Sheltons Group Legal – an Australian law firm based in London

Investing in Australia?

Know your obligations under the new Register of Foreign Ownership of Australian Assets

From 1 July 2023, foreign investors have been required to notify the newly established Register of Foreign Ownership of Australian Assets (the Register) if they acquire interests in particular Australian based assets. Notice must also be given if an Australian entity, that held an interest prior to 1 July 2023, becomes foreign owned after such date.

The information stored on the Register is not publicly available, and its purpose is to give the Australian government greater visibility of foreign ownership of Australian assets.

The following are some of the types of interests which will require a foreign investor to give notice to the Register:

  • an interest in Australian land which is a freehold interest, a long-term lease (where the term including any options exceeds 5 years), or an interest in an exploration tenement
  • an interest in a share or unit of an Australian land corporation or trust or an interest in a share of the trustee of an Australian land trust
  • a registerable water interest, and
  • an equitable interest in a long-term lease or licence of agricultural land.

Generally, a foreign investor must give notice to the Register within 30 days after they acquire an interest, or if there is a change of at least 5% in the interest of an entity.

Civil penalties will apply if an entity fails to give notice to the Register within the relevant timeframes. Additionally, foreign investors may have ongoing notification obligations depending on the nature of the asset.

What does this mean for your business?

The implementation of the Register increases regulatory compliance for foreign businesses that plan to invest and operate in Australia.

It will mean that your internal procedures will need to be updated, especially if you are a business that undertakes a broad range of commercial activities within Australia.

***

If you’re looking to invest or establish operations in Australia, or if you’re an Australian entity looking to receive foreign investment, then feel free to let our London-based Australian qualified lawyers know and we can discuss how we can assist.

Courtney Gleeson
Lawyer
Sheltons Group Legal (London and Sydney)
C.Gleeson@SheltonsGroup.com

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Courtney Gleeson, Principal Lawyer of Sheltons Group Legal, joined the panel for the Australia-United Kingdom Free Trade Agreement seminar organised by the  Australia-United Kingdom Chamber of Commerce in London.

The event, held on 06 September 2023, was an opportunity for insightful discussions, valuable networking and the exploration of key provisions for the benefit of Small and Medium-sized Enterprises (SMEs).

Thank you to Australia-United Kingdom Chamber of Commerce for inviting Sheltons to be a part of such an insightful event.

 

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Sheltons Group Legal – an Australian law firm based in London

Entering the Australian market is a different ballgame – when you compare the corporate requirements of your head office or company location to that of Australia, there are likely to be considerable differences in how a company is required to operate!

Australian company law is an area our clients often have difficulty navigating, usually because they simply don’t have time to become well versed in it when their time is dedicated to running a business. However, corporate compliance is a really important area for company directors and businesses to be aware of. A lack of awareness can lead to liabilities, including personal liabilities, penalties, and generally compromising situations for businesses in the Australian marketplace.

What is corporate compliance?

The Corporations Act 2001 (Cth) (‘the Act’) is the primary Australian legislation that regulates compliance obligations and standards for both Australian companies and foreign companies that are trading in Australia. Among many matters, the Act prescribes the ongoing legal obligations required of all companies registered under it. Some key obligations include: maintenance of corporate registers; documenting various company decisions, and ensuring shareholder approval is obtained; annual declarations of solvency; filing financial reports; and notifying the public record keeper of particular changes to a company.

Many clients don’t realise that company directors have a duty to ensure that the company they are involved with complies with statutory requirements. Sheltons Group has been working with clients to ensure their company compliance for decades now. We’ve developed streamlined operations to help Australian companies easily meet company law requirements, every day. Sheltons Group Legal can take care of your corporate compliance, allowing you to maximise time concentrating on business activities.

Is your Australian company legally compliant?

If you have any questions about how to ensure your Australian company and business operations maintain good standing in Australia – we welcome you to contact us! We are glad to discuss matters which relate to your company specifically, or in general, and will work with you to ensure your company is legally compliant.

Courtney Gleeson
Lawyer
Sheltons Group Legal (London and Sydney)
C.Gleeson@SheltonsGroup.com

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Sheltons Group Legal – an Australian law firm based in London

Under recently introduced legislation, ‘casual’ employees in Australia have been granted a right to request the conversion of their employment to an ‘ongoing’ or permanent position – subject to certain criteria. This enables employees to take advantage of more extensive entitlements that have previously only been provided to ‘ongoing’ or permanent employees.

The difference between ‘casual’ & ‘ongoing’ employment

For the first time, casual employment has been specifically defined in Australian employment legislation as: an employee whose employer makes “no firm advance commitment to continuing and indefinite work according to an agreed pattern”.

In Australia, employment on a ‘casual’ basis carries different legal rights for the employee as compared to ‘ongoing’ employment: a term describing both part-time and full-time workers, i.e. those employed on a permanent basis.

A common example of a ‘casual’ employee might be a warehouse worker whose hours are not consistent or defined by a continued ongoing rota or roster. Conversely, an ‘ongoing’ employee might be administration or payroll staff who work the same agreed pattern of hours or days each week, with an expectation of continued work.

Distinguishing whether someone is a casual or ongoing employee can be blurry in some cases and will often depend on the factual circumstances of the arrangements.

Employers are now legally obliged to offer casual employees conversion to an ongoing position.

The measures introduced essentially focus on job security for employees. Where a casual employee has worked a certain period of time for the same employer, the employer must offer a conversion of their employment from casual to ongoing.

Why is the distinction of employees important?

Failure to classify an employee appropriately can leave employers vulnerable to ‘double-dipping’ claims. For example, where an employee who has already been paid casual loading under an agreement for casual employment later seeks compensation for unpaid leave and other entitlements owed to them as if they were a part-time or full-time employee on the basis that their employer had made an incorrect classification.

Incorrect employee classifications can also lead Australian Government regulators to impose penalties against the employer, and fines to backpay unpaid wages can easily bankrupt small businesses. So, if in doubt, now is a good time to assess the classification of employees in your business.

Sheltons Group Legal can assist you in ensuring your business has the ‘casual’ v ‘ongoing’ employment distinction correct and we would be glad to hear from you!

Courtney Gleeson
Lawyer
Sheltons Group Legal (London and Sydney)
C.Gleeson@SheltonsGroup.com

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Sheltons Group Legal – an Australian law firm based in London

The Australian Fair Work Commission has determined there will be Australia-wide increases to the national minimum wage as well as to Modern Award minimum wages. The increases take effect from 1 July 2023.

Each year, the Fair Work Commission (‘FWC’) makes an order that covers subjects including the national minimum wage after considering factors relevant to the economy, employers and employees.

In the face of persistent high inflation, the Government’s federal budget earlier this year urged the FWC to ensure the Australian workforce to which the minimum wage applies does not suffer a wage-price spiral backwards.

Accordingly, the FWC’s Annual Wage Review 2022-23 announced that the national minimum wage would be increased by 8.6% and Modern Award minimum wages increased by 5.75%.

As a result, the national minimum wage has increased from AUD 812.60 to AUD 882.80 per week for full time employees (i.e. employees who work an average of 38 hours each week) – meaning the hourly minimum wage is now AUD 23.23. The Modern Award minimum wage increase means that pay rates above AUD 882.80 per week will increase by 5.75% per week.

Modern Awards are industry or occupation specific and apply to those performing work covered by the Award. As such, it is important to be aware that different minimum wage rates apply across different Modern Awards. 

Approximately 2.6 million employees across Australia are expected to receive the minimum wage increases. It is therefore essential that all employers take note of the increases to ensure each employee is being paid at or above the new minimum rates. Annualised salaries must be sufficient to absorb all statutory entitlements. 

If you would like further information about the Australian wage increases, or assistance in determining which Modern Award applies to your employees – please contact us.

Courtney Gleeson
Lawyer
Sheltons Group Legal (London and Sydney)
C.Gleeson@SheltonsGroup.com

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Sheltons Group Legal – an Australian law firm based in London

Is your business about to enter into an agreement or contract governed by Australian law?

It is really imperative that you are aware of the key terms and obligations that you’re committing to – and that you understand if what you are agreeing to is standard practice.

It is often the case that laws governing certain commercial arrangements in Australia are significantly different from those ordinary in the jurisdiction you are familiar with. Standard agreements that you may regularly adapt and use for business in other countries may not be suitable or enforceable in Australia.

Australian shareholder agreements, business acquisition or sale documentation, commercial property leases and agreements relating to the supply of products or services with others may be governed by national legislation, or by state-based laws and regulations depending on where the contracting parties might physically be located or where services are generated.

Sheltons Group Legal can review and advise on agreement terms before you proceed with any commitments.

Typically, most commercial contracts and agreements are favourable to the party that has prepared the governing document. It is important not to simply assume the terms and obligations have been included in a fair and equal manner.

Businesses caught in a litigious event usually find themselves in such situations by failing to record the terms of an agreement correctly or because of a laid back approach to entering into an agreement. Having a clear and concise written agreement in place should not just be a business consideration – it’s a must!

Sheltons Group Legal is able to assist with the preparation or review of any commercial agreements or contracts that your business might require. Having a written agreement in place documents the arrangements between the parties and ensures clarity for all. Clear articulation of the terms and obligations is crucial to avoid ambiguity and disagreements at a later date.

Courtney Gleeson
Lawyer
Sheltons Group Legal (London and Sydney)
C.Gleeson@SheltonsGroup.com

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Sheltons Group Legal – an Australian law firm based in London

Until recent legislative changes to the Corporations Act 2001 (Cth), a director’s resignation was taken to be effective from the date confirmed in a relevant resolution, or simply when the director provided written notice of their resignation.

The ‘date of effect’ might not be what the individual director OR company understands it to be

Previously, the date included on a notice of resignation automatically meant the end of liability, the end of director duties being owed to the company by that individual, and the end of that individual having authority to represent the company. However, a change in the legislation means that carrying out the correct steps with respect to a resignation are now more important than ever. Not following the necessary steps can cause burdensome complications for both the company and the individual seeking to resign from their director post.

Where notification of a director resignation is not received by ASIC (Australia’s corporate regulator) within 28 days from the date that the resignation is proposed to have effect from, the legal and actual date of effect will be the date on which ASIC is notified and NOT the date specified in a notice of resignation or company resolution.

Significance of the ‘date of effect’

What is the date of effect? The date of effect refers to the date on which an individual is legally ceased from their role as director.

If ASIC is not correctly notified within the prescribed timeframe, the individual who purports to have resigned from the position of director will legally still be a director of the company until such time as ASIC is notified. Any attempt to significantly back date the date of effect recorded with ASIC is terribly complicated and can also require a Court Order, which will only be granted in exceptional circumstances.

The importance of correct director resignations

If a company is of the view that a director has resigned, or the company has removed a director, but ASIC has not been duly informed within the 28 day time period – that individual is legally still a company director until ASIC is notified. At all times when an individual is a company director, they are not only bound to directors’ duties and may in instances be held personally liable, but they have authority to represent the company, enter into contracts/agreements and make other important decisions representing the company. As you might imagine, this can cause concern and confusion for many parties and doesn’t serve your business’ reputation well from a customer’s perspective.

To avoid unnecessary stress and expense in rectifying a failed director resignation or removal, please contact us to assist whenever there is a change in your company’s directorship.

Courtney Gleeson
Lawyer
Sheltons Group Legal (London and Sydney)
C.Gleeson@SheltonsGroup.com

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It is now more important than ever to carefully consider tax implications when disposing of Australian residential  property (real estate) as a foreign resident. Over the last 6 years Australia has introduced new capital gains tax rules for foreign residents.

In this article, we consider the potential tax consequences of selling Australian residential property as a resident of the UK. The article is split into two segments:

1. Australian tax implications, and

2. UK tax implications.

Please note, the article below is a brief summary of tax legislation in both the UK and Australia. If you are planning to dispose of Australian property as a foreign resident, it is recommended that you seek professional advice specific to your situation and not rely solely on this article.

Australian Capital Gains Tax Implications

In Australia there are two capital gain tax (CGT) reliefs commonly utilised when disposing of residential property.

The first is the ‘main residence exemption’. The main residence exemption means there will generally be no tax liability upon sale of your main residence. Where the dwelling was your main residence for only part of the ownership, the full exemption is proportioned according to the number of days it was not your main residence. Please note, the exemption will remain available where the main residence was vacated and not rented out (and no other main residence election was made).

However, since 30 June 2020 foreign residents who have sold property have no longer been able to benefit from the exemption, unless they have satisfied the requirements of the life events test, covered below.

In order to qualify for the ‘life events test’, both of the following must be true:

  • You were foreign resident for tax purposes for a continuous period of 6 years or less
  • During that period, one of the following occurred:

– you, your spouse or your child under 18 had a terminal medical condition
– your spouse or your child under 18 died
– the CGT event happened because of a formal agreement following the breakdown of your marriage or relationship.

The second frequently utilised capital gains tax relief in Australia is the capital gains tax discount. When you sell or disposes of an asset, you can usually reduce the capital gain by 50% if you owned the asset for at least 12 months.

As with the main residence exemption however, the capital gains discount has now been removed for foreign residents who acquired assets after 8 May 2012.

Where foreign residents either acquired the asset on or before 8 May 2012 or had a period of Australian residency after 8 May 2012, they may apply the discount to part of their capital gain. The discount is then calculated using the ATO worksheet, attached here.

Upon disposing of Australian property and once the capital gains tax calculation has been finalised, foreign residents are liable to tax on their capital gain at a rate of 32.5%.

UK Capital Gains Tax Implications

As a resident of the UK you are normally liable to UK tax on your worldwide income and gains arising in the tax year, this is known as the arising basis of taxation. Therefore, your Australian residential property gain will normally be taxable in the UK.

Until 05 April 2023 the UK capital gains tax allowance is £12,300. However, from 6 April 2023 this is reduced to £6,000 and then again to £3,000 from 6 April 2024. Any taxable gain over the relevant allowance will be liable to residential capital gains tax rates, currently standing at 18% and 28% (depending on the size of the gain and marginal rate of income). Unlike the new rulings for foreign residents in Australia, the proportion of the gain which relates to the period of time where the property was your main residence will be exempt from the UK taxation. This is known as principal private residence relief (PPR relief).

However, where you are resident but non-domiciled in the UK, you can elect to be taxed in the UK on your UK income and gains alone, and pay UK tax on foreign income and gains only if these are remitted (brought) to the UK. This is known as the remittance basis of taxation. Electing to use the remittance basis however, means the loss of your tax-free personal allowances and capital gains tax exempt amount for the year the election is made. In many scenarios, the individual is selling the Australian property in order to purchase property in the UK. In this instance the capital gain would be remitted to the UK and thus UK capital gains tax would apply. Therefore, if you are entitled to use the remittance basis, it is important to calculate the most tax efficient method of taxation.

Where you are taxed on an arising basis (worldwide income) and you’ve paid tax in Australia on your Australian property gain, you may be entitled to a UK foreign tax credit.

Where a ‘UK resident’ has property gain from Australia, the Australia-UK double tax treaty in principle becomes relevant. However, it generally has no impact on the application of domestic law in Australia or the UK.

Contact Us

As evident above, ongoing changes to the rules for foreign residents selling Australian property means it is now crucial to understand the tax implications of disposing Australian property, particularly whilst resident of the UK.

If you require any advice or assistance with UK or Australian capital gains tax, we are here to help. Feel free to contact us for a no-charge fact finding call. After such call, we are usually able to send a fee quote for services.

For enquiries please contact:

Ned Shelton
Director
Sheltons Accountants Australia
N.Shelton@SheltonsGroup.com

and

Jamie Feng
Assistant Accountant
Sheltons Accountants UK
J.Feng@SheltonsGroup.com

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Are you moving to the UK and renting out your property in Australia?

Below we have covered some popular Australian and UK tax issues and questions that arise when becoming a non-resident landlord of Australia.

Will I be taxed on my Australian rental income in Australia?

Non-residents of Australia are generally taxed on income derived directly or indirectly from sources in Australia (subject to the interaction of a double tax agreement). As a result of this, when you are tax resident of the UK you can be subject to Australian tax on rental income derived from an Australian source.

Gross rental income will be included as assessable income in your Australian tax return. You will then be entitled to a deduction for tax-deductible expenses incurred from renting out your Australian property. Where your deductions exceed the rental income, that loss may be offset against your other taxable Australian sourced income, or carried forward to the following tax year. Where you have generated a profit, you will be subject to tax at 32.5 percent on the first $120,000 (AUD) of net income, and then rates ranging from 37 percent to 45 percent for the remaining income.

Will I be taxed on my Australian rental income in the UK?

As a resident of the UK you are normally liable to UK tax on your worldwide income and gains arising in the tax year. Therefore, your Australian rental income will normally be taxable in the UK.

However, where you are resident but non-domiciled in the UK, you can elect to be taxed in the UK on your UK income and gains alone, and pay UK tax on foreign income and gains only if these are remitted (brought) to the UK. This is known as the remittance basis of taxation. Electing to use the remittance basis however, means the loss of your tax-free personal allowances and capital gains tax exempt amount for the year the election is made. Therefore, if you are entitled to use the remittance basis, it is important to calculate the most tax efficient method of taxation.

Where you are taxed on an arising basis (worldwide income) and you’ve paid tax in Australia on your Australian property income, you may be entitled to a UK foreign tax credit.

Where a ‘UK resident’ has property income from Australia, the Australia-UK double tax treaty becomes relevant.

What expenses can I claim on my Australian property income in the UK?

If this is your first experience of being a landlord whilst resident of the UK, you may be unsure about what expenses are tax deductible. HMRC (UK equivalent to the ATO) provide that for an expense to be allowable for tax purposes, it should be incurred wholly and exclusively as a result of renting out your property. Typical expenses include building insurance, estate agent fees and utility bills (only if not reimbursed by tenants).

In some instances, what you assume are revenue expenses may in fact be ‘capital expenses’. For example, improving or upgrading something that was existing. Capital expenses are not allowable and cannot be claimed against rental income, however you might be able to set them against capital gains tax if you sell the property in the future. You should seek professional advice if you’re unsure on the tax treatment of your property expenses.

Unlike in Australia where mortgage interest is fully tax-deductible, since April 2020, you have no longer been able to deduct any mortgage expenses from taxable rental income whilst resident in the UK. Instead, mortgage interest is used as a tax reducer, where you receive a tax credit based on 20 percent of mortgage interest payments. For example, if you make mortgage interest payments of £5,000 per year, you will receive a tax credit of £1,000 to deduct from the liability incurred on your property income.

Will I receive my Australian personal allowance as resident of the UK?

If you are a non-resident for the full Australian income year (01 July to 30 June), you can’t claim the tax-free threshold. This means you pay tax on every dollar of taxable income you earn from Australia.

If however, you are an Australian resident for tax purposes during the income year, you will receive a part-year tax-free threshold. This may be relevant in your year of exit from Australia.

How do I file my UK self-assessment tax return?

As resident of the UK, when you are in receipt of overseas income it automatically places you into the UK self-assessment regime. The return will be used to calculate any UK tax liability arising from your Australian property income and any additional relevant income.

The tax return deadline in the UK is 31 January following the tax year end (31 October for paper returns). Automatic late filing penalties will apply after the deadlines have passed.

Ways in which you can file a UK tax return:

  • Send your tax return by post
  • Use commercial software
  • Use HMRC online services
  • Get help from a professional

How do I file my Australian tax return?

As non-resident of Australia, the due date for your tax return remains 31 October following the end of the tax year. Non-residents may obtain an extension to 15 May of the following year if they are registered with a tax agent, i.e. tax-year end 30 June 2022 would be due 15 May 2023.

Ways in which you can file an Australian tax return whilst overseas:

  • Lodge your tax return online with MyTax
  • Lodge your return by post
  • Lodge your tax return with a registered tax agent

Contact Us

If you need advice or assistance with your UK or Australian tax obligations, we are here to help. Feel free to contact us for a no-charge fact finding call. After such call, we are usually able to send a fee quote for services.

For enquiries please contact:

Ned Shelton
Director
Sheltons Accountants Australia
N.Shelton@SheltonsGroup.com

and

Jamie Feng
Assistant Accountant
Sheltons Accountants UK
J.Feng@SheltonsGroup.com

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If you’re a British Citizen in Singapore, you may still be required to file a UK tax return as well as a Singapore tax return, even if you’re considered non-resident in the UK for tax purposes.

Filing UK taxes from Singapore can be confusing. In this blog, our Tax Manager, Christian Iles, answers the most common questions we’re asked when British citizens move to Singapore.

This blog is not just relevant to British citizens, but also individuals who may have lived in the UK or simply have tax compliance obligations in the UK.

In what circumstances will I need to file a UK tax return whilst a resident in Singapore?

There are several reasons why a non-resident of the UK is required to file a UK tax return. These include, but are not limited to:

  • an individual who is in receipt of UK property income
  • an individual who is in receipt of taxable UK dividend income
  • company directors of a UK company who receives remuneration for their duties
  • an individual who sells property or other assets liable to UK capital gains tax

Will I receive my UK personal allowance as a resident in Singapore?

When non-resident of the UK and resident of Singapore, it is only in certain circumstances that you will get a personal allowance of tax free UK income each year. To receive UK personal allowance, you must:

  • hold a British passport,
  • be a citizen of a European Economic Area (EEA) country, or
  • have worked for the UK government at any time during that tax year.

If you are British citizen, holding a British passport, you will be entitled to your UK personal allowance.

What if I did not file UK taxes when I should have been?

If you live in Singapore and forgot, or simply didn’t know that you needed to file your UK tax return, you will still need to file the overdue returns and pay any overdue liabilities. It is important to get up-to-date as soon as possible in order to minimise any penalties and interest charged. In certain circumstances, a letter of appeal can be sent to HMRC to minimise penalties due.

Do I need to declare UK sourced income on my Singapore tax return?

As overseas income is not taxable in Singapore, you are not required to declare UK income on your Singapore income tax return.

Are the UK and Singapore tax years the same?

No. The UK tax year runs from 06 April to the following 05 April, whereas the Singapore tax year runs from 01 January to the following 31 December.

How can I file my UK tax return and when will any liability be due?

The same tax return deadlines apply to non-residents as they do to UK residents – 31 January following the tax year end (31 October for paper returns). Automatic late filing penalties will apply after the deadlines have passed. Any liability you may owe upon filing your UK tax return, will also be due by 31 January following the end of the tax year.

As a non-resident you are unable to use HMRC’s online services to file your return. Instead, you need to:

  • submit your tax return by post,
  • use approved tax software, or
  • seek assistance from a tax agent.

When is my Singapore tax return and liability due?

In Singapore, the filing due date for individual tax returns is 15 April following the end of the tax year. If filed electronically, the deadline is 18 April.

Once your individual tax return has been filed, you will receive your Notice of Assessment or tax bill between May and September. Any tax liability is due in full within 30 days of receiving your Notice of Assessment.

Contact Us

At Sheltons Accountants we have extensive experience providing multi-jurisdictional tax advice, advice on tax treaty issues and cross-border tax efficient structuring.

If you need advice or assistance with your UK or Singapore tax obligations, including dual tax return filings. Feel free to contact us at SG@SheltonsGroup.com for a no-charge fact finding call. After such call, we are usually able to send a fee quote for services.

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