Category: Australia

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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Are you moving to Australia and renting out your UK property? If so, you will be classified as a ‘non-resident landlord’ by HM Revenue and Customs (HMRC).

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

How do I stop my estate agent or tenant from deducting UK tax at source?

If you have been determined as a non-resident landlord of the UK, your letting agent or tenant will deduct basic rate tax (20%) from your rent. Once the tax year is complete, your estate agent or tenant will provide you with a certificate certifying how much tax they have deducted in the relevant tax year.

As a landlord, cash flow is important, therefore it’s likely you would prefer to receive your rent in full and pay any tax due through your UK self-assessment tax return.

The way in which you can receive your rent in full, prior to any taxation, is to file a non-resident landlord form (NRL1). Once the form has been approved, HMRC will inform your letting agent or tenant to stop deducting tax from your rent. From there on, you will receive your rent in full without UK taxation. Any tax deducted earlier in the year will be refunded on your next rental statement.

However, it is worth noting that HMRC will only approve your NRL1 application if your taxes are up to date. For example, you have no outstanding tax or tax returns due.

What expenses can I claim on my UK property income?

If this is your first experience of being a landlord, you may be unsure about what expenses are tax deductible. HMRC iterate 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 buildings 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 expense.

Since April 2020, you have no longer been able to deduct any mortgage expenses from taxable rental income. Instead, mortgage interest is used as a tax reducer, where you receive a tax credit based on 20% 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 be taxed on my UK rental income in Australia?

Whether you’re taxed on your UK rental income in Australia will depend on the type of tax resident you are. There are three main types of residents in Australia: Australian resident, foreign resident and temporary resident.

If you’re classified as a ‘foreign resident’ or ‘temporary resident’ working in Australia, you generally don’t need to declare income you receive from outside Australia in your Australian tax return. Therefore, as long as you remain a ‘foreign resident’ or ‘temporary resident’, you will not be taxed on your UK rental income in Australia.

However, in the event that you’re an ‘Australian resident’ for tax purposes, you must declare all income you earned both in Australia and overseas. In this instance, UK property income must be added to your Australian tax return. If you’ve paid tax in the UK on your UK property income, you may be entitled to an Australian foreign income tax offset.

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

Will I receive my UK personal allowance as resident of Australia?

When non-resident of the UK, it’s only in certain circumstances that you will get a personal allowance of tax free UK income each year. These include the following:

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

However, under the double tax treaty between the UK and Australia, it’s likely as a resident of Australia that you will be entitled to the UK personal allowance. Thus, only the rental income over the UK personal allowance will be taxable in the UK.

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

Regardless of whether you’re a resident of Australia, renting out a UK property automatically enters you into the UK self-assessment regime. The return will be used to calculate any tax liability arising from your UK property income and any additional UK taxable income.

The same Tax Return deadlines apply to non-residents as they do to UK residents – 31st January following the tax year end (31st October for paper returns). Automatic late filing penalties will apply after the deadlines have passed.

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

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

Contact Us

If you need advice or assistance with your UK or Australian tax obligations, we are here to help. Simply send us an email at the address below to arrange a free initial consultation.

For enquiries please contact:
Ned Shelton
Director
Sheltons Accountants
N.Shelton@SheltonsGroup.com

Click here to read our blog where we compare the UK and Australian Tax systems

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When moving between the UK and Australia, it is important to be aware of the differences that each jurisdiction imposes on areas of personal taxation. Failing to comply with the relevant procedures and local tax legislation could leave individuals with a series of penalties.

The table below highlights a list of arguably the most important areas of personal taxation that individuals should be aware of when moving between the UK and Australia. Whilst both countries operate a progressive income tax system, with the top tax rate peaking at 45%, this is where similarities cease as from here on, the UK and Australian tax systems function differently in almost every way.

UK Tax System vs Australian Tax System:


UK Tax System Australian Tax System
Tax Year for individuals 6 April to 5 April 1 July to 30 June
Who is required to file/lodge a Tax Return

In the UK, most individuals who are employed will pay tax on their income through payroll and are not required to file a Tax Return.

Tax Returns are required where:

  • Earnings are over £100,000 in a tax year
  • In receipt of non-UK sourced income
  • In receipt of property income
  • In receipt of taxable savings, investments and dividends
  • Claiming income tax reliefs
  • Need to pay capital gains tax
  • Self-employed or partnership income
  • Liable to high income child benefit charge
  • In receipt of taxable income which has not yet been taxed

 All Australian residents and non-residents with any Australian sourced income (some exclusions apply)
Payroll System In the UK, HMRC operates a Pay As You Earn (PAYE) system where tax is collected by the employer through every payslip. The employer then remits the tax withheld to the tax office (HMRC). Australia operates a Pay As You Go Withholding system which deducts tax and is then paid to the tax office. As with the UK, the employer withholds tax when processing payroll and then forwards this to the tax office.
Tax Free Allowance UK residents (and in some instances non-residents) receive a tax-free personal allowance each year. In 2023-23, the tax-free personal allowance is £12,750. In certain circumstances this can be reduced or increased. There is a tax-free threshold of $18,200 for all Australian resident taxpayers, regardless of the source of income. Foreign and temporary residents are excluded from this threshold.
Income Tax The UK operates progressive rates of income tax which include:

  • £0 to £12,570 (personal allowance) – 0%
  • £12,571 to £50,270 (Basic rate) – 20%
  • £50,271 to £150,000 (Higher rate) – 40%
  • Over £150,000 (Additional rate) – 45%

Australia operates progressive rates of income tax which include:

  • $0 to $18,200 – Nil
  • $18,201 to $45,000 – 19%
  • $45,001 to $120,000 – 32.5%
  • $120,001 to $180,000 – 37%
  • $180,001 and over – 45%

The income tax rates above are for ‘Australian’ Residents only. Different rates apply for ‘temporary’ and ‘foreign’ residents.
Capital Gains Tax

In the UK there is a Capital Gains Tax allowance of £12,300 per year (2022-23). After this your tax rate will depend on whether you’re a ‘Basic rate’ tax payer or ‘Higher rate’ tax payer:

Basic Rate: 18% on residential property and 10% other chargeable assets

Higher Rate: 28% on residential property and 20% other chargeable assets

There is a 50% Capital Gains Tax discount for Australian individuals who own an asset for 12 months or more. This means you pay tax on only half the net capital gain on that asset.

Taxable Capital Gains are added to the individuals assessable income and are taxed at the marginal rate at which the income falls.
Inheritance Tax In the UK, the standard Inheritance Tax threshold is £325,000 (which can increase to £500,000 where the home is passed to children of the deceased). Where an estate is valued over £325,000 there is a 40% Inheritance Tax rate. Australia does not have any Inheritance Tax.
Tax Return Deadline 31 January following the end of the tax year (31 October if filing a paper return). In Australia, the due date is 31 October following the end of the tax year. However, if an individual is registered with a tax agent this will usually extend to 15 May of the following year i.e. tax-year end 30 June 2022 would be due 15 May 2023.
Tax Payment Deadline 31 January following the end of the tax year. This is the same as the tax return deadline.

In Australia, the tax payment deadline depends on when the tax return is due and the date it is lodged. Where a tax return is due 15 May, the following payment dates will apply when the tax return is lodged:

  • Up to and including 12 February, the payment date is 21 March
  • From 13 February to 12 March, the payment date is 21 April
  • From 13 March, the payment date is 5 June

If the tax return is not due by 15 May, the payment will be due on the later of 21 days after the:

  • Relevant lodgement due date, or
  • Notice of assessment is deemed received
Assessable on Worldwide Income UK residents, for tax purposes are taxed on their worldwide income*.

Australian residents for tax purposes, are also taxed on their worldwide income.

‘Foreign’ and ‘temporary’* residents for tax purposes only need to declare income and gains derived in Australia.
National Insurance/ Medicare In the UK, both the employee and employer are required to pay national insurance contributions each month. The rates vary from 0% to 13.8%. National Insurance is also due on self-employed income. In Australia, individuals must pay a flat rate of Medicare (unless exempt). The Medicare levy is 2% of an individual’s taxable income. An additional Medicare levy of up to 1.5%, unless they pay for private health insurance.

*Assessable on worldwide income (UK) – Individuals resident of the UK with non-domicile status can opt to claim remittance basis and not be taxed on their overseas income as long as it is not remitted to the UK.
*Assessable on worldwide income (AUS) – Individuals who are ‘temporary’ resident will also be taxable on income earned from employment or services performed overseas whilst temporary resident.

The UK and Australian Tax Systems: An Overall Comparison

Determining which country has the more competitive tax system is no easy task.

Although income tax is generally lower in the UK (due to the progressive tax bandings), the Australian system includes a considerably lesser Medicare tax in comparison to the UK’s National Insurance rates. What’s more, where Australia allows a 50% discount on net taxable Capital Gains, the rate at which Capital Gains tax is payable in the UK may be under half of what individuals could be liable to pay in Australia (if their annual income exceeds the top tax bracket in Australia).

In addition, establishing whether an individual is an ‘Australian’, ‘foreign’ or ‘temporary’ tax resident of Australia, or their ‘domicile’ status when tax resident of the UK, heavily dictates their tax liability due at the end of the tax year.

Since 1978, Australia’s tax system has operated with no inheritance tax –which saw Australia as the first developed country to abolish death duties. In stark contrast, the UK still maintains an aggressive tax rate of 40% above the inheritance tax threshold. It is evident that, where an individual’s assets equate to more than £325,000 on death, the Australian tax system is significantly more attractive.

As the tax systems in the UK and Australia are extremely different, it requires in-depth analysis to understand how each system operates and the implications which might then present for an individual on a case-by-case basis.

If you require any advice or assistance with UK or Australian personal tax, we are here to help. Simply send us an email at the address below or fill in our contact form to arrange a free initial consultation.

For enquiries please contact:
Ned Shelton
Director
Sheltons Accountants
N.Shelton@SheltonsGroup.com

Click here to read our blog in regard to renting out your UK property whilst living in Australia.

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Are you considering expanding your business to Australia? Join our free webinar on Tuesday 31 July at 10am for a review of the questions you should be asking yourself.

Your expert speakers

Richard Harper, now the owner of Keyway Trade Services in Sydney, shares his decades of experience in Australia with UKTI/Department for International Trade working with UK businesses entering Australia.

Ned Shelton, Managing Partner of the independent specialist firm Sheltons Accountants, makes available his many years of experience with working with UK businesses exporting to and setting up in Australia.

Who is the webinar for?

The webinar has been designed for any business that has been considering expanding from the UK to Australia. Ned Shelton and Richard Harper will discuss the key issues to consider before your business expansion.

What does the webinar cover?

The webinar will provide guidance on everything from Australian tax rules on exporting and on running a business in Australia to selling on-line, and from special considerations on selling in Australia to understanding Australia, Australians – and the Australian market.

Ned Shelton touches on

  • Company law – differences (to the UK)
  • Company tax
  • Fringe Benefits Tax (FBT
  • Superannuation
  • State taxes
  • When you need to register with ASIC (as a branch)
  • When you might have to pay company tax (the ‘permanent establishment’ issue)
  • ABNs, domain names and trademarks,
  • And especially: GST on sales (export) to Australia

Richard Harper addresses

  • Australia – the country in context
  • Agents and distributors and ways to market
  • Registration – prohibitions and restrictions
  • Resonating with Australians
  • Specifics on food and drink
  • The supermarket dominance
  • Key elements for success
  • The importance of market visits
  • Dealing with Aussies

Why join the webinar?

  • Explore the benefits of setting up a physical presence in Australia vs exporting to Australia
  • Learn about the various tax rates and rules
  • Find the most tax efficient ways to expand into the Australian market
  • Learn about the special features of Australia
  • Find out about the key actions prior to market entry
  • Hear about the traps and opportunities of selling to the Australia market
  • Put your questions to an expert panel

Reserve your place in seconds – for free

The webinar takes place on Tuesday 31 July at 10am. You can reserve your place in seconds here. It’s free! Can’t make it? No problem. We will send you a link to the full recording of the webinar so you can learn from the experts’ views at a more convenient time. Don’t miss out.