FOOD PRODUCERS are on the countdown to showing they are compliant with the new Country of Origin Labelling (CoOL) legislation which comes into effect on July 1.

To assist, GS1 Australia is working closely with retailers to make sure their food suppliers are ready.

All companies that sell food priority products in Australian retail stores and online sites have until July 1, 2018, to change their labels to comply with the CoOL requirements.

By law, labels for priority food products grown, produced or made in Australia will have to carry the familiar Australian Made kangaroo symbol and bar chart, with accompanying text, that shows the proportion of Australian ingredients in the product. Non-priority foods only require a text statement of origin on their labels. 

GS1 Australia claims the new labels will provide Australian consumers with clearer and more meaningful country of origin information, so they can make more informed choices about the food they buy.

“Our collaboration with the retailers supports the shared vision of providing consumers with clearer information about the origins of their food,” GS1 Australia’s head of data and digital content services, John Hearn said.

“It also provides food suppliers with solutions to upload and share their CoOL attribute data with retailers who use our digital services.”

Mr Hearn said GS1 Australia’s suite of digital content services provided an easy solution for suppliers to provide their CoOL information to retailers.

The Data and Digital Content Services team at GS1 Australia have added the CoOL data fields to the National Product Catalogue (NPC) – GS1 Australia’s synchronisation solution that helps businesses exchange standardised supply chain information with their trading partners.

This means that food suppliers can enter CoOL attribute product data in the NPC and forward this information to retailers from a single location.

“Smart Media, our complete digital marketing solution for sharing digital content and photography with retailers and online marketplaces, also supports the Country of Origin Labelling data requirements of all major retailers,” Mr Hearn said.

To further assist suppliers and their trading partners, the GS1 Barcode Check Verification Report has also been updated to include CoOL legislation images as they appear on the finished product.

“GS1 Australia’s support so far has assisted the enablement of many food suppliers to be ready for July 1,” Mr Hearn said.

“An increasing number of suppliers are now populating CoOL attributes in the National Product Catalogue with many more suppliers in the pipeline to complete the legislative requirements.

“It is great to see that many food suppliers are populating the CoOL fields in the National Product Catalogue and we encourage all of them to start uploading content, so they are ready and compliant with the CoOL legislation,” Mr Hearn said.

He said this collaborative success story further demonstrated GS1 Australia’s commitment to the continued exchange of quality data between trading partners.

To assist in understanding the food labelling laws, GS1 has created a video supported by Coles and Metcash.

Further information is also available on the Australian Government website.

www.gs1au.org

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THE February 26 appeal decision by the Federal Court of Australia in Chowder Bay Pty Ltd v Paganin resulted in the valuer and the developer dodging a bullet by the skin of their teeth – and it’s a lesson to all in the property industry according to Mullins Lawyers.

Six investors had sued the valuer on the basis his valuation of the project at $67.8 million was misleading and deceptive. Mullins Lawyers special counsel Gordon Perkins said this valuation had resulted in the bank advancing money to the developer, which in turn resulted in a loss to the investors.

The investors argued in court that if the valuation had been accurate (estimated at about $45.5 million), the bank would not have financed the development and they would have sold the undeveloped land and recovered their money. 

“The argument failed because the valuers had qualified their valuation and the bank was a sophisticated user of valuations,” Mr Perkins said. “The outcome may have been different had the end user of the valuation not been as sophisticated as the bank.”

The Chowder Bay project attracted 23 investors at $500,000 each to develop a former caravan park in Western Australia into a residential resort.

The court was told that the investors were to receive one residential apartment each on sale of the remaining development and the developer was to receive several apartments. The bank was to finance about 45 percent of the sale price of all of the apartments.

When arranging the valuation, the developer gave the valuer a list showing the sale prices of the apartments and the 23 apartments to be given to the investors as ‘sold’.

“The valuer seemed to be unaware of the true consideration for those ‘sales’ but ultimately was aware they were to investors and inserted appropriate qualifications into the valuation,” Mr Perkins said. “The developer defaulted when sales of the remaining apartments were not sufficient to repay the loan before it expired. The bank appointed a receiver to the development and sold the apartments.”

Assessing the merits of the claim, the trial judge examined all of the circumstances surrounding the valuation and found that the bank was not misled or deceived as the assumptions and qualification by the valuer were clearly expressed. The bank’s knowledge of the transaction and its sophistication as a user of valuations were factors in this decision as was the qualification in the second valuation to the effect that the valuer had not seen the presale contracts and that the bank should confirm them.

The Court of Appeal supported the Judge’s reasoning in this regard and upheld the decision that the valuation did not mislead the bank. As a result, the case failed from an investor perspective.

Mr Perkins said there were several clear lessons from the case.

“Valuers need to consider to whom they are addressing their valuation and where appropriate to include sufficient explanation of unusual features and qualifications relevant to the degree of sophistication of the recipient,” Mr Perkins said. “Financiers should be aware of the basis for assumptions made by a valuer and specifically check matters raised by the valuer in any qualifications to the valuation.

“In this instance the argument was narrow and focussed on the valuation. A similar argument could have been raised by the investors to the effect that ‘they made a loss because the bank was negligent in making the loan. Had the bank been diligent and acted on the qualification they would not have made the loan and the investors would have recovered their money from sale of the undeveloped land’.

“Unfortunately the argument that ‘the bank should not have lent me the money’ arises too frequently for financiers to ignore this point. Developers, directors and their management must make sure that they fully and frankly advise valuers when instructing them.

“They should also ensure their financiers are fully and frankly advised of the nature of any special arrangements. Here the bank’s risk was that the sale of the remaining units did not occur in time to repay the loan.

“Although there was sufficient equity to protect the bank, had the developer been diligent, the issue could have been dealt with before the loan was drawn and the outcome for the developer and investors would have been different,” Mr Perkins said. “The developer and one of its directors misled the valuer by not advising the nature of the arrangements with investors described in the valuation as ‘pre-sales’.

“They were aware of the issue by the time of the second valuation. It’s possible they also misled the bank as to the nature of the ‘pre-sales’ to investors. This was not argued and nothing turned on the finding against the director and developer as the link with the loss claimed by the investors was broken (the valuer had not misled the bank).

“Had the outcome been different, the directors would have been liable for at least part of the loss. This scheme had more than 20 investors. If the investors each had paid less than $500,000 it would be a managed investment scheme requiring registration with ASIC.

“This was not relevant to the case above but we recommend that developers and others raising funds using trusts or other forms of investment vehicle check that their activities comply with the laws regarding managed investments,” Mr Perkins said.

www.mullinslawyers.com.au

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THE Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has urged small businesses to prepare themselves to manage mandatory data breach reporting laws, effective February 22.

“If an unauthorised entity accesses anyone’s personal information from a business computer system, where it is likely to result in serious harm to that individual, that data breach will have to be reported to the Office of the Australian Information Commissioner (OAIC), as well as the individual affected,” Ombudsman Kate Carnell said. 

“An unauthorised entity could be an employee, an independent contractor or an external third party, such as a hacker (via cyber attack). Serious harm to an individual may include physical, psychological, emotional, financial or reputational harm.”

Ms Carnell warned this legislation carried significant financial penalties, and would affect any small business that collected personal information from their customers, and staff.

“Small businesses can’t afford not to understand what the new laws mean to them, and yet I’ve read a new study reporting 44 percent of Australian businesses are not fully prepared,” she said.

“Another report by Telstra last year found 33 percent of small businesses don’t take proactive measures to protect against cyber breaches.

“With penalties of up to $360,000 for individuals and $1.8 million for organisations, the impact of a breach on a small business is devastating.”

Mrs Carnell said information on what a breach is, how to report a breach, or how to take steps to avoid notification in a timely manner can be accessed from the OAIC website.

“With the new laws commencing in around three weeks, I suggest small business operators also read our Cyber Security Best Practice Guide,” Ms Carnell said.

Small businesses in categories that must comply with the Notifiable Data Breaches scheme can be determined through the Office of the Australian Information Commissioner.

www.oaic.gov.au

www.asbfeo.gov.au

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THE Federal Government is introducing legislation to close tax consolidation rules that are alleged to have been misused by multinational companies to avoid Australian tax.

Tax consolidation allows wholly-owned corporate groups to be treated as a single entity for tax purposes. Under existing rules, multinational consolidated groups can, in some circumstances, achieve tax free gains on assets by transferring entities between non-resident associates.

“There are about 12,000 tax consolidated groups in Australia, including the majority of our largest businesses,” Revenue and Financial Services Minister Kelly O’Dwyer said. “These rules reduce compliance costs for business and improve the integrity of the tax system. 

 “This legislation will improve the integrity of the consolidation regime by preventing multinational groups from sheltering future income tax by 'churning' entities between related parties.

“This will ensure that these multinational groups pay the right amount of tax on gains from their Australian assets.

Ms O’Dwyer said the Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill 2018 improves the integrity and operation of the consolidation rules by removing a double tax benefit arising from the treatment of deductible liabilities; simplifying the rules by disregarding deferred tax liabilities; preventing double benefits from arising from securitised assets; ensuring the tax treatment of certain assets and liabilities is consistent with economic substance; and closing a loophole allowing access to double deductions by shifting value across entities.

“The changes in this Bill implement recommendations made by the Board of Taxation in its post-implementation reviews of the consolidation regime,” Ms O’Dwyer said.

“The government has consulted extensively on these measures, including as part of the Board of Taxation reviews. The government has listened carefully to stakeholders in the design of these changes to ensure they are fair and balanced.”

www.treasury.gov.au

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SUPERANNUATION Guarantee (SG) contributions paid by employers may be key to a person’s retirement plan,  but some penalties for non-compliance may be detrimental to small business and there may be more red tape on the way, according to the Institute of Public Accountants (IPA). 

“There is no doubt that employers should be making timely and accurate superannuation contributions on behalf of their staff but some penalties associated with late payments and non-compliance are draconian to say the least,” said IPA chief executive officer, Andrew Conway. 

“The imposition of punitive costs on employers who pay their SG contributions late or in part can be extremely damaging on a small business struggling with cash flow issues.

“If the employer does not pay the correct amount of SG contributions on time, it can be deemed as a shortfall and SG onerous charges are imposed.  This consists of the total of the employer’s individual SG shortfalls for each employee and attracts further nominal interest and administration fees for that quarter.

“To add further insult, employers are then asked to calculate SG contributions and SG charge on a different basis to the norm which adds further compliance complexity to the employer.  This calculation can actually make the shortfall higher.  And worse, all of the above is non-deductible. 

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has welcomed the Unfair contract terms and small business loans report released on Friday by the Australian Securities and Investments Commission (ASIC).

“Just over a year ago, ASBFEO and ASIC jointly reviewed small business standard form contracts, and we found the major four banks had failed to take the necessary steps to comply with their obligations under unfair contract terms (UCT) legislation,” Ms Carnell said.

“This was after a generous one year transition period to meet the November 2016 implementation deadline. 

“Shortly after our UCT review, the big four banks committed to a series of changes to make sure small business loans of up to $3 million entered into or renewed from 12 November 2016 would be protected from unfair contract terms.

“The legislation covers all financial institutions in Australia and we are yet to see the rest of the financial services industry make the appropriate changes, so their standard form loan agreements comply with the law.”

Ms Carnell said small business loan contracts are complex, with many pages and in highly legalistic language.

“Often small businesses do not understand the significance of what they are signing,” she said.

The unfair contract terms removed, or limited in use, from small business contracts by the big four banks are:

  • unilateral variation: the ability to vary anything in the contract without agreement;
  • financial indicator covenants: used to trigger a default and debt recovery even if loan repayments made;
  • material adverse change events: the power to terminate the loan for an unspecified negative change in the circumstances
  • entire agreement clauses: prevent bank being held responsible for conduct, statements or representations made to the borrower outside the writer contract
  • broad indemnification clauses: borrower to cover losses and costs incurred due to fraud, negligence or wilful misconduct of the bank employees, agents or a receiver appointed by the bank.

“The actions a big four bank can take on a small business loan is now more transparent to the borrower and proportional to the management of risk,” Ms Carnell said.

“We will monitor the use of the changed clauses by the big four banks, and ensure their existing applicable small business customers are aware of the changes.

“We will also continue to apply pressure on the rest of Australia’s financial institutions, to make sure they too meet the unfair contract terms legislation.”

www.asbfeo.gov.au

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Law firms unsteady on tech adoption

  • Super User
  • Legal
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AUSTRALIAN law firms stand at a critical juncture in terms of technology choice and implementation – and it us likely to place the future of some firms in jeopardy.

The technology adoption pathways are unclear for most legal companies, according to a new report by Thomson Reuters Peer Monitor and Melbourne Law School. 

The 2017 Australia: State of the Legal Market report claims that, despite improvements in the large law firm market, all organisations must make “big strategic decisions” on how to deploy technology to ensure the best opportunities for future growth.

In adopting new technologies, law firms must decide whether to pursue a strategy of ‘exploit’ – to  leverage current strengths and capabilities to make their current core business as good as it can be – or ‘explore’ to leverage new exploratory and experimentation efforts that may bear fruit in the future. The other option is a hybrid approach.

“In an increasingly technology-enabled world with hypercompetitive markets, firms can no longer afford to stand still but instead need to make active choices,” senior fellow at Melbourne Law School and lead author of the report, Joel Barolsky said. “Firms must decide whether to be pioneers investing in experimenting with new technologies, or take a more cautious approach and wait to see which technologies take hold and what clients prefer.  

“Both paths come with their own risks and rewards. My personal view is that firms need to adopt both Exploit and Explore strategies to determine the best path forward,” said Mr Barolsky, who is also the principal at Barolsky Advisors.

The report is based on financial data drawn from the Australian offices of 18 major law firms, with analysis undertaken by Thomson Reuters Peer Monitor.

The market for large law firm services may have turned a corner in the 2017 financial year, according to the report. After four consecutive years of declining demand, the market returned to positive growth – but at a mere 0.1 percent.

Overall, the market showed growth in four key metrics: demand, worked rates, fees worked and utilisation – although none was greater than a single percent. 

“However, after contracting for most of the last decade, even this modest success may mark an important inflection point,” the report noted.

Corporate general and mergers and acquisitions (M&A) work, along with real estate practices, showed significant growth, while banking and finance had significant contraction in demand.

The very largest firms, referred to as the ‘Big 8’ generally outperformed their counterparts, with revenue growth averaging 1.6 percent, while other large firms declined 1.3 percent.

The Big 8 have widened the gap in utilisation, with the average QFE working 310 hours, or 20 more than their counterparts at other large firms. The picture with regard to rates is more mixed.  

Big 8 firms have widened the gap on worked rates – that is, agreed upon rates with clients – charging an average of $489 per hour, or $66 more than other large firms. However, with billed rates – the rates actually billed to clients – the gap has narrowed, with Big 8 charging an average of $423, or $48 more than other large firms.

According to Thomson Reuters Legal Australia strategic markets development leader Dean Corkery, the average firm decreased overall spend on direct and indirect expenses in the 2017 financial year.  

“Big 8 firms are still growing expenses, only at a slower rate,” Mr Corkery said. “However, other large firms are contracting both their direct and indirect expense spend. Technology and outside services represented some of the largest increases in spending.”

Despite the improving market conditions, the report cautioned that firms face increasing pressures from a combination of client demands, growing judicial and regulatory requirements, and evolving preferences of employees.  Technologies such as cognitive computing, mobile, client connectivity, software-as-a-service and the cloud, may help firms cope with these pressures and continue to grow profitability.

“The advent of new and emerging technologies brings challenges and opportunities to the legal sector,” Mr Corkery said. “Many firms have already started adding innovation as a key element in their business strategy to better respond to demands from clients and employees. Those that can successfully combine leadership, resources and agility in innovation are likely to come out on top.”

www.insight.thomsonreuters.com.au

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