THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has a range of concerns about the newly approved version of the Banking Code of Practice in effect from March 2020, saying it doesn’t go far enough to protect small businesses.

“The ABA claims it has implemented the Royal Commission recommendations but it has not acted on all of the recommendations including one that is critical to small business,” Ms Carnell said.

“Commissioner Hayne recommended that the definition of a small business should be businesses that apply for a loan up to $5 million and have fewer than 100 employees.

“Despite our repeated efforts, the Code only protects small businesses with up to $3 million in total debt to all credit providers.

“What that means is that a large number of small businesses, particularly those capital intensive businesses such as agriculture, building and manufacturing, are not covered by the Code.

“While we support approved amendments to the Code to help drought-affected farmers, that same level of protection ought to be given to small businesses in these rural and remote communities that are also suffering," Ms Carnell said.

“Of particular concern, is a new addition to the Code under paragraph 115 b)** which in effect, allows banks to take action against the small business guarantor, before enforcing recovery against the security provided by the small business borrower.

“This is totally unacceptable and has the potential to be seriously detrimental to the small business borrower.

“During the Royal Commission, Commissioner Hayne acknowledged the ABA Banking Code of Practice is the chief protection for small business borrowers and as such, it needs real and meaningful changes to give it teeth," she said.

“While the Code has been improved, the number of get-out-of-jail clauses for the banks still dilute the protections for small businesses.

“We will continue to push for a better framework for a balanced relationship between banks and their small business customers.”

www.asbfeo.gov.au

Background:

(*) Commissioner Hayne Recommendation 1.10 – Definition of ‘small business’

The ABA should amend the definition of ‘small business’ in the Banking Code so that the Code applies to any business or group employing fewer than 100 full-time equivalent employees, where the loan applied for is less than $5 million.

(**)Banking Code of Practice 2019:

115. 115. However, the restrictions under paragraphs 113 and 114 do:
116. a)  not apply if you have specifically agreed in writing after the default notice is issued and we have informed you of the limitations of our enforcement rights under this chapter that they do  not apply; or
117. b)  not require us to first enforce any mortgage or other security that  the borrower has provided if we reasonably expect that the net proceeds of that enforcement will not be sufficient to repay a substantial  portion of the guaranteed liability, or because of the borrower not providing us with information, documents, or access to premises or assets as required, we are unable to reasonably assess whether the net proceeds of that enforcement will not be sufficient to repay a substantial portion of the guaranteed liability.

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THE Institute of Public Accountants (IPA) has confirmed a grant from the National Health and Medical Research Council (NHMRC) which will support the IPA’s research endeavours into the mental health of small business.

“The IPA is very pleased to partner with Beyond Blue, Mental Health First Aid Australia, Worksafe Victoria and Deakin University and to receive the research grant of $559,073 from the NHMRC,” said IPA chief executive officer, Andrew Conway.

“It is an exciting development considering this is a world first in this type of research and I am humbled to be recognised as introducing this initiative.

‘In terms of mental health research, this is a genuine game changer; we intend to put our collective backing behind this. 

“Through our Australian Small Business White Paper development, we have heralded the fact that the mental health of small business is a significant issue in Australia, and we are intent on doing what we can to arrest the tide of growing health concerns," Prof. Conway said.

“Our nation-wide small business road show in 2017 provided many anecdotes of small businesses battling with depression, anxiety and other issues; too many stories to ignore.

“We are very grateful to the NHRMC for this funding which will extend research in protecting the mental health of SME owners; evaluating real-world approaches to mental health first aid; and, client-relationship building training for small business advisers," he said.

“Our members are very often the first to see the struggle signs within their clients and therefore, we would like to see our members better equipped to support their clients and themselves through mental health first aid training. 

“They need to be skilled appropriately, to have those early conversations and point the way to the health professional that is required,” Prof. Conway said.

About the Institute of Public Accountants

The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies.  In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 38,000 members and students in over 80 countries.  The IPA Group is the largest SME focused accountancy organisation in the world. The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants. 

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THIS WEEK, the Full Federal Court ruled in favour of the Australian Taxation Office (ATO), agreeing that horse racing clubs and state racing boards are required to pay superannuation contributions on behalf of jockeys. 

The court upheld the ATO’s superannuation guarantee (SG) charge assessments that were issued to a New South Wales thoroughbred race club and Queensland’s principal racing authority with respect to riding fees paid to jockeys during the period 1 July 2009 to 30 June 2014.

ATO Deputy Commissioner John Ford said this outcome is an excellent example of the ATO’s ongoing focus on reducing the incidence of non-payment of superannuation guarantee in the community, especially by larger businesses.

The ATO takes the non-payment of SG very seriously. Employers that do not pay the correct amount of SG contributions for their workers deprive them of their retirement savings they are entitled to.

“Super is money set aside for employees’ future retirement and financial wellbeing,” Mr Ford said.

In the matters of Commissioner of Taxation v. Scone Race Club Limited (SRC) and Commissioner of Taxation v. Racing Queensland Board (RQB), both SRC and RQB argued that they weren’t liable for super payments, because they only made the payments of riding fees to the jockeys on behalf of the owners for administrative purposes.

The court ruled in favour of the commissioner, agreeing that it was the SRC and RQB which were liable to pay riding fees to jockeys for riding in a horse race and are therefore deemed to be their employers for the purposes of the SG legislation.

Where the ATO finds that an employer hasn’t met their obligations, they are liable for the super guarantee charge (SGC), made up of:

• the amount of super the employer should have paid,
• interest on those amounts, and
• an administration fee of $20 per employee per quarter.

SRC and RQB have 28 days to seek special leave to appeal to the High Court.

The ATO has a range of strategies and activities in place to educate, support, monitor and enforce compliance by employers. The ATO encourages people to report instances of non-payment and responds to every report of possible non-payment of SG from employees or former employees.

“We will pursue outstanding debts, aiming to collect and distribute unpaid super and interest to employees as soon as possible,” Mr Ford said.

In 2018-19, the ATO contacted more than 22,000 employers as a result of reviews or audits, and raised assessments of over $805 million.

ato.gov.au/unpaidsuper

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CANBERRA will play host to a meeting of parliamentarians from around the world, with the 28th Asia Pacific Parliamentary Forum to be held at Parliament House in January.

The APPF is an annual forum where national parliamentarians from the Asia Pacific region meet to identify and discuss important matters of common concern.

Speaker of the House of Representatives and president of the APPF Executive Committee, Tony Smith MP, said the forum would bring together more than 300 delegates from parliaments from the 27 member countries and another 11 observer countries.

"Since the first APPF in 1993, the forum has been an incredible opportunity for parliamentarians to share experiences with colleagues from around the world," Mr Smith said.

"I’m especially pleased that in 2020, the forum will welcome delegates from countries in the Pacific Island Forum.

"Events such as APPF28 form part of the Australian Parliament’s International Program, which helps to promote understanding, sharing of knowledge and democratic development with our fellow parliaments around the world."

Australia was one of nine originating countries of the APPF. The Australian Parliament hosted the second preparatory meeting in Canberra in 1991 before the inaugural meeting of the APPF in January 1993 in Tokyo. Australia last hosted the APPF in 2000.

Delegates will participate in a number of plenary sessions, discussing subjects such as security, economics and trade, and regional cooperation. At the conclusion of the forum, a joint communique will be published, outlining all agreed resolutions from APPF28.

For more information about the forum, visit appf28.org.

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