A REPORT by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO)  on early debt recovery action by the Australian Taxation Office (ATO) has found that garnishee notices have been issued in a sizeable number of cases where tax disputes were before Administrative Appeals Tribunal (AAT).

In response to this finding, Ombudsman Kate Carnell has called for the ATO to immediately cease debt recovery action against any small business with a dispute before the AAT.

“We found ATO debt recovery action occurred in at least 12 percent of cases before the AAT, severely impacting a small business’s resources to prosecute its case and carry on its business,” Ms Carnell said. 

“Strong forms of debt recovery action by the ATO, such as garnishee notices, can destroy a small business because it effectively strips funds from a small business’s bank account.

“Consequently, the small business is not able to pay wages, rent, suppliers or bank loans and the follow-on effects of this – bad reputation, no credibility and potential bankruptcy – is significant."

GARNISHEE THREAT

“Despite the devastating impact on small businesses, the ATO alone has the authority to produce garnishee notices without any external oversight," Ms Carnell said.

“ATO garnishee notices must be actioned only with appropriate oversight and approval, such as the court system, before an order can be issued.

“The asymmetry in power between this large and powerful organisation and the small business sector has left these particular small businesses in a vulnerable position and with diminished access to justice," Ms Carnell said.

"They simply don’t have the same resources to fight where there is a legitimate dispute."

However, the ASBFEO has developed a solution that is helping many small businesses caught in this awful situation, offering affordable access to advice from a highly qualified tax lawyer.

“Small businesses taxpayers in dispute with the ATO now have the option of a simple, fast and cheaper external review through our new Small Business Concierge Service.

“Our case managers help them understand the AAT process, they get an hour with a small business tax lawyer at a cost of $100 and an additional hour free if they decide to go ahead with the appeal.”

www.asbfeo.gov.au

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By Leon Gettler >>

ALIFERY, an online start-up that provides freelance lawyers for ASX listed companies, law firms and small to medium sized enterprises, has found demand is running high.

These are not just any lawyers.

“The expert lawyers have an average of 15 years’ experience and we’re giving companies access to those people, “ Alifery founder Louise Hvala told Talking Business. “They are former general counsels, former partners, they have worked both locally in Australia and overseas.

“Their backgrounds vary from commercial to banking and finance, litigation and family law.”

Ms Hvala said Alifery has around 200 lawyers on its books at the moment. 

She said Alifery’s main business, Gatehouse, had found that more lawyers were going freelance “because the world is changing”.

“What we’re seeing is people want more flexibility, they want to be able to spend time with their children and travel the world. They’re tired of the old school ways within law,” Ms Hvala said.

“And some of them realise that reaching partnership level might be a very long process if they get there at all so they’ve decided to establish themselves as a sole practitioner but providing freelance services.”

The benefit of that is that Alifery provides the infrastructure. The lawyers don’t have to create it themselves.

Ms Hvala said the advantage for companies is they are getting lawyers at a cheaper rate as they would not be having to carry the traditional overheads of law firms.

She said Alifery’s lawyers were up to 50 percent cheaper than businesses were used to paying in-house.

Alifery’s lawyers set their own rates.

“Their clients can provide a budget, but if they don’t then freelancers will set their own rate,” Ms Hvala said.

Alifery lawyers’ rates are set on market trends.

Alifery also helps them to team up and cross refer to other experts.

So if one lawyer is experienced in commercial contracts, but needs someone with a background in litigation, Alifery will bring them together.

And business is booming, Ms Hvala said. Alifery is now planning to expand into the UK and the US. 

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.

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NEW ONLINE platform, Alifery is leading the legal profession into the future by connecting ASX listed companies, private businesses and law firms with highly experienced expert freelance lawyers for work opportunities, contracts and projects.

The new platform is capitalising on the growing ‘gig’ economy and freelance trend. A recent study by PayPal found that 70 percent of Australian businesses now use freelancers.

With over 700 users already registered to the Alifery platform and projects being successfully completed between corporate clients and expert legal freelancers, the platform is delivering value. 

The company is looking to raise capital in 2019, and is led by Louise Hvala, the founder of Alifery Freelance Lawyers and co-founder of leading specialist legal recruitment firm Gatehouse Legal Recruitment.

“More and more we are seeing our corporate and law firm clients seeking subject matter legal experts for short term or project based legal matters, rather than hiring a full time legal professional,” Ms Hvala said. 

“On the other side we have expert freelance lawyers coming to us daily wanting a change in lifestyle, more work-life balance, time for travel or time for family and they are choosing to work on a contract, project or temporary basis as freelancers.

“Our freelancers are experts in their fields here, including former general counsels of ASX listed companies and former partners of top tier law firms who have registered with us on the Alifery platform and offer their services to our company and law firm clients,” Ms Hvala said.

“While other professions have fully embraced the freelance economy and are reaping the benefits, we are only now starting to see this within the legal profession. Both sides, client and expert legal freelancer, are keen to try new ways of working which fits within budgets and project scope, while suiting lifestyle choices.”

Any idea that that this could be the ‘Upwork for legal professionals’ would be very wrong, Ms Hvala said.

“We vet every single legal freelancer who signs up on the Alifery platform to maintain quality and ensure our freelancers have the experience our clients need,” she said.

“This is not about a race to the bottom on price. Our expert legal freelancers have on average 15 years experience and are some of the best in their fields.

“They don’t have the bricks and mortar overheads as freelancers, and so they are able to deliver more value to our clients, which include leading law firms and ASX-listed companies, who are posting projects and accessing our freelance legal experts on an as needed basis.”

Ms Hvala said the technology behind the Alifery platform helped to ensure that its expert legal freelancers were being matched with the right opportunities via a complex set of algorithms, “with procurement and invoicing all being taken care of via the platform too”.

Alifery is set up to meet the needs of small, medium and large businesses increasingly having short term projects that require skilled legal professionals to be on call – but do not want to deal with red tape, unnecessary overheads and legal budget blowouts.

The legal profession is often attacked for a lack of affordable legal services and low consumer satisfaction, among other challenges such as mental health issues. 

Ms Hvala said Alifery was tackling these issues head-on, in a modern and innovative way, providing freedom, flexibility and value to both its expert legal freelancers and its clients.

www.alifery.com.au

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THE AUSTRALIAN Taxation Office Commissioner, Chris Jordan, has responded to the Inspector General of Taxation’s Review into the ATO’s use of garnishee notices.

In an official statement, Mr Jordan said: "Today I welcome the Inspector-General of Taxation’s release of their review into our use of garnishee notices in recovering debt. After this detailed review, spanning several months and resulting in a report of almost 200 pages, I am pleased to see that the independent external scrutineer of the ATO has made it crystal clear that there were no revenue targets for our debt staff at any time, and no ‘cash grab’. 

"All of us in the ATO will continue to work with Australian businesspeople and their tax advisors to help them meet their obligations and support viable businesses to thrive. That is our focus and it always will be.

"It is pleasing to see that the Inspector-General found absolutely no evidence of a culture of antagonism against small businesses or any other type of taxpayer. In their review they found professional, hard-working people following our processes and attempting to do their often difficult job as well as possible.

"These findings are in stark contrast to the picture painted by ABC’s Four Corners program in April 2018 which would have its viewers believe that our staff were rushing to issue garnishee notices without proper thought or process, to meet a target.

"The ATO has always had strict guidelines and processes in place for the use of garnishee notices in the management of debt matters. We are legally required to collect money owed to the Commonwealth and we discharge this duty with care.

"As the Inspector-General noted, our staff use garnishee powers appropriately and infrequently – only when other debt collection activities have been unsuccessful, and the taxpayer has not engaged with us to find a resolution.

"I acknowledge that the Inspector-General’s report identifies some training requirements and experience shortfalls in one of our offices that may have led to some confusion over a brief period. The report also notes this was identified and rectified by our internal review systems, long before any external airing of concerns, with further training and support provided where it was needed.

"I welcome and accept all of the Inspector-General’s recommendations in relation to our internal communication, training procedures and contingency planning."

www.ato.gov.au

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THE AUSTRALIAN Competition and Consumer Commission (ACCC) secured almost $170 million in penalties for breaches of competition and consumer law in the 2017-18 financial year – including fines for Telstra, Ford and Apple – according to its latest annual report.

Significant decisions included the ACCC opposing BP Australia’s proposed acquisition of Woolworths retail service station sites, as well as the decision not to oppose Saputo’s proposed acquisition of Murray Goulburn’s dairy assets following divestiture of its Koroit plant.

The ACCC continued to advocate higher penalties for breaches of competition and consumer laws, and recorded its highest penalty in the Yazaki cartel case of $46 million. This was a case against the major supplier of wiring harnesses used in manufacturing the Toyota Camry. 

The ACCC was also successful in securing penalties of about $10 million each against Telstra, Ford and Apple for consumer protection issues.

“We have been advocating hard for increased penalties for breaches of the Competition and Consumer Act to make boards and shareholders sit up and take notice,” ACCC chair Rod Sims said.

“We will continue to seek higher penalties where we see consumer detriment or deliberate breaches of competition laws. This past year we’ve also welcomed the legislated increase to serious financial penalties available for breaching consumer law, bringing them in line to competition law penalties.”

The ACCC Infocentre received over 290,000 contacts, and visits to the Scamwatch website increased to 2.4 million. Consumers accessed ACCC’s online education resources more than 4 million times, and businesses 1.5 million times. 

Some 281 mergers were assessed in 2017-18: 90 percent were pre-assessed without the need for a public review. The remaining 10 percent – 29 merger matters – underwent a public or confidential review, with 17 unconditionally unopposed.

“While we endeavour to complete these merger reviews as quickly as possible, the focus is on getting the right decision to ensure long-term competitive benefits,” Mr Sims said.

Mr Sims also highlighted the ACCC’s work in the communications sector in 2017-18.

“In this last financial year, we took action on telcos’ misleading broadband speeds advertising and commenced our Measuring Broadband Australia program,” Mr Sims said. “Consumers are now getting much more accurate and transparent information about the speeds they can realistically expect from their internet, and which providers are delivering the fastest speeds.”

The ACCC continued to undertake numerous market studies and inquiries, with reports on the communications sector, dairy industry, new car retailing and retail electricity pricing finalised. Inquiries into digital platforms, residential mortgage products pricing, gas markets and Northern Australian insurance are continuing.

The ACCC also monitors and reports on sectors such as airports, stevedoring, petrol, wheat ports and water.

“The importance of a strong regulatory framework and resolute action by regulators to correct harmful conduct, protect consumers and provide confidence to the public is clear,” Mr Sims said. “The ACCC will continue to work hard to make markets work for the benefit of all Australians.”

The ACCC Annual Report is available on the ACCC website.

www.accc.gov.au

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THE ACCC has flagged further Competition and Consumer Law interventions and followed through, building on significant enforcement actions last year.

According to commercial lawyers Cooper Grace Ward, in the first half of 2018 there were increased consumer law penalties, major investigations commenced by the ACCC and one of the largest ever fines for breaching competition law imposed by the Federal Court.

“In light of all this, it is important to ensure that your ‘house is clean’ and now is the time to review and update your compliance policies and training programs to ensure you do not fall victim to the new penalties regime,” Cooper Grace Ward competition and consumer law consultant David Grace said. 

The consumer law penalty regime, effective from September 1, 2018, mirrors the competition law civil penalty provisions, with the maximum penalty for a body corporate being the greater of $10 million or: if a court can determine the value of the benefit, three times the value of that benefit; or if the court cannot determine the value of the benefit, 10 percent of the corporation’s annual turnover in the preceding 12 months.

“This is a considerable increase from the (previous) maximum penalty of $1.1 million,” Mr Grace said. “The changes also increase the maximum penalty for individuals from $220,000 to $500,000.

“These are significant increases and emphasise the need to ensure that you are complying with your consumer law obligations.”

Mr Grace said the key message from the penalty increase was that breaches of the Australian Consumer Law provisions will be considered as seriously as breaches of cartel and other anti-competitive conduct provisions.

In 2018, a Full Federal Court’s decision imposed one of the largest ever fines for a breach of competition law. Japanese company Yazaki Corporation was ordered to pay a penalty of $46 million for engaging in anti-competitive cartel conduct in the supply of wiring harnesses used in the manufacture of the Toyota Camry.

The ACCC submitted to the court that the appropriate penalty should be considered against the seriousness of their conduct and the size of their organisation.

ACCC chair Rod Sims said of the ACCC’s approach, “It is of considerable importance that penalties imposed by the courts are large enough to act as a sufficient deterrent to prevent companies and their employees contravening Australia’s competition laws.”

“Given the strong stance being taken by the ACCC and the significant increase to potential penalties, it is extremely important for organisations to ensure they are complying with these laws,” Mr Grace said. “Reviewing and updating your compliance and training programs will help minimise any exposure to breaches.”

www.cgw.com.au

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By Andrew Nicholson >>

ANYONE who has been to Fiji will have been welcomed (enthusiastically) by locals with a hearty greeting of “bula”.

However, shots are being fired over the Pacific as Fijians have become very upset by the proposed use of the term (and their native language) which has been registered as a trade mark in the United States.

It has been reported that tensions have grown in recent weeks after Florida-based Ross Kashtan trade marked the common Fijian greeting for his bar Bula on the Beach, sparking heated online debate and the circulation of a petition seeking to protect the word. 

An online petition reached its 5000-signature target on the day of the Fijian Government's announcement to fight the trade mark.

Fiji's Attorney-General has said that his Government is "shocked and outraged" and has described the use of the bula trade mark as a "blatant case of heritage-hijacking".

He is further reported to have said, "We would never give permission for anyone – particularly someone outside of Fiji looking to profit – to effectively claim ownership of bula, a word so deeply-rooted in our national identity that it has become synonymous with Fiji itself.”

REFERRAL TO WIPO

The Fijian Government has confirmed that the matter will be raised with the World Intellectual Property Organisation (WIPO), which controls the filing of international trade marks. However, as trade marks are registered on a country-by-country basis, that approach may have little impact on the US Patents and Trade Marks Office (USPTO) which governs trade mark registration within the US and which has already accepted the mark.

It appears that the intent of the approach to WIPO is to generate “…some sort of guidelines … so that questions needed to be asked to business people who want to trade mark words, or music, or designs, or whatever they want to trade mark, that it's not theirs”.1

The Australian Trade Marks Office may have its own matter to address shortly with an application for the mark ‘Bula Beer’ having been filed in June with the following endorsement – the applicant has advised that the English translation of the Fijian words ‘Bula Beer’ appearing in the trade mark is ‘Hello Beer’.

Different countries have their own mechanisms for dealing with indigenous language issues in trade marks.

For example, in New Zealand, a trade mark containing Māori words and symbols must pass through a Māori trade mark advisory committee which advises the Commissioner of Trade Marks whether the registration of a trade mark that is, or appears to be, derivative of Māori text and imagery, is likely to be offensive to Māori.

Trade marks which contain Māori words and symbols are also given a special ‘Māori’ trade mark type status or classification on the Register.

TRADE MARKS ACT 1995

In Australia, the Trade Marks Act requires an examiner to consider whether a trade mark may be offensive or scandalous to a sector of the community, including the Indigenous Australian community in part or at large. 

However, there is no requirement for the applicant to prove that it has obtained the consent of, or consulted with, the relevant Indigenous group.

The situation was highlighted just prior to the recently completed Gold Coast Commonwealth Games, where the mascot’s name ‘Borobi’ was adopted from the indigenous Yugambeh language – translated into English to mean koala.

It was suggested by Jabree Ltd – a registered cultural heritage body for the indigenous Yugambeh people – that allowing the Commonwealth Games Corporation to use the word effectively made the Yugambeh people a “laughing stock” as it indicated that they could not control the use of their native language.

The Yugambeh people opposed the registration of the mark and the matter was resolved by a decision of the Trade Marks Office only weeks before the Games were due to commence. The decision found that:

  • there was no inherent restraint on the use of Indigenous words as trade marks;
  • even though it was not legally required to do so, the Commonwealth Games Corporation had consulted with the Yugambeh people about the use of the word in a structured and inclusive manner (although there were differing accounts as to whether consent had been given by Yugambeh elders);
  • the mark did not create a connotation that the Yugambeh people approved of or endorsed the use of their language by the Commonwealth Games Corporation; and
  • the use of the word ‘borobi’ in the context adopted by the Commonwealth Games Corporation was not offensive, shameful or shocking and not scandalous or used contrary to law under the Trade Marks Act.

The examples above are illustrative of the additional considerations which are necessary when adopting indigenous and/or culturally sensitive words as trade marks.

They also highlight (as is the case with all marks) the care which needs to be taken when selecting trade marks and the need to undertake appropriate due diligence and background enquiries to ensure that problems don’t arise.

www.mullinslawyers.com.au

Andrew Nicholson is an intellectual property law specialist and a partner at Mullins Lawyers in Brisbane. Mullins Lawyers is a foundation Industry Expert partner with Queensland Leaders, the organisation fostering the next generation of leading Queensland-based companies.

1ABC News, 28 September 2018

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