Corporate Governance

I recently attended the Australian Institute of Company Directors Course at Customs House and was inspired by an excellent program. It seemed to me that companies and how they manage their business are all bound by the same principles and affected by many of the same issues. Here are a few points worth considering:

1 Culture: Someone said “culture eats strategy for breakfast”. Maybe they are right and it takes strong and focused leadership to ensure culture develops in the right way. Make the rules about how you do business known and live by them as a Director;

2 Strategy: Without really knowing and understanding what you are about you cannot ever hope to reach your goals. Have a formal session each year and if you need it, get an external facilitator. make sure the team understand it so they can explain it in one sentence in a lift. Refresh this every year;

3 Financial Competency: The learning examples used included a family business secured by a family home with a basic balance sheet. As a Director if you cannot understand the numbers using 8 simple steps then you should resign.It is being able to read what is happening to a company that drives those numbers so you can make critical decisions;

4 Effective Decision making: As a key platform all business owners have to make decisions. By having a structured  process every time you are far more likely to make superior decisions for the long term sustainability of the enterprise.

5 Compliance & Risk: If you do not know the legal and accounting compliance and risk requirements then find someone who does. make sure you establish clear procedures to invest in these so the business is protected and maintained as much as possible. Establish a risk appetite based on your culture and purpose. Scenario planning is a great way to find out what you would do if the worst happened. Test your capacity to respond;

6 Board Composition and Effectiveness: If you cannot perform the role then find someone who can. There are plenty of people who can source the right Director to give the company the energy, the experience and the ability to make your business succeed. Get a Chair who can manage the group and make sure you balance the dynamics between board members, the CEO and the stakeholders.

If you would like assistance with any of these issues please take the first step and ask, cheers


Small Business Relief CGT

CGT and Small Business Concessions


 20 years after introduction of the small business CGT concessions, many business owners are unaware of their options. A carefully thought out plan with advice is smart.

The fact is most business owners fail to plan for the final succession plan for their hard earned company and assets.

We often identify business where opportunities for generous capital gains tax (CGT) concessions are missed on the sale of a business. Profit from the hard work and effort by taking advantage of the CGT concessions.

Inside the income Tax Assessment Act 1997 (Cth) Division 152, there are four key CGT small business concessions available. Get early advice on these concessions if you are considering selling your business, and structure the sale in a way that will allow you to take full advantage.


 You must be able to satisfy the basic eligibility conditions for relief before you can enjoy these benefits.

The CGT event must occur in relation to your “CGT asset”. This may be the sale of a business you own, however these terms are defined under tax law.

Assuming this is the case, you must then either:

  1. be a small business entity for the relevant income year;
  2. be a partner in a partnership (that is a small business entity) for the relevant income year, with the CGT asset being an interest in an asset of the partnership; or
  3. Satisfy the “maximum net asset value” test.

Small Business Entity and Partnership Interests

 If your aggregated turnover from either the previous or current year is less than $2 million, then you are considered a small business entity.  Similarly, if a partnership meets this small business entity definition, as a partner in the partnership you will have satisfied the eligibility condition.

Maximum net asset value test

 The maximum net value of all CGT assets that belong to you, any entities connected with you and any affiliates or entities connected with your affiliates must not exceed $6 million just before the relevant CGT event for which you are trying to access a CGT concession.

Be wary of timing! If the value of your business and assets is growing and you are approaching this threshold, act fast to take advantage of the CGT small business concessions.

As long as you have satisfied the above eligibility conditions, you are able to take advantage of the CGT relief under one of the following four conditions.


 Small business 15-year exemption (Subdivision 152-B)

If you have owned the CGT asset for an unbroken period of 15 years, and are over 55 when you sell the CGT asset, you may completely disregard any capital gain arising from the sale.

This is a highly valuable tool to use in retirement planning. If you’re not sure, you should seek professional advice to ensure you don’t miss out.

Small business 50% reduction (Subdivision 152-C)

 If you have not owned your business for 15 years, or are not ready to retire, then this concession allows you to reduce a capital gain by 50%, in addition to the 50% CGT general discount available to individuals under Division 115. This will give you a 75% reduction in your taxable CGT asset.

Small business retirement exemption (Subdivision 152-D)

 If you are under 55, and contribute the proceeds from the sale of a CGT asset to a super fund, you can elect to disregard all or part of a capital gain made from the sale. There is a life time limit of $500,000 for this exemption, so you can utilise it over the course of multiple asset sales until you reach the limit.

Small business roll-over (Subdivision 152-E)

 You can elect a roll-over, and reinvest the proceeds from the sale of your existing business into a new business (one that you either purchase or start) and defer the making of a capital gain from the sale until you ultimately dispose of that new business.

You have up to two years post-sale to purchase or start the new business before you trigger the obligation to pay CGT on the original sale. This roll-over could be used simply to defer your CGT obligations for two years with potentially significant savings.

If you are a small business owner start planning for your ultimate exit, because it is very difficult to change a structure and meet the criteria within the time frames.

Smart business owners seek early legal and tax advice and put themselves in the best possible position ready for the exit at the best value and with the best allowable revenue outcomes.




Cyber Breaches are you prepared!

Privacy Law Changes
We all create and manage data. The business world is swimming in it. The way we manage this data is crucial and how we deal with cyber attacks is now a greater responsibility.
On 19 October 2016, the Minister for Justice described in Parliament the reasons behind the new Privacy Amendment Bill as: receiving notification of the breach can allow that person to take action to protect themselves from harm.
The Privacy Amendment (Notifiable Data Breaches) Bill 2016 will only apply to the “personal information” of individuals, but will have significant practical implications for contractual relationships and corporate data security. Consider the following:
1. Notified data breaches may become immediate public news. Not only will the person affected vent their displeasure on social media and via company and media comments pages, but breaches will be reported in the mass media and recorded for perpetuity online;
2. Privacy and consumer rights organisations will keep comprehensive and permanent online records of reported privacy breaches. See for example in Australia the database maintained by the Privacy Rights Clearinghouse:
3. Contractual parties will know about the breach and may be concerned about whether their confidential information has been breached.
The consequences are potentially very serious for a business the subject of cyber breaches. Standard form confidentiality agreements require parties to: notify the other party of any possible or actual breach of confidentiality; take all reasonable steps required to prevent or stop the breach at the Recipient’s request; assist the other party in connection with any action or investigation regarding any possible or actual unauthorised disclosure. Some confidentiality or non-disclosure agreements may also require that the breaching party indemnify the loss caused by the unauthorised disclosure. That could be expensive!
You should conider obtaining cyber-insurance for this very reason. You may cause damage to anotherparty and be held liable for the breach.
Technology and telecommunications contracts now include specific cyber security provisions, requiring immediate notification on becoming aware of any breach or potential breach. Usually this is defined to include the detection of any malicious code or disruption to services. Frequently this is backed up by obligations for suppliers to provide security reports and allow security audits from time to time.
It may be difficult to comply with these obligations immediately after of a data breach, given the system has been compromised. Contractual compliance will require notice to a contractual party as the first response to a data breach.
Managing breaches in a sophisticated way costs time and money which many companies do not have and much of the focus relates to privacy obligations and personal information.
Data breaches will require a co-ordinated B2C and B2B response. The publicity and brand damage associated with the B2C response is a serious matter, but the failure to observe B2B contractual obligations could leave a company facing major litigation (including class actions if enough parties are affected), terminated contracts and a lack of commercial confidence.
Managing the contractual obligations in the public eye should be done with an organisation having a digital risk management plan. Successfully following that plan and being able to manage an effective response to a breach, is the best action to an online record tracking each reported breach.
Responding to contractual parties will require a different plan for response, especially if an insurer is involved. Early notification to that insurer will be critical in the extent of cover.
There is clearly the potential for cyber breaches to cause significant contractual liability. The potential effect of public disclosures and contractual notification should be quantified and a plan put in place.
You should consider getting specific advice about these issues relating to your company and the effect of the new laws.

Tie me kangaroo (Trademark) down sport !

Well I never thought I would see a large company like Qantas slip up on a matter of their core branding identity.


It seems that the lessons we all need to learn in business is that despite public perceptions unless we secure by registration, a valid Trademark in all applicable classes, a competitor might just take advantage of it. Take a look at the case study below and let us know if this triggers any concern in your company.

Qantas uses a variety of “kangaroo” trade marks as part of its business, including the “kangaroo tail fin” logo below which it registered in Australia in 1996 for advertising, marketing and merchandising services and financial, investment and banking services associated with the use and promotion of credit cards and charge cards (Registration No. 711454):

In a recent Federal Court case, Qantas has unsuccessfully opposed an application by Mr Luke Edwards to register the following “kangaroo t-shirt” logo as a trade mark:

Mr Edwards operates an online retail store selling a range of goods including clothing and apparel. In 2010, Mr Edwards applied to register his “kangaroo t-shirt” logo above as a trade mark, for use in relation to clothing; footwear; headwear; shirts; T-shirts. At the time, Mr Edwards’s online store offered t-shirts branded with his “kangaroo t-shirt” logo.

Qantas formally opposed the registration of the “kangaroo t-shirt” logo on a number of grounds but the Delegate of the Registrar of Trade Marks found in favour of Mr Edwards.

Qantas appealed the decision to the Federal Court, claiming that the “kangaroo t-shirt” trade mark was deceptively similar in appearance to Qantas’s existing Trade Mark Registration No. 711454 for the “kangaroo tail fin” logo.

Qantas also claimed that the goods/services covered by the two marks were closely related, (Meaning that Mr Edwards’s clothing; footwear; headwear; shirts; T-shirts were closely related to Qantas’s advertising, marketing and merchandising services.) Go figure!

Qantas also claimed that it had a strong reputation in Australia in relation to various registered and unregistered “kangaroo” trade marks it had used for many years and, because of this reputation, Mr Edwards’s use of his “kangaroo t-shirt” trade mark would be likely to deceive or confuse consumers. Qantas argued that consumers would simply see Mr Edwards’s “kangaroo t-shirt” logo on clothing as an extension of the Qantas brand.

The Federal Court dismissed both grounds of opposition and found in favour of Mr Edwards.

The Court held that Qantas and Mr Edwards’s trade marks were not deceptively similar in appearance, as each of the marks has a separate, distinctive element apart from a kangaroo. The Court also held that the goods/services covered by the two marks were not closely related. The Court noted that Qantas’s advertising, marketing and merchandising services were no more or less related to Mr Edward’s clothing; footwear; headwear; shirts; T-shirts than ‘any other goods or services that can be advertised, marketed or merchandised’ and that there was, therefore, no close relationship between the two.

In assessing Qantas’s reputation in its various “kangaroo” trade marks, the Court found that two of these “kangaroo” marks ‘would have been recognised by a substantial number of ordinary members of the public as marks denoting [Qantas’s] airline services’. However, the Court determined that there was no likelihood that consumers would be deceived or confused on seeing Mr Edwards’s “kangaroo t-shirt” trade mark used for clothing; footwear; headwear; shirts; T-shirts given the differences between the marks.

Qantas has now filed a new application for the “kangaroo” logo below covering a wide range of goods/services in 15 classes including various items of clothing (No. 1703712). Mr Edwards has opposed this application and it will be interesting to see the outcome of these proceedings.

This case highlights the importance of considering the different types of marks which are important to your business. In addition to registering brand names as trade marks, logos and other types of trade marks are also registrable and may be just as valuable.

I must say I am surprised that Mr Edwards did succeed but on a close review the logo is distinctly different. I wonder if it is a case of “the horse has bolted”. Make sure you d not find your business in the same predicament and remember that registration is a “priority right”. The first in time to register generally wins. cheers


Family Constitutions – The Rules

I have a saying that as soon as a parent passes away the children revert to how they felt when they were six years old. The rules as imposed by the parent often go out the window. Good communication between family members is vitally important when faced with business and investment decisions arising from an estate or for the longer term in a family company.

To create a formal document to govern the future decision making by the family group is optimal but often difficult to achieve. So how should you go about it and what level of documentation is required.

Firstly, if the entity that has the money and the assets is a company or a trust, the formal document governing management can be amended to accommodate the “rules” and it will be legally binding. A “family agreement” is a less formal way of achieving the goal but can be highly effective.

A  family business must make hard decisions each day to be successful and by adding a family dynamic it can be just that much harder to get a good outcome. The key to a family constitution is that the procedures are in place to enable good decision making to happen.

To have a successful business the business leaders need to adopt a strong Code of Conduct to build a brand and engage with the employees.This applies to all family members who want to be involved. On the same basis, a constitution can set out a method by which the shareholders plan to create capital and pay dividends according to sound policy. This might include retained earnings and limits on capital expenditure in any financial year, with a keen eye on the strategic growth plan for the business. These guidelines encompass communication between family members, confidentiality, dealing with employees and social media.

So how can you get there? By creating a platform for discussion and having independent advice on the process to build a skeleton of rules, great things can be achieved. Almost akin to a mediation a guiding hand can build on strengths and eliminate conflict by having a strong focus on shared benefits. To build harmony the shareholders need to accept that there must be a sensible way to resolve conflicts built into the rules. This might include regular meetings and agenda setting to identify areas of potential conflict, as well as acceptance of majority voting decisions on some matters, whilst reserving the right for a unanimous vote on others. A great start is to include an independent advisory board who can add professional skill to the culture of decision making.

The single driver is to ensure that the strategic plan as agreed from the outset is and remains the focus of the group. Profit is not always king but an important element of any measure of success. With profit comes choices and the ability to accommodate a wider set of goals. A sustainable business over the generations is a major milestone and having clear conflict resolution methods will generally enhance this position.

Life teaches us that there is always an end to things and planning for an exit by all or by one, is an essential part of the strategy. By getting agreement on a fair and sensible solution in times where an exit is unplanned or must happen for the good of the business, it is more likely all parties will benefit in maintaining capital value and profitability.

It is extremely challenging at times when family members want to or need t transition out of the business. A Family Constitution can set a framework for stepping through this succession process to ensure fair value for the leaver and for the continuing proprietors.Education, key performance indicators and philanthropic measures can all be built into a family Agreement to enable clear goals as well as being a dynamic process ope to change. The aim should always be for continual improvement. Ask us how we can create your Family Constitution today!

International Update

International Tax Changes

I am constantly intrigued with the tax changes in other jurisdictions around the world. As a member of the Society of Trust and estate Lawyers we see a number of administrations that cross international borders including trusts controlled by resident Australian taxpayers.


Take a look at some of the recent changes of disclosure in member countries to the Hague Conventions on tax and succession.

FRANCE: Public access to trusts register is provisionally suspended pending hearing on privacy challenge

France’s Conseil d’Etat has suspended the public’s recently created right to view the online register of trusts that have connections with France, pending a full hearing at the constitutional court (CC). The CC is to determine whether public access to the register is a proportional measure under the French constitution. The case results from the appeal of an American citizen who claims that this register runs counter to the right to privacy. On 27 June STEP stated its opposition to public access to the trust register, noting that the data was supplied for tax purposes in good faith, and with no permission for it to be made public.

SWISS BANKING: UBS clients withdraw funds as end of secrecy approaches

Clients based in emerging markets, especially Latin America, have withdrawn CHF2.3 billion (approximately USD2.4 billion) from UBS bank accounts, according to press coverage of the Swiss bank’s most recent quarterly report. The bank’s management expects the outflows to continue for the rest of 2016 and into 2017 as emerging market countries implement voluntary disclosure programmes in anticipation of the full implementation of the OECD’s automatic exchange of information.

JERSEY: Trust law soon to be amended again

An expert at international law firm Ogier examines potential changes to Jersey’s trust law currently in the pipeline. A recently completed consultation centred on amendments clarifying that there is no need for the trust to have a beneficiary at all times during its existence; the rights of beneficiaries to information in respect of the trust; reservation of powers by a settlor; arbitration; retrospective approval of self-contracting by trustees; extended indemnity provisions for departing trustees; accumulation and retention of income in trusts; power of the Royal Court to vary a trust; and others.

MAURITIUS: Ultra-wealthy investors to be granted five-year ‘tax holiday’

Mauritius’ 2016–2017 budget introduces several reforms intended to boost its financial services industry. Foreign ultra-high-net-worth individuals investing a minimum of USD25 million in Mauritius will be granted a five-year tax holiday, as will licenced overseas family corporations, licenced asset and fund managers managing a minimum asset base of USD100 million, and international law firms issued with a global legal advisory services licence – to that effect, a limited liability partnership bill will also be introduced.

CANADA: Consultation on draft tax legislation

Draft legislation has been published implementing the important tax changes announced in Canada’s 2016 federal budget. They include proposals concerning multiplication of the small business deduction, avoidance of the business limit and taxable capital limit, country-by-country reporting and the Common Reporting Standard penalty.

US: FinCEN extends customer identification rules for real estate agents

The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has extended its ‘temporary’ orders requiring US title insurance companies to identify the natural persons behind shell companies used to pay ‘all cash’ for high-end residential real estate in six major metropolitan areas. Similar ‘geographic targeting orders’ are already in place for Manhattan and Dade County in Miami, two of the US’ prime property areas. ‘All-cash’ does not mean actual banknotes but rather the purchase of property not funded by a loan.

NEW ZEALAND: Guidance on Common Reporting Standard for automatic information exchange

New Zealand’s Inland Revenue Department (IRD) has published guidance for financial institutions on the upcoming automatic exchange of financial information, based on feedback from a recent consultation. Draft legislation will be introduced in August.

If you have any questions regarding assets located overseas in terms of your trust and estate planning, please give us a call. Regards Tony

Duty and the Beast



Long ago and far away the State Government in it’s wisdom created a Beast called “The First Home Owners Grant”.

This was designed to stimulate investment in domestic housing and drive the State economy forward.

We have a new version and a new threshold and if you or a family member meet the eligibility criteria, now might be a good time to take advantage of the payment.


As announced in the State Budget 2016-17, additional duty of 3% will apply to acquisitions of residential land by foreign persons (including companies and trusts) from 1 October 2016.

This additional transfer duty is imposed to fund additional payments under the State Government First Home Owner’s Grant.

The Queensland First Home Owners’ Grant is a state government initiative to help first home owners to get their new first home sooner. Depending on the date of your contract, you’ll get $15,000 or $20,000 towards buying or building your new house, unit or townhouse (valued at less than $750,000). You can even buy off the plan or choose to build yourself.

Note: The $20,000 Queensland First Home Owners’ Grant is not available to contracts that replace previous contracts entered into before 1 July 2016.

To be eligible for the grant:

  • You must be an Australian citizen or permanent resident (or applying with someone who is).
  • You or your spousemust not have previously owned property in Australia.
  • You must be at least 18 years of age.
  • You must be buying or building a brand new home, valued under $750,000.


This means a significant opportunity for young people trying to purchase their first home and we recommend that you take advantage of it while you can.


Remember, the payment must be considered as only one part of the equation. Careful planning, research and valuation evidence must be obtained before jumping into a contract. You must have a reasonable due diligence process for the Contract including Building and pest reports and conducting adequate searches of the property. Ask us how we can help with a fixed fee solution today!