We recently have began the process of emerging into the realm of multimedia marketing. Two weeks ago, the Hatzis Lawyers youtube channel went live at www.youtube.com/HatzisLawyers.
Here is our Introduction Video:
Thursday, July 29, 2010
Division 7A Loans
The Commissioner for Taxation has released a ruling on what is classed as a Div 7A loan in dealings between a private company and an associated trust estate.
A Div 7A loan will be declared to exist where a private company does one of two things: they can either expressly give rise to such a loan; or they can intentionally fail to call for payment of an unpaid present entitlement (UPE) from the trust. Generally, however, a UPE is not a loan. It only becomes so when the UPE is the provision of financial accommodation.
A private company with a UPE will be held to have made a financial accommodation to a trust if (a) the company has provided some form of pecuniary aid or favour to the trust and (b) a sum is ultimately (re)payable to the company from the trust. With these two elements, by a company intentionally failing to call for payment of the UPE, they are providing pecuniary aid or favour to the trust and since the trust will ultimately have to pay the UPE to the company, the sum is ultimately payable from the trust to the company. If these two elements can be met, a company will have formed a Div 7A loan with the trust. In this situation, a debtor/creditor relationship replaces the UPE.
A Div 7A loan will be declared to exist where a private company does one of two things: they can either expressly give rise to such a loan; or they can intentionally fail to call for payment of an unpaid present entitlement (UPE) from the trust. Generally, however, a UPE is not a loan. It only becomes so when the UPE is the provision of financial accommodation.
A private company with a UPE will be held to have made a financial accommodation to a trust if (a) the company has provided some form of pecuniary aid or favour to the trust and (b) a sum is ultimately (re)payable to the company from the trust. With these two elements, by a company intentionally failing to call for payment of the UPE, they are providing pecuniary aid or favour to the trust and since the trust will ultimately have to pay the UPE to the company, the sum is ultimately payable from the trust to the company. If these two elements can be met, a company will have formed a Div 7A loan with the trust. In this situation, a debtor/creditor relationship replaces the UPE.
Family Trusts and the Bamford Decision
For those concerned with trust law, the High Court’s ruling in Bamford v Federal Commissioner for Taxation is the first definitive decision to consider how to calculate a ‘share’ and what constitutes ‘net income’.
In essence, the High Court (in upholding the decision of the Full Court of the Federal Court) held that trustees are no longer taxed for capital gains, it is now the responsibility of the beneficiary. In Bamford compliant deeds, the beneficiary may be liable for either the fixed dollar or variable percentage of their interest in trust income. If the deed is not Bamford compliant, then a beneficiary may be taxed on income that is higher than what they actually receive.
Trust Deeds drawn before June 2009 (when the Federal Court released its decision) may not be Bamford compliant. If your deed was drawn before that time, we recommend contacting our Commercial team on 1300 428 947 or at commercial@hatzis.com.au and speaking with one of our Solicitors.
In essence, the High Court (in upholding the decision of the Full Court of the Federal Court) held that trustees are no longer taxed for capital gains, it is now the responsibility of the beneficiary. In Bamford compliant deeds, the beneficiary may be liable for either the fixed dollar or variable percentage of their interest in trust income. If the deed is not Bamford compliant, then a beneficiary may be taxed on income that is higher than what they actually receive.
Trust Deeds drawn before June 2009 (when the Federal Court released its decision) may not be Bamford compliant. If your deed was drawn before that time, we recommend contacting our Commercial team on 1300 428 947 or at commercial@hatzis.com.au and speaking with one of our Solicitors.
Unfair Dismissal under the Fair Work Act
Under the Rudd Government’s new Fair Work Act 2009 (Cth), a person is protected from being dismissed where the provisions of s 382 are met. Under that legislation, a worker who believes that they have been unfairly dismissed may make an application to Fair Work Australia.
A recent ruling of Fair Work Australia demonstrates a scenario as to just how wide the term can be pushed in terms of a breach of s 382.
In Harley v Aristocrat Technologies Australia Pty Ltd [2010] FWA 62, Mr Harley was held to have been constructively dismissed by his employer, Aristocrat Technologies (ATA), when he resigned as a result of a letter he received from them. In that letter, he was asked to explain why his employment should continue in light of his perceived poor sales record and numerous client complaints. Mr Harley, in his application to Fair Work Australia, alleged that the real reason he was required to resign was the inaction of ATA in relation to his complaints of harassment and bullying against the State Manager.
In its ruling, Fair Work Australia held that the inaction of ATA in relation to the complaints against the State Manager was a failure on ATA’s part to deal fairly with its employees, namely Mr Harley.
From this ruling, it appears that Fair Work Australia is willing to find breaches of s 382 where employment is terminated where there is a failure of the employer to deal fairly with its employee’s.
If you would like to read the ruling of Fair Work Australia in Harley, it can be found here.
A recent ruling of Fair Work Australia demonstrates a scenario as to just how wide the term can be pushed in terms of a breach of s 382.
In Harley v Aristocrat Technologies Australia Pty Ltd [2010] FWA 62, Mr Harley was held to have been constructively dismissed by his employer, Aristocrat Technologies (ATA), when he resigned as a result of a letter he received from them. In that letter, he was asked to explain why his employment should continue in light of his perceived poor sales record and numerous client complaints. Mr Harley, in his application to Fair Work Australia, alleged that the real reason he was required to resign was the inaction of ATA in relation to his complaints of harassment and bullying against the State Manager.
In its ruling, Fair Work Australia held that the inaction of ATA in relation to the complaints against the State Manager was a failure on ATA’s part to deal fairly with its employees, namely Mr Harley.
From this ruling, it appears that Fair Work Australia is willing to find breaches of s 382 where employment is terminated where there is a failure of the employer to deal fairly with its employee’s.
If you would like to read the ruling of Fair Work Australia in Harley, it can be found here.
Discrimination in the Workplace
It is a cardinal rule of Industrial Relations that an employer is never to discriminate against an employee. What most employers fail to realise, however, is just how wide a scope the term discrimination actually has.
In its most basic form, discrimination is where a person or group is treated less favourably than others due to an identifiable attribute or characteristic. This can occur in both a direct and indirect manner.
Direct discrimination is where an employer treats an employee or a group of employees in a manner dissimilar to the treatment enjoyed by the rest of the workplace. For example, a school deciding not to hire male staff is a form of direct discrimination.
Contrast that with indirect discrimination, which is where a policy or requirement appears impartial however has the ultimate effect of placing a person or group of persons at a disadvantage. For example, if an employer requires that applicants be married, that would discriminate on grounds of marital status against those persons not married.
If you are worried that your polices and practices may fall under the umbrella of discrimination, please feel free to call our Litigation team on 1300 428 947 or email at
In its most basic form, discrimination is where a person or group is treated less favourably than others due to an identifiable attribute or characteristic. This can occur in both a direct and indirect manner.
Direct discrimination is where an employer treats an employee or a group of employees in a manner dissimilar to the treatment enjoyed by the rest of the workplace. For example, a school deciding not to hire male staff is a form of direct discrimination.
Contrast that with indirect discrimination, which is where a policy or requirement appears impartial however has the ultimate effect of placing a person or group of persons at a disadvantage. For example, if an employer requires that applicants be married, that would discriminate on grounds of marital status against those persons not married.
If you are worried that your polices and practices may fall under the umbrella of discrimination, please feel free to call our Litigation team on 1300 428 947 or email at
Wednesday, July 14, 2010
Dissolving a partnership? Some important things to know
We commonly provide advice to individuals operating small to medium sized businesses in partnership with others. It is inevitable that business partners will come to some disagreement and as a result, they may decide to go their separate ways and finalise their business relationship.
We have seen some recent examples of “what not to do” when finalising a partnership. An important point to remember is that all partners may be liable for any debts or liabilities incurred by the business and/or their fellow partners.
If the partnership is to be finalised, then appropriate measures should be taken to ensure all matters are dealt with and each party can walk away knowing their respective positions.
Two recent cases spring to mind. In the first example, a partnership was dissolved without a comprehensive agreement signed by the parties. This meant the party continuing to operate the business, which was operated by the partnership, was stuck with liabilities incurred by the partnership before the date it was dissolved.
The remaining partner was upset. The responsibility for the liabilities fell at his feet when he believed all partners were liable for the liabilities in question. While the partners executed an agreement, the agreement was deficient and did not properly detail the wishes of all partners.
The second example involved the outgoing partner being pursued by the Australian Taxation Office (ATO). The ATO sought to recover a substantial debt against the outgoing partner arising from a debt incurred after the date that the partnership ceased to exist.
We were able to assist our client by relying on the very specific terms of an agreement we had drafted and which the partners signed, which specifically dealt with debts of the partnership.
The result was we were able to save our client tens of thousands of dollars in liability to the ATO, simply because we had a comprehensive agreement on which we would rely.
Both cases highlight the need to see us and obtain an appropriate agreement if you are ending a relationship with a business partner.
We have seen some recent examples of “what not to do” when finalising a partnership. An important point to remember is that all partners may be liable for any debts or liabilities incurred by the business and/or their fellow partners.
If the partnership is to be finalised, then appropriate measures should be taken to ensure all matters are dealt with and each party can walk away knowing their respective positions.
Two recent cases spring to mind. In the first example, a partnership was dissolved without a comprehensive agreement signed by the parties. This meant the party continuing to operate the business, which was operated by the partnership, was stuck with liabilities incurred by the partnership before the date it was dissolved.
The remaining partner was upset. The responsibility for the liabilities fell at his feet when he believed all partners were liable for the liabilities in question. While the partners executed an agreement, the agreement was deficient and did not properly detail the wishes of all partners.
The second example involved the outgoing partner being pursued by the Australian Taxation Office (ATO). The ATO sought to recover a substantial debt against the outgoing partner arising from a debt incurred after the date that the partnership ceased to exist.
We were able to assist our client by relying on the very specific terms of an agreement we had drafted and which the partners signed, which specifically dealt with debts of the partnership.
The result was we were able to save our client tens of thousands of dollars in liability to the ATO, simply because we had a comprehensive agreement on which we would rely.
Both cases highlight the need to see us and obtain an appropriate agreement if you are ending a relationship with a business partner.
Business Purchases - What do you get for your money?
Purchasing an existing business can sometimes be a stressful exercise. Questions such as “what market share does the business have?”, “will the product sell?” and “what revenue must I make to pay my bills?” arise. An additional question, which is sometimes overlooked, is “what do I get for my money?”
In a recent case, we were asked to enforce a right that arose from a confidentiality agreement between the proprietors of the business and a former employee. The former employee accessed and marketed to clients from the business’ database to retain those clients for the former employee’s own business pursuits.
The question at play was whether the rights stemming from the confidentiality agreement passed to our clients upon the purchase. The business acquisition was not appropriately documented and the issue of whether the rights passed became blurred.
Intellectual property and confidentiality are important issued for small business. Although there are laws protecting business, it can sometimes be difficult or expensive to bring the matter before a Court for determination.
In any transaction, it is important to fully document the intention of the parties and the outcome sought by each of them.
In this particular case, the business purchased had rights pursuant to the confidentiality agreements however; the former employee alleged the agreement was with the business proprietor and did not pass with the purchase.
While the action is being played out in the Courts, the question can be avoided by appropriately documenting what is actually passing to a purchaser of a business; a properly drafted contract is a solid step to protect your interests.
To overcome issues of this nature arising, we urge potential business owners to consult with us and appropriately document their acquisition, to eliminate problems that arise through ambiguity and uncertainty.
In a recent case, we were asked to enforce a right that arose from a confidentiality agreement between the proprietors of the business and a former employee. The former employee accessed and marketed to clients from the business’ database to retain those clients for the former employee’s own business pursuits.
The question at play was whether the rights stemming from the confidentiality agreement passed to our clients upon the purchase. The business acquisition was not appropriately documented and the issue of whether the rights passed became blurred.
Intellectual property and confidentiality are important issued for small business. Although there are laws protecting business, it can sometimes be difficult or expensive to bring the matter before a Court for determination.
In any transaction, it is important to fully document the intention of the parties and the outcome sought by each of them.
In this particular case, the business purchased had rights pursuant to the confidentiality agreements however; the former employee alleged the agreement was with the business proprietor and did not pass with the purchase.
While the action is being played out in the Courts, the question can be avoided by appropriately documenting what is actually passing to a purchaser of a business; a properly drafted contract is a solid step to protect your interests.
To overcome issues of this nature arising, we urge potential business owners to consult with us and appropriately document their acquisition, to eliminate problems that arise through ambiguity and uncertainty.
Wednesday, July 7, 2010
About Us
With over 20 years of experience, Principal George Hatzis has seen the practice grow from humble beginnings to a vibrant energetic office. Providing clients with a personal, prompt and quality service in all matters of the law has been the key to Hatzis Lawyers success.
Adopting performance standards has assisted the practice to achieve this level of accomplishment. Hatzis Lawyers is only the second legal firm in Queensland to obtain QL Level 1V Certification in Best Practice Excellence.
In 2002 Hatzis Lawyers was voted Employer of Choice by the Queensland Law Society, Small Employer of the Year in the Queensland Training Awards and was a finalist in the Quest Newspapers Business Achiever Award.
Visit out website at www.hatzislawyers.com.au.
Subscribe to:
Posts (Atom)