Legal

More protection for taxpayers who win against the ATO?

THE TAXPAYERS Australia organisation has called for protection for taxpayers who find themselves embroiled in disputes with the ATO – especially where the ATO position ultimately turns out to be without foundation.

The call comes on the back of Taxpayer’s Australia’s role in assisting Gary Kurzer, the New South Wales man whose story was featured prominently in a recent edition of the Sydney Morning Herald.

Mr Kurzer spent eight years fighting the ATO against claims that he had underpaid tax on the disposal of properties he once owned on the central NSW coast. 

After initially claiming that he owed more than $200,000 in GST and penalties, plus capital gains tax on profits of over $600,000, the ATO was finally forced to concede that Mr Kurzer owed just $8,000.

Mark Chapman, head of tax issues for Taxpayers Australia, said it was only as a result of a dogged campaign by Mr Kurzer that the ATO finally had to concede a trail of basic errors and misjudgements in the handling of his case.

Along the way, the mental stress and monetary cost of fighting the case caused Mr Kurzer to lose his relationship, his health, his business and his house.  In September this year, Mr Kurzer is taking the ATO to the Federal Court alleging negligence, arguing that the ATO owes taxpayers a duty of care.

Mr Chapman said while Mr Kurzer’s case was extreme, Taxpayers Australia encountered many taxpayers who had faced similar battles. 

Mr Chapman warned that unlike most other situations, “it’s a case of guilty until proven innocent when dealing with the ATO” and if the taxpayer actually is innocent, they can face an uphill struggle in getting their case heard.

A recent report from the Inspector-General of Taxation – the Review into the Australian Taxation Office’s administration of penalties on July 8, 2014 – highlighted that the average cost of fighting a tax case before the Administrative Appeals Tribunal is more than $6,000, and that is a sum that has to be paid whether or not the taxpayer wins.

“In other words, if the taxpayer fights the ATO and wins, they have no recourse back to the ATO to claim the costs they have incurred in fighting the case,” Mr Chapman said.

“Nor do they have any mechanism for claiming compensation if the ATO has not behaved in accordance with the law and its own Taxpayers Charter. In many cases, the toll on the taxpayer in terms of stress and fatigue can be just as acute as the direct monetary impact.

“And, of course, if you’re a small business or an individual, the kinds of costs you might be looking at to fight the ATO are simply unaffordable and you might be left with only one option; pay up.”

The Inspector-General’s report highlighting that 35 percent of penalties imposed by the ATO in the three years to 2012-13 were later reversed on objection, typically because of ATO mistakes, this figure rises to 46 percent in the 2012-13 year.

Mr Chapman said Taxpayers Australia believed the ATO did not have a good track record at getting it right.

Of those penalties, he said, 51 percent were imposed on the smallest businesses and only 19 percent on the largest), which he called “clearly disproportionate and suggests that many of these small businesses have neither the will nor the resources to take on the ATO”.

As a result of the Inspector-General’s report, the ATO has agreed to his recommendation that penalties should not be payable until the matters under dispute are resolved, and also that the ATO should pay interest on penalties which are not sustained.

“This is a start, but it isn’t enough,” Mr Chapman said of Taxpayers Australia’s view.

“A legally binding obligation needs to be imposed on the Commissioner of Taxation, backed up by a statutory compensation mechanism, to ensure that the Commissioner follows the tax law and his own administrative policies and procedures and where he doesn’t do so, he should be legally obliged to provide compensation to taxpayers who have suffered as a result,” Mr Chapman said.

“In addition, where taxpayers fight and win a case against the ATO, they should have the opportunity to apply for their reasonable costs to be paid by the ATO, in just the same way as occurs in other legal actions.”

www.taxpayer.com.au

ends

Former Trio-linked investment manager jailed

A FORMER investment manager with links to the failed firm Trio Capital (Trio), was sentenced on June 27 to 25 months jail for making false statements resulting in his business receiving more than $500,000 in payments.

Tony Maher, who changed his name from Paul Gresham, pleaded guilty in October 2013 to making the statements regarding the valuation of investments made by the ARP Growth Fund (ARP) over two years. 

At the time he owned and controlled PST Management Pty Ltd, the company that acted as the investment manager of ARP.

Mr Maher, 60, of Katoomba, was charged with 20 offences (refer to ASIC article: 13-293MR).
Appearing in the District Court of NSW, Mr Maher was sentenced to 25 months jail. He will serve 15 months before being eligible for parole.

ASIC Commissioner John Price said, “Mr Maher’s conduct fell below an acceptable standard. Gatekeepers, like directors, company officers, auditors, investment advisers and financial planners, who think they can flout the law, should think again.”

Since ASIC’s investigation started on October 2, 2009, more than 11 people have either been jailed, banned from providing financial services, disqualified from managing companies or have agreed to remove themselves from the financial services industry for a total of more than 50 years. Two agreed to lifetime bannings.

In February 2012, ASIC accepting an enforceable undertaking (EU) from Mr Maher, preventing him from ever again working in the Australian financial services industry or managing a corporation (refer:12-15MR).

Further enforcement outcomes include:

  • Shawn Richard, former investment manager of the Astarra Strategic Fund (ASF), being sentenced to three years and nine months jail with a minimum of two years and six months (refer: 11-169MR)
  • The permanent banning of Eugene Liu, ASF'’s chief investment strategist, from providing financial services (refer: 13-041MR). In April 2014, Mr Liu’s request for review of his permanent ban from providing financial services was heard. The decision has been reserved.
  • Enforceable undertakings (EU) with five former Trio directors, where they agreed not to be involved in the financial services industry or manage a company for between two and 15 years. The former directors are: Natasha Beck, Keith Finkelde, David O’Bryen, David Andrews and Rex Phillpott (refer: 11-182MR and 11-133MR).
  • An EU with planning firm Kilara Financial Solutions to address compliance issues (refer: 11-122MR).
  • Suspending the licence of financial planners Seagrims, with this licence then being cancelled at the company’s request (refer: 11-134MR).
  • Banning Seagrims directors Peter Seagrim and Anne-Marie Seagrim for three years, with the Administrative Appeals Tribunal subsequently cutting the ban to six months (refer: 11-134MR).
  • An EU with former ASF auditor Timothy Frazer, providing he would not act as a registered company auditor for three years (refer: 12-22MR).

www.asic.gov.au

 

ends

 

POSTED JULY 2, 2014

Details of Federal red tape reductions reveal a fair start

THE Federal Government’s ‘big numbers’ of the Federal Budget have been under discussion in great detail, but the smaller details of what is being changed through the ‘red tape reduction’ efforts of the government are just as important operationally for many businesses.

Parliamentary Secretary to the Prime Minister, Josh Frydenberg, said back in March the government introduced legislation and tabled documents to repeal more than 10,000 “unnecessary and counter-productive pieces of legislation and regulations”.

He called the more than 50,000 pages set for repeal “unnecessary and costly legislation and regulations that are a dead weight on Australian businesses, community groups and households” expecting this reduction in red tape across the economy to save “more than $700 million a year, every year”.

“We are committed to cutting red tape costs by $1 billion a year to improve our nation’s competitiveness, help to create more jobs and lower household costs,” Mr Frydenberg said. 

“It will be easier for small businesses to do business with government. There will be a simplified process for tendering for contracts below $200,000, standardised terms and conditions and user-friendly online templates.

“We are making it easier for small businesses to be paid with the introduction of a new policy; credit and debit cards will become the Government’s preferred payment option for purchases under $20,000.”

Mr Frydenberg said the goal was for national businesses to operate under one workers’ compensation scheme right around the nation, rather than have to operate in up to eight.

Other specifics outlined were:

  • Businesses will no longer be required to administer the former government’s paid parental leave scheme.
  • Importers of agricultural chemicals and veterinary medicines, such as pet worm tablets, household weed killers or agricultural fertilisers, will no longer need to re-register well established products over and over, when the products haven’t changed.
  • A reduction in paperwork for Australians seeking to do business in the Asia Pacific  region with a streamlined accreditation process for the APEC Business Travel Card.
  • A new one-stop-shop for offshore petroleum environmental approvals (NOPSEMA) will streamline approval of projects that include offshore petroleum and greenhouse gas activities in Commonwealth waters.
  • Repealing the Carbon Tax and the Mining Tax should not only reduce cost of living pressures and help create jobs, but will also save nearly $100 million in compliance costs.
  • The film industry will be able to make minor modifications to films (for example, turning 2D into 3D, then DVD and Blu-ray) without going through the classification process every time.
  • Job service providers will no longer have to retain cabinets full of paper files and will now be able to keep records electronically.
  • Slow moving machinery – like concrete mixers or ‘wacker packers’ (used to compact soil) will no longer need to be registered as ‘motor vehicles’ under the Personal Property Securities register.
  • Universities will no longer be required to submit extensive (and duplicated) survey data on the size, use, management and maintenance of their lecture theatres, laboratories, offices and other facilities each year.
  • Charities will no longer be subjected to as much duplication with their paperwork.
  • Aged care providers and Disability Employment Service Providers will be spared many thousands of hours of paperwork.

Mr Frydenberg said, “Common sense changes will be made to Labor’s recent Future of Financial Advice laws to reduce the compliance costs for small businesses, financial advisers, and the broader financial services industry, whilst maintaining the quality of advice for consumers.”

That particular pledge has recently come under fire and may yet be modified on its course through the Parliament.

“Cutting red tape is at the heart of this Government’s mission: to build a strong and prosperous economy for a safe and secure Australia,” Mr Frydenberg said.

www.cuttingredtape.gov.au

ends

POSTED MAY 27, 2014

ACCC ‘on the march’

THE Australian Competition and Consumer Commission (ACCC) seems to be ‘on the march’ in dealing with major companies deemed to have breached their trading obligations, judging by the March 2014 quarterly report, ACCCount. Top of the bill is activity ahead of the Federal Government’s repeal of the carbon tax.

The ACCC has begun a formal monitoring role in preparation for the repeal of the carbon tax. The ACCC is to monitor prices, costs and profits to assess the general effect of the carbon tax scheme in Australia.

The ACCC’s focus will be on suppliers of regulated goods, namely natural gas, electricity and synthetic greenhouse gases, as well as corporations identified as liable entities under the Clean Energy Act 2011.

“The ACCC is gathering information that will provide a benchmark to allow the ACCC to compare prices charged to consumers both before and after the carbon tax is removed,” ACCC acting chairman Michael Schaper said. 

In February the ACCC released its Compliance and Enforcement Policy for 2014. The policy outlines the ACCC’s new priority areas including drip pricing, misleading promotions in retail energy plans, disruption of scams, and complexity “and unfairness in consumer or small business contracts”.

Cartel conduct, anti-competitive agreements, misuse of market power, and product safety remain enduring priorities for the ACCC, Dr Schaper said.

He said the ACCC was on track to meeting its commitment to increase the number of competition cases investigated. In the March quarter the ACCC:

  • obtained a penalty of $11 million against Flight Centre Limited for attempting to enter into anti-competitive arrangements with airlines (case now under appeal and cross-appeal);
  • instituted proceedings in the Federal Court against Pfizer Australia Pty Ltd for alleged misuse of market power and exclusive dealing;
  • instituted proceedings against Woolworths Ltd and Coles Group Ltd for allegedly breaching court enforceable undertakings in relation to shopper docket discounts.

Continuing its focus on consumer protection, in the first quarter of 2014 the ACCC was involved in 29 proceedings relating to consumer protection, including the commencement of proceedings against Zen Telecom Pty Ltd for alleged contraventions of the Australian Consumer Law (ACL) in relation to its unsolicited telemarketing practices.

The ACCC regulatory arm released its final decision on the review of the declaration of the domestic transmission capacity service (DTCS) in March. The DTCS is a high-capacity transmission service used to carry large volumes of voice, data and video traffic.

 The DTCS is an essential input into the provision of services over the legacy copper network and the national broadband network (NBN). The ACCC’s final decision extends the declaration of the DTCS for a further five years and includes a number of variations.

“Competition for transmission services like the DTCS typically provides lower prices for this essential wholesale service. Retailers are then able to pass this on to consumers in the form of lower prices,” Dr Schaper said.

“The changing nature of Australia’s telecommunications industry has put the ACCC’s regulatory role into sharp focus. The ACCC will continue its important work in various infrastructure sectors with a particular concentration on telecommunications.”

The Australian Energy Regulator (AER) made its final decision on SP Australian Networks Limited (SP AusNet)’s revenue proposal capping it at $1600 million ($ nominal). This cap has been applied to ensure SP AusNet recovers no more than its efficient costs. The AER has also begun engagement with its Consumer Challenge Panel, a key part of the Better Regulation programme.

The ACCC assessed and reviewed a total of 69 merger matters in the quarter, including announcing its opposition to the proposed acquisition of the assets of Macquarie Generation by AGL Energy Limited (AGL).

The ACCC considered that the proposed acquisition was likely to result in a substantial lessening of competition. AGL has applied for a merger authorisation to the Australian Competition Tribunal. The hearing is set for June 2, 2014.

www.accc.gov.au

ends

POSTED MAY 23, 2014.

ACCC finally acts on Coles ‘unconscionable conduct’ allegations

THE Australian Competition and Consumer Commission (ACCC) instituted proceedings against retailing giant Coles in the Federal Court of Australia on May 5, in a protracted reaction to allegations of unreasonable dealings with some of its suppliers that emerged from media reports – predominantly on the ABC – as far back as 2011. 

Suppliers including agribusiness and manufacturing businesses had earlier been reluctant to speak out officially, fearing negative repercussions to their trade, and this is believed to have delayed the ACCC’s action.

The ACCC took its court action against Coles Supermarkets Australia Pty Ltd and Grocery Holdings Pty Ltd (together, Coles) alleging that Coles engaged in unconscionable conduct in relation to its Active Retail Collaboration (ARC) program, in contravention of the Australian Consumer Law (ACL).

The ACCC alleged that in 2011, Coles developed a strategy to improve its earnings by obtaining better trading terms from its suppliers. 

It is alleged one of the ways Coles sought to improve its earnings was through the introduction of ongoing rebates to be paid by its suppliers in connection with the Coles ARC program, based on purported benefits to large and small suppliers that Coles asserted had resulted from changes Coles had made to its supply chain. 

ACCC’s investigations showed Coles’ target was to obtain $16 million in ARC rebates from smaller suppliers. Coles was ultimately seeking an ongoing ARC rebate in the form of a percentage of the price it paid for the supplier’s grocery products.

This, for its smaller suppliers, was the sum of a percentage which Coles asserted was referable to the value to the supplier of being able to access the Coles supplier portal and, where applicable, a percentage based on the asserted value to the supplier for Coles having changed its ordering patterns to order products in “economic order quantities”. 

The ACCC alleged that in relation to 200 of its smaller suppliers, Coles required agreement by the supplier to the rebate within a matter of days. 

If these suppliers declined to agree to pay the rebate, Coles personnel were allegedly instructed to escalate the matter to more senior staff, and to threaten commercial consequences if the supplier did not agree.  The ACCC alleges that, in a number of cases, threats were made when suppliers declined to agree to pay the rebate. 

The ACCC alleged Coles had engaged in unconscionable conduct towards 200 of its smaller suppliers, in breach of the ACL by, among other things:

  • providing misleading information to suppliers about the savings and value to them from the changes Coles had made;
  • using undue influence and unfair tactics against suppliers to obtain payments of the rebate;
  • taking advantage of its superior bargaining position by, amongst other things, seeking payments when it had no legitimate basis for seeking them; and
  • requiring those suppliers to agree to the ongoing ARC rebate without providing them with sufficient time to assess the value, if any, of the purported benefits of the ARC program to their small business.

“The conduct of Coles alleged by the ACCC in these proceedings was capable of causing significant detriment to small suppliers’ businesses,” ACCC Chairman Rod Sims said.

“This could have resulted in these businesses becoming less able to plan and less able to innovate in the market, with resulting reduced economic efficiency and consumer detriment.

“The ACCC alleges that Coles used undue pressure and unfair tactics in negotiating with suppliers, provided misleading information and took advantage of its superior bargaining position, so that its overall conduct was in all the circumstances unconscionable. 

“If this conduct is established in court, the ACCC expects that the community will share the ACCC’s view that business should not be conducted in this way in Australia,” Mr Sims said. 

“When we called for market participants to provide information to the ACCC on a confidential basis to assist the ACCC’s investigation, I committed that the ACCC would seek to maintain that confidentiality. 

“In accordance with that commitment, the documents and information relied on by the ACCC in these proceedings were obtained by use of the ACCC’s compulsory statutory information gathering powers in a subsequent phase of the investigation.”  

The ACCC is seeking pecuniary penalties, declarations, injunctions and costs.

The ACCC said the proceedings arose from a broader investigation by the ACCC into allegations that supermarket suppliers were being treated inappropriately by the major supermarket chains. The ACCC said a broader investigation is continuing, not ruling out action against other supermarket groups.

The ACCC v Coles matter is listed for a directions hearing in Melbourne on June 6, 2014.

www.accc.gov.au

Chronology of the ACCC's investigation

November 2011   

Media reports indicated that supermarket suppliers were being treated inappropriately by the major supermarket chains. 

November 2011 – February 2012

The ACCC sought information from market participants about these concerns. But it became clear that suppliers were reluctant to speak to the ACCC for fear of what they perceived may be the consequences of providing information to the ACCC. 

February 2012

The ACCC chairman called on suppliers to provide information to the ACCC on a confidential basis, ensuring the ACCC would seek to protect and maintain that confidentiality.

This resulted in around 50 market participants approaching the ACCC on a confidential basis to discuss practices by the major supermarket chains they were concerned about.

Having identified areas of concern, the ACCC then commenced an in-depth investigation into those issues.

February 13, 2013

The ACCC provided an update to the Senate Estimates Committee of its investigations. The ACCC advised that the allegations raised with the ACCC, which were the subject of its investigation, included allegations of some conduct that the ACCC considered did not conform to acceptable business practice and may be unconscionable or a misuse of market power.  Such conduct, which was not necessarily identical across suppliers, product lines or even supermarkets, included:

persistent demands for additional payments from suppliers, above and beyond that negotiated in their terms of trade;

the imposition on suppliers of penalties that did not form part of any negotiated terms of trade, and which apparently do not relate to actual costs incurred by the major supermarket chains as a result of the conduct which has led to the penalty being imposed;

threats to remove products from supermarket shelves or otherwise disadvantage suppliers if claims for extra payments or penalties are not paid;

failure to pay prices agreed with suppliers; and

conduct discriminating in favour of home brand products.

June 2012 – December 2013  

Extensive in-depth investigation using compulsory information gathering powers that required suppliers and Coles to provide information.

 

Posted May 7, 2014.

ends

 

PPSA amendments to leases and motor vehicles

 

THE Federal Government is making amendments to the Personal Property Securities Act (PPSA) to help address anomalies over certain leases and what qualifies as a ‘motor vehicle’. 

The PPS Amendment (Deregulatory Measures) Bill 2014 was introduced to Parliament on March 19.

The bill will repeal section 13(1) (e) of the Personal Property Securities Act 2009 which deems leases of serial numbered goods of 90 days or more to be security interests for the purposes of the Act and make minor consequential amendments to the Act.

The Australian Government has also amended part of the definition of a motor vehicle in the PPS Regulations, to provide that one of the requirements is that the property is capable of travelling at speeds of at least 10km per hour and which has one or more motors with a total power greater than 200 watts. The regulations appear to have had some unintended consequences in this area.

The revised definition will take effect from July 1, 2014. The Personal Property Securities Amendment (Motor Vehicles) Regulation 2014 and the changes to the leases section is available at www.commlaw.gov.au

 ends

 

 

Review of the Personal Property Securities Act: affecting small business?

THE FEDERAL Government is undertaking a review into the Personal Property Securities Act 2009 to consider its operation and effects, paying particular attention to the experience of small businesses.

Attorney-General George Brandis has appointed Bruce Whittaker, a partner with the law firm Ashurst, to lead the review.

“Mr Whittaker's extensive legal and industry experience make him an excellent choice for the review,” Mr Brandis said.

“This Act established a national regime for secured finance using personal property. It replaced a complex and costly patchwork of over 70 Commonwealth, State and Territory laws and 23 registers.

“Two years on from the Act’s commencement, it is timely to review its effect to ensure it is meeting its objective of providing greater certainty to lenders and helping business, especially small business, to access finance.

“The government is committed to reducing unnecessary burdens on small business. It is important that any problems or concerns with the Act are identified.

The government has already moved quickly to address some pressing concerns raised by the hire industry about the Act.”

Mr Whittaker has been asked to prepare an interim report by July 31 this year, with recommendations on priority actions for the Federal Government to consider. The interim report will focus on issues raised in relation to small businesses.

The final report is due on January 30, 2015 and is expected to make recommendations on how to improve the Act, including simplification where appropriate, Mr Brandis said.

The review focuses on the effects of the reforms introduced by the PPS Act, as requested by the Attorney-General, on:

  • Australian businesses, particularly small business;
  • Australian consumers;
  • the market for business finance in Australia; and
  • the market for consumer finance in Australia;
  • the level of awareness and understanding of the PPS Act at all levels of business, particularly small business;
  • the incidence and, where applicable, causes of non-compliance with the requirements of the PPS Act particularly among small businesses;
  • opportunities for minimising regulatory and administrative burdens, including costs, on businesses, particularly small business, and consumers;
  • opportunities for further efficiencies in the PPS Act regime including (but not limited to) simplification of the Personal Property Securities Register and its use;
  • the scope and definitions of personal property covered by the PPS Act;
  • the desirability of specifying thresholds for the operation of the PPS Act regime in respect of particular types of personal property;
  • the interaction of the PPS Act with other legislation including the Corporations Act 2001;
  • the review must include consultation with relevant stakeholders.

Mr Whittaker is a partner in Ashurst’s banking and finance group in Melbourne and leads the firm’s PPS practice. Mr Whittaker specialises in debt capital markets, acquisition and leveraged finance, project finance, asset finance and leasing, and banking.

Mr Whittaker has more than 30 years experience in private practice both in Australia and internationally and is recognised as one of the world’s most experienced structured finance lawyers.

Mr Whittaker is also an editor and contributing author of the LexisNexis looseleaf and online service Personal Property Securities Law in Australia, and joint PPS Specialist Editor for LexisNexis’s Australian Encyclopaedia of Forms and Precedents.

The Personal Property Securities Act 2009 (the PPS Act) provides a single national system for the creation, registration, priority and enforcement of security interests in personal property.   The PPS Act commenced on January 30, 2012.

www.attorneygeneral.gov.au

ends

 

Contact Us

 

PO Box 2144
MANSFIELD QLD 4122