers into perspective is always key from an investment standpoint. CBA will likely have revenue of ~$26b in FY19, booking a net profit of ~$10b.

While the Royal Commission has clearly raised some major issues within the banks and the headlines have been shocking, from an investment perspective, the numbers are manageable.

Next stop, the Aged Care Royal Commission.


Should you have any further enquiries, please don’t hesitate to contact us on (08) 9227 6300 or clientservices@austasiagroup.com

November 2018 | General

With the current turmoil in political circles, we thought it timely to provide some commentary on the policies announced by Labor, as Parliament is sitting at the end of this month. Somewhere between May and November 2019, we will see another Federal Election. While the policies of both parties are varied and complex, of particular interest to us and our clients are the Labor policies, as they are the most complex and likely to have the biggest financial impact on the country.

The policies Labor announced are detailed, so we are sending a series of articles which try to help you understand the impact of some of these policies on your financial and tax positions in the event that Labor win the next election.

We apologise to clients in advance for getting more emails from us, as we do not wish to spam you, but there is a lot happening in financial circles currently, and most clients want us to help, giving you an idea of what the financial and tax landscape looks like will assist you to make decisions about your future.

While we do not support any particular political party, and do not wish to take political sides, the recent announcements by Labor will affect a number of our clients. Although the announcements by Labor are designed to tax the rich and then give to the poor by way of Government Benefits, Health, Hospitals and Education, they will have bigger impacts and ramifications for the country. Many clients may think that they won’t be affected, but it will affect all clients who:

  • Own their own home;
  • Own residential properties, so have negative gearing or tax structures to maximise their tax positions;
  • Have superannuation funds that own shares which have franking credits;
  • Have investment portfolios that own shares which have franking credits;
  • Own shares that they bought in the float of Comm Bank, AMP, Telstra, and others; and
  • May be receiving Government Benefits, such as the Health Care Card, Aged Pension, Aged Care or other benefit.

This first article in our series, is around the announcements for:

  • Negative Gearing on Property; and
  • Capital Gains Tax discount, and its affect on property.

We will send further updates relating to:

  • Franking Credits;
  • Negative Gearing relating to investments in shares and margin loans; and
  • General policy announcements.

After another round of musical chairs in Canberra, Scott Morrison became our new Prime Minister. This leadership spill was largely due to the belief that Labor is likely to win the next Federal Election. With a Labor victory a strong possibility, if the bookies are right, clients should understand the potential impact on their tax, financial and investment position.

The Reach of the Policies

Before we delve into the two major policy announcements, we will give some context to the reach of the policies.

Here are some statistics, so don’t think that this won’t happen to you or won’t affect you:

  • From the 2016 Census, an estimated 31% of Australians own their own home with no mortgage;
  • From the 2016 Census, an estimated 34.5% of Australians are paying off a property with a mortgage;
  • This is a total of 65.5% of Australian households own property;
  • 30% of Australians rent; and
  • It is estimated that 21% of households own a second home that would count as an investment property.

You can see that these proposed changes to the Australian Property market are likely to affect more than half of all Australian families.

Banning Negative Gearing

Currently, where any borrowings are used to support the purchase of shares or property and, where the income is less than the expenses, a tax deduction may be claimed. A Labor Government at the next election will see this abolished.

The policy proposal will ban negative gearing on new share and property investments unless it’s a ‘new build’ for property, from a date yet to be decided after the next election.

The policy is designed to raise more tax, and to reduce the demand for housing by investors, in order to promote more home ownership.

Reducing Capital Gains Discount

Labor propose to halve the capital gains discount for all assets purchased after a yet-to-be-determined date after the next election. Currently, assets held for more than 12 months benefit from a 50% capital gains discount. Under the Labor proposal this discount will only be 25%.

They propose grandfathering investments held prior to whatever date this comes in, and also protecting superannuation funds from these changes.

How will this affect Property Markets?

Both changes are designed to make property significantly less attractive to potential investors as the cost of owning an investment property would increase, and the tax effectiveness will reduce. When both policies are taken into account, the fear is that waning investor interest would lead to a drop in the value of the housing market.

The greatest impact will be on already weakening property prices.

The WA property market is also now suffering. Earlier this year, the WA property market was showing signs of improvement. However, in the last few months, the flicker of hope of a property resurgence has slowed. While rental markets are starting to improve in WA (with the rental vacancy rate below 6% for the first time in a number of years), this hasn’t flowed through to the property sales market. While there is a lot of activity in WA in the resource sector (mining and oil & gas), a lot of the growth and activity hasn’t flowed through to the WA economy. Some of this is due to a change in migration rules to allow for more people to come into the country to fill the void in engineering, project management, and other technical assistance. There have been more people leaving WA than coming to WA, which has meant lower demand for property. The WA economy needs more foresight into the future to assist in promoting demand for housing, and to then help with the property market push.

The Melbourne and Sydney property markets are already experiencing drops of around 10% to 20%, and that is without these policy announcements.

With the Labor policy announcement, it is likely that the WA property market will again fall, as the demand will be further reduced, as well as property prices across the nation. A report published jointly by RiskWise and Wargent Advisory, has estimated projected price reductions nationally between 6% and 10%. In WA, the worst affected state so far, that’s another estimated fall of 6% – 10% in the value of your family home.

As they say things come in 3’s, and unfortunately for property investors, if the Labor policy gets up by way of election, we could have the perfect storm of:

  • Property declines already due to current economic conditions;
  • Labor Government adopting the changes; and
  • An interest rate rise, which could also be on the cards.

What else could be announced?

If Labor win, there could be additional policies that they may introduce. The once sacred Family Home which is exempt from Capital Gains Tax could be in the sights of Labor as a way to raise more revenue in order to deliver on their policy commitments. While we are supportive of providing a better country for all, the great Australian dream of owning your own home and then being able to live comfortably in retirement without a landlord, and no support from the Government, could be dashed if those policies become law.

In conclusion

The best chance to stop this is before the next election. If the number of disenchanted voters swells, there’s a possibility that these changes will be wound back or scrapped altogether.

You can get in touch with your local member of parliament and make your voice heard. What have you got to lose? The one thing that politicians like more than free travel, is being re-elected.

If you have any further enquiries, please don’t hesitate to contact us on (08) 9227 6300 or clientservices@austasiagroup.com

Important information and disclaimer

This publication has been prepared by AustAsia Financial Planning Pty Ltd AFSL 229454, AustAsia Accounting Services Pty Ltd Registered Tax Agent No 7587 3005 and AustAsia Finance Brokers Pty Ltd, Australian Credit Licence No 385068.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.

Information in this publication is accurate as at the date of writing, 7 November 2018. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.

Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of AustAsia Group, nor their employees or directors give any warranty of accuracy, not accept any responsibility for errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

 

November 2018 | General

Part 3 – What to do next?

If you’ve been following this series of emails, you’ll now be aware of some of the over-arching issues businesses might encounter when engaging staff or contractors. You will know now that casual staff, contractors and permanent employees all have different entitlements, and how important it is to have an employment contract or contractor agreement at the very least.

Sometimes the best way to fully understand the impact of an issue is to see how it has played out in the real world. For this reason, we’ve put together the following real-life case studies of how these issues have affected our clients.

Case Study 1: Super Guarantee

One of our clients believed that they were engaging a contractor. The terms of employment were loose and casual, with no subcontract agreement or purchase order in place. The parties had agreed on a flat rate of $50 per hour for each hour worked. This rate included insurances (public liability and workers compensation) and superannuation. It was agreed that all tools would be provided by the subcontractor and no set work roster was decided as the subcontractor didn’t want to work regular hours (they were also doing a number of other smaller jobs at the same time). The subcontractor failed to show up for work on occasion and so wasn’t paid for those hours.

Years later the subcontractor made a complaint to the ATO about non-payment of superannuation – despite the previous agreement the two parties had made. The ATO contacted our client and performed a Superannuation Guarantee audit. They found that:

  • The subcontractor was an employee for superannuation purposes
  • Even though the rate of pay had been agreed as a flat fee of $50 per hour, including all insurances and superannuation, our client was liable for the ATO Superannuation Guarantee for 4 years, totalling $40,000 (plus penalties and interest).

AAG in Action: Had our client engaged our services earlier we could have helped guard against this outcome by ensuring they had a proper legal subcontract agreement in place before any work commenced or, we could have reviewed the loose arrangements earlier, fixed the problems and limited the unpaid superannuation liability before it grew to the magnitude it did.

Case Study 2: Fair Work Commission (Fair Work) Issue

Another client employed a member of staff on a casual basis. The rate of pay was agreed to be $30 per hour which was 25% above the award rate for usual work. This rate allowed for:

  • Non-frequent work
  • No holiday pay or sick pay (at the request of the staff member)
  • The ability for the staff member to work as many hours as they wished, with no paid overtime. This was agreed as the rate of pay was above the casual rate in the award.

A year later the staff member resigned and made a complaint to Fair Work.

Fair Work asked our client for details such as:

  • A copy of the Employment contract
  • Copies of Payslips
  • Copies of Timesheets
  • Other evidence of pay and conditions

Our client was unable to provide these things. All they could produce were bank statements showing payments and some handwritten payslips.

AAG in Action: Fortunately, we were able to negotiate an agreed outcome that did not involve vast legal costs. Had we been engaged earlier, we would have emphasised the need for good record keeping, warned of the dangers of not doing so and assisted with preparing the necessary employment documentation. However, we’d taken the client over from another accounting firm and their financial records weren’t in a good state. Our subsequent investigations found:

  • There was no formal employment contract
  • There was no confirmation that the staff member had been employed and paid on a casual basis
  • By current tests, the employee was actually classified as permanent part-time not casual
  • The employee was entitled to payslips each pay period, so in not providing those the client had been in breach of Fair Work regulations.

Had the client engaged AAG’s services before engaging the employee, created a sound legal employment contract and complied with all payroll and payslip requirements, they would have saved a lot of time, money and stress in dealing with the matter.

Case Study 3: Payroll Tax Audit

It’s important to note that the State Revenue Department in each state has its own definitions of what constitutes an employee and a subcontractor and that these definitions differ from state to state and from those set out by the ATO.

Not knowing this, one of our clients engaged a series of subcontractors to complete some work. They variously hired them as:

  • Sole Traders
  • Partnerships
  • Personal Trustees of a Family Trust

Unfortunately for the client, the State Revenue Department’s definition classed the subcontractors as employees (not subcontractors) for the purposes of Workers Compensation Insurance and Payroll Tax. This resulted in an unexpected Payroll Tax liability of over $10,000.

AAG in Action: Had the client engaged AAG’s services before awarding the initial works we would have ensured that they only hired subcontractors which operated under a corporate company structure instead, and this issue would not have arisen. We determined the cost of fighting the State Revenue Department’s decision was going to be in the order of $8,000 and as there was no guarantee of a better outcome, we assisted our client to negotiate a payment plan for the $10,000. This could have so easily been avoided.

AAG in Action

We are here to help. At AAG we assist current and potential clients with a range of employment related issues including:

  • Employment Contracts
  • Payroll Advice
  • Superannuation Advice
  • Payroll Tax Advice
  • Structuring of employees or subcontractors
  • Review of business structures

By setting things up property in the beginning, we can help to protect you against the risk of fines, legal expenses and that most valuable commodity, time, further down the line. If you would like to chat to us further about how we can help you, call us today on (08) 9227 6300 or clientservices@austasiagroup.com.

Important information and disclaimer

This publication has been prepared by AustAsia Accounting Services Pty Ltd Registered Tax Agent No 7587 3005.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.

Information in this publication is accurate as at the date of writing, 7 November 2018. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.

Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of AustAsia Group, nor their employees or directors give any warranty of accuracy, not accept any responsibility for errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

November 2018 | General

Part 2 – Is a Casual Employee a Casual Employee?

Do you employ casual employees? If so, this article is for you.

Employee entitlements, National Employment Standards, Federal Employment Awards, Industrial Relations regulations and Union Representatives – these things combined create a minefield for business owners at the best of times. But recently, things have become even more complicated.

What happened?

A recent Federal Court decision in the case of Skene v Workpac Pty Ltd has set a new precedent: publishing a long-term, predictable roster, coupled with insufficient narration on a payslip, can create all sorts of unexpected obligations and costs to employers. Under some circumstances, casual employees may now be entitled to a range of benefits previously reserved only for permanent staff.

The full court judgement in the case of Skene v Workpac Pty Ltd can be found here, but in summary, the key points of the court’s decision were based on what is considered the “essence” of casual employment.

“…the predominant and essential indicator of casual employment is the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”

It is this “essence” which forms our critical caution point to clients. Specific consideration needs to be given to the National Employment Standards, its definition of casual employment, and the pay loadings attributable to it. Of utmost importance is how the employee’s remuneration is described on routine payslips.

In our experience…

For at least five years, unions have been lobbying governments and business owners to offer permanent status benefits to employees on casual agreements. While it’s understandable that unions might try to secure the best deals for their members, this would severely limit business owners’ options around flexible staffing arrangements, presenting them with significant costs and legal obligations. However, these issues can be avoided if employment agreements are drafted correctly.

What does this mean for you?

If you employ staff on a casual basis and have not tailored your employment agreements to address the above concerns, we strongly urge you to contact AustAsia to discuss updating your employment contracts.

By reviewing your contracts now, you may be able to protect yourself – and your business – from being blindsided by a costly claim, such as the one Workpac has incurred, in the future.

Should you have any further enquiries, please don’t hesitate to contact us on (08) 9227 6300 or clientservices@austasiagroup.com

October 2018 | General

On the surface, the difference between an employee and a contractor seems simple: one is permanent and one is not. However, the test used by the courts to determine the matter has changed. In order to avoid unexpected personal liability in the case of a dispute, it’s important to be clear about the classification of the roles.

Some clients have engaged a sole trader, partnership or a family trust with an individual trustee, thinking they were hiring a contractor. It was only later after a dispute emerged that they realised they were wrong.

The test used by the courts is not as clear as it once was and so it’s important to understand it.

The Test

There are 5 key factors the courts consider when determining if someone is a contractor or an employee:

  1. Control. Greater control by the boss indicates an employee relationship, while an employer exercising little control indicates a contractor.
  2. Payment. Payment on a regular basis indicates an employee relationship, while payment for a particular service indicates a contractor role.
  3. Delegation. Contractors can delegate work to others, an employee does the job personally.
  4. Commercial risk. Contractors carry their own insurance and bear the cost of any defects in their work. Usually an employee does not.
  5. Responsibility for equipment. Contractors pay for their equipment, employees are supplied with equipment or are reimbursed.

What this means to you

Employers need to exercise caution. The consequences of getting it wrong can have unfortunate and unintended repercussions including:

  • ATO Superannuation Guarantee – the ATO are working on getting all contractors to have superannuation paid at 9.5% of their contract payments.
  • Workers Compensation Insurance – in WA, the state legislation requires that a contractor that is a sole trader or partnership must be covered for Workers Compensation by the head contractor. Most other states are similar, but the details depend on the individual.
  • MyLeave – in WA for the construction industry, the legislation requires contractors and employers to pay contributions for Long Service Leave as they go.

And the potential liability for:

  • Payroll tax
  • Holiday leave and sick leave
  • Back pay
  • Unfair dismissal
  • Long service leave

There is no obligation for the above to be paid for contractors – but there is for employees.

We recommend considering the sub-contractor’s legal structure before engaging their services, as well as having a clearly set out subcontractor services agreement.

If employing a staff member, we also recommend that you have a clear employment contract.

Should you have any further enquiries, please don’t hesitate to contact us on (08) 9227 6300 or clientservices@austasiagroup.com

April 2018 | General

Over recent months we’ve been told by some of our clients that they haven’t received emails from us, resulting in delays in us meeting their service expectations.

The common link in the feedback we’ve received reveals that clients with a Hotmail, MSN, @live.com or @outlook.com email address are the ones who are most likely to not receive our emails, although many clients with these addresses have received them, with no apparent problems… The intermittent nature of the problem and the fact that we as the Sender aren’t notified that the mail couldn’t be delivered, and neither are our clients, has made this matter all the more frustrating for everyone.

Our research into this matter shows that these email delivery problems are nothing new and have been going on for some years, although seem to be more prevalent again recently. It appears that there is no short-term ‘fix’ in sight and that some Hotmail/MSN/ andlive.com/outlook.comusers may not even be aware of the problem.

So, here are our recommendations:

1) If you have a Hotmail/MSN/live.com/outlook.comemail address, ideally you should not be using it as your primary email address, rather for email that is important to you, setup/use an email address from icloud.com  gmail.comgmx.comor even yahoo.com which are all alternative free email services, that have proven to be more reliable and consistent.

2) If you want to continue using your Hotmail/MSN/live.com/outlook.com email address, to increase the likelihood that you will receive email from your contact person(s) at AustAsia Group, please manually add that person(s) to your individual address book within Hotmail/MSN/live.com/outlook.com.

The best way to do this is:

  • Log into your online email account via the web at www.outlook.com.
  • Click on the top left corner click on the block of 9 dots and select People.
  • Click ‘+ New’ and fill out the contact details, to add them to your address book.

If you have any questions regarding this matter or would like to get the email address/es of your AustAsia Group representative/s, please don’t hesitate to contact us for more information.

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