By Sandra Barry >>

The states and territories have passed separate legislation restricting domestic interstate travel, which has significant implications for some employers.

The following states and territories have implemented interstate border restrictions:

  • Queensland from 12am on Wednesday, 25 March 2020

  • South Australia from 4pm on Tuesday, 24 March 2020

  • Tasmania from Friday, 20 March 2020

  • Western Australia from Tuesday, 24 March 2020

  • Northern Territory from 4pm on Tuesday, 24 March 2020.

Each of these jurisdictions have declared the restrictions will apply to all travellers arriving by air, land and sea. Travellers will need to comply with strict quarantine requirements or be refused entry. 

Each jurisdiction has declared that the strict border restrictions and quarantine requirements will not apply to persons who fall within ‘essential travellers’ exemptions.

Which states and territories have not implemented interstate border restrictions?

New South Wales, Victoria and the Australian Capital Territory have announced that their borders will remain open to interstate travellers. However, based on the rapid changes occurring as states and territories attempt to deal with coronavirus, it is highly likely that some form of border restrictions in these jurisdictions will also be implemented.

Essential traveller exemptions

The rules for interstate border restrictions are slightly different in each state and territory but exemptions for essential travellers appear to be relatively the same. The essential travellers categories are generally:

  • national and state/territory security and governance

  • health services and essential medical treatment

  • transport, freight and logistics services

  • skills critical to maintaining key industries or businesses

  • emergency services workers

  • cross border community members (for the purposes of work and obtaining essential goods and services)

  • passing through (excluding Tasmania)

  • compassionate grounds

  • FIFO workers (that are linked to an essential traveller category and are able to provide evidence of their employer and location they are travelling).

Essential traveller exemption applications

At the time of writing this article, the legislative directives for each state and territory are not fully in place or complete. Due to the complexities in implementing border restrictions, it is likely that these directives and legislative provisions will change rapidly.

In Queensland, essential travellers are required to complete an online application to obtain a Queensland Entry Pass and have documentation supporting their status available. Queensland Police have also indicated they are working on an ‘identifier’ (a visible sticker) to place on vehicles regularly passing across the border. Police have also closed roads to support the Queensland restrictions.

In Tasmania and the Northern Territory, essential travellers are required to complete arrival forms at available border access points. In some circumstances, essential travellers will need to have applied to the relevant government authority to obtain the necessary exemptions before travel.

South Australia has only stated that police will be stopping persons at checkpoints, taking details and making enquiries as to the person’s movements and reason for travelling into South Australia. Because of the limited guidance, we recommend that essential travellers have documentation supporting their status available.

In Western Australia, essential travellers are required to complete forms on arrival at points of disembarkation, road checkpoints or stations. For persons entering by road, there is a further requirement that only ‘designated roads’ be used (Victoria Highway or Eyre Highway).

Quarantine conditions for essential travellers

Tasmania requires essential travellers to comply with strict quarantine conditions, including self-accommodating and monitoring symptoms for COVID-19.

At this stage, it does not appear that essential travellers need to comply with quarantine conditions in other state and territories. However, this position may change rapidly.

What this means for employers

Employers with interstate operations will need to ensure that travel complies with interstate border restrictions and that operations fall within the essential traveller categories.

In Queensland, employers need to ensure that they have provided employees required to travel interstate with a Queensland Entry Pass.

For other interstate travel, employers will need to consider what application or exemption forms and documentation needs to be available to employees ahead of interstate travel. This will include determining whether exemptions need to be submitted and granted by relevant authorities before travel.

There are strict monetary penalties for both individual employees (of up to $62,800) and corporate employers (of up to $250,000) where border restrictions and essential traveller requirements are not complied with.

Employers with interstate operations affected by the interstate border restrictions can contact us for further advice.

www.cgw.com.au

Sandra Barry is a senior associate at Cooper Grace Ward Lawyers, based in Brisbane. Input into this report also came from Cooper Grace Ward partners Belinda Winter and Annie Smeaton.

THE Australian Taxation Office (ATO) has welcomed the decision of the High Court on March 11 in relation to the meaning of 'associate' for tax purposes, with broader relevance to dual listed companies, staples and other similar structures.

The relevance in the context of BHP was in relation to the Australian taxation of a relatively small component of its profits made by a marketing-hub established in a low-tax jurisdiction by the BHP dual-listed group BHP Group Limited, formerly known as BHP Billiton Limited in Australia (BHP Australia) and BHP Group Plc, formerly known as BHP Billiton Plc, in the UK (BHP UK), namely the profits from the on-sale of commodities from Australian subsidiaries of BHP UK.

Following the simplification of their structure announced by BHP as part of the transfer pricing settlement with the ATO in 2018, BHP Australia is already being taxed on 100 percent of the profits of the marketing hub in Singapore from the sale of Australian commodities owned by BHP Australia, the vast bulk of its Australian operations. 

This High Court  decision now finalises the dispute between the ATO and BHP in relation to the on-going Australian taxation of the marketing hub profits, which will be fully taxed in Australia.

The decision in BHP Billiton Limited v Commissioner of Taxation saw the High Court confirm the Commissioner’s position that BHP Australia is taxable on its share of the marketing hub’s profits from sales of commodities acquired from Australian subsidiaries of BHP UK as well as those acquired from Australian subsidiaries of BHP Australia. This is because BHP Australia and BHP UK are associates of each other and the marketing hub in Singapore.

“This decision means that BHP Australia was taxable on its share of profits derived by the marketing hub from selling commodities mined in Australia which it purchased from BHP UK's Australian subsidiaries,” Deputy Commissioner of Taxation for Public Groups Rebecca Saint said. 

“The resolution of this case in conjunction with BHP’s earlier structural simplification and $529 million transfer pricing settlement [for the years 2003 to 2018] means this long running dispute is now concluded, and Australians can have full confidence that BHP, as one of Australia’s largest companies, is paying full tax on its profits from the sale of Australian commodities," she said.

“Complex domestic and international tax structures of global multinationals have been a focal point of the ATO’s Tax Avoidance Taskforce. This decision validates our robust approach of ensuring complex arrangements comply with Australian taxation laws and that large corporate groups are paying the correct amount of tax.”

This case highlights the Tax Commissioner’s continued commitment to protecting the Australian tax base and willingness to hold large well-resourced multinationals operating in Australia to account to ensure that those multinationals pay their fair share of tax in Australia rather than diverting profits offshore to no-tax or low-tax jurisdictions.

“We are committed to taking strong action to ensure multinationals comply with the Australian tax regime and we are prepared to litigate to protect the integrity of the Australian tax system,” Ms Saint said.

The precedent set by the decision provides clear guidance that will assist the ATO in its efforts to ensure that other multinationals pay their fair share of tax in Australia. The decision will also have broader implications for other taxpayers affected by taxing provisions that use the concept of an 'associate'..

The High Court decision can be read in full here.

www.ato.gov.au

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THE Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has warned that if big businesses continue to flout reasonable payment terms, she will have no choice but to recommend federal legislation requiring all businesses to be paid in 30 days.

“In the past week, Telstra and Rio Tinto have moved to 20-day payment terms for SMEs and there is no reason why other big businesses can’t do the same,” Ms Carnell said.

“Australia’s big businesses have had more than enough chances to do the right thing, so if they can’t follow Telstra and Rio’s lead, I will have no choice but to recommend legislation requiring 30 day payment terms across the board. 

“Late payments by large businesses to small businesses account for 53 percent of all invoices. That’s $115 billion paid late to small businesses – equivalent to $7 billion of working capital to Australian small businesses every year," Ms Carnell said.

“The economic case for faster payment times is clear, not just in Australia but internationally. When the Obama administration moved to 15 day payment times, a Harvard Business School study found that created 75,000 jobs and delivered an additional $6 billion to US workers’ pay packets.

“Our recently released position paper outlines the key preliminary findings of our Supply Chain Financing Review and we are seeking feedback on that before making formal recommendations. The final report will be handed down at the end of March.

“So far, our Supply Chain Finance Review has revealed the voluntary Supplier Payment Code is just not working," she said.

“The Code is voluntary, there is no compliance monitoring and it’s actually unenforceable.

“The fact is that all businesses, regardless of their size should be paid in 30 days and supply chain finance should be available to those small businesses that want to be paid faster.”

Contributions to the Supply Chain Financing Review can still be made via This email address is being protected from spambots. You need JavaScript enabled to view it.

www.asbfeo.gov.au

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THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the opportunity to advocate for stronger unfair contract term protections for small businesses, as the Federal Government begins its next phase of consultation.

“The government has now released its regulatory impact statement, which broadly reflects the recommendations made by my office throughout this process,” Ms Carnell said.

“We look forward to continuing to champion improved protections for small business as part of this consultation process, but it’s been a long time coming. While we support this thorough process, the time for meaningful change can’t come soon enough. 

“Small businesses have waited long enough, so we’d encourage the government to make this a priority. There’s certainly room for significant improvements to the current unfair contract term legislation to help level the playing field," Ms Carnell said.

“While my office is able to resolve many contract disputes by using the unfair contract term provisions as a lever, on occasions when these negotiations fail, a small business is forced to seek a ruling through the courts.

“This can be very costly for small businesses and when a larger company has more resources to delay proceedings, this can lead to small businesses giving up or going out of business.

“That’s why it is our position that regulators should be given enhanced enforcement capabilities to determine and deal with unfair contract term cases," she said.

“Unfair contract terms should be made illegal and penalties should apply to breaches.

“The legislation should be extended to cover contracts up to $5 million, as the most common standard form contract for a small business is with its financial services provider. This has also been supported by the Australian Financial Complaints Authority (AFCA) which has raised the cap for complaints it can consider to $5 million," Ms Carnell said.

“Removing the current exemption for insurance contracts from the unfair contract term regime as recommended by Commissioner Hayne, also makes logical sense.

“My office will vigorously advocate for a change in how small businesses can challenge unfair contract terms outside the court system in our comprehensive submission to the consultation process.”

www.asbfeo.gov.au

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell is leading an inquiry into Austrlia's insolvency system. The goal of the inquiry is to investigate and assess "if current insolvency practices achieve the best possible outcome for small and family businesses in financial trouble".

Anecdotally, with virtually no businesses that enter into voluntary administration emerging to trade again, the inquiry is most likely to reveal that small businesses are particularly vulnerable to being summarily liquidated. Even large, well-resourced and asset-rich businesses that have entered voluntary administration in recent years -- such as Cubby Station and Arrium, the former BHP steel company that had a range of brands including OneSteel -- were liquidated and sold to international buyers at major markdowns to their balance sheet values, losing shareholders, including large pension funds, billions of dollars. 

Questions of whether insolvency practitioners have the continuation of a business, once restructured, as a priority will be raised as will the thorny issue of the fees that are charged by administrators and the correspondingly lower returns to creditors.

“This inquiry will shine a light on the insolvency system and uncover if it encourages practitioners, in the first instance, to restructure the small or family business to turn it around," Ms Carnell said. 

“Unfortunately the Banking Royal Commission wasn’t asked to look at the role of insolvency practitioners and that was a missed opportunity.

“We know there is a very low success rate in restructuring Australian businesses under external administration and the impact of the insolvency process is often devastating for the small business owner.

“Few small businesses that enter formal insolvency administration are able to navigate their way through the process to reach a restructuring agreement," she said.

“The latest data reveals more than 8,000 businesses entered external administration in 2018/19. Of those, small and family businesses in rural and regional Australia have been among the hardest hit.”

Ms Carnell said the Insolvency Practices Inquiry would examine:

  • the existing insolvency system through the experience of small business
  • the degree of transparency of the governance, processes and costs of practitioners including legal advisers, valuers, investigating accountants, administrators, receivers and liquidators
  • how the insolvency of a small or family business may lead to bankruptcy for the owners
  • how the framework impacts the practices and fees of insolvency practitioners.

As part of the inquiry, the Ombudsman has established a reference group, chaired by former Senator John Williams, to act as a forum for input and discussion on the challenges faced by small and family businesses facing insolvency. 

Mr Williams took a lead role in the 2010 Senate Inquiry into the regulation, registration and remuneration of liquidators.

“It is most important that small businesses and farmers who find themselves in financial difficulty are treated with respect and fairness,” Mr Williams said.

“This inquiry is essential to see if any systemic improvements can be made.”

“Our Small Business Loans Inquiry identified a lack of transparency for the small business owner when a creditor commenced debt recovery action,” Ms Carnell said.

“The small business owners felt they had lost control of their business and in cases where the business was wound up, they felt the process was poorly managed.

“This inquiry will identify areas where practices can be improved and recommend changes to the system to achieve fairer outcomes for all parties involved.”

Small and family businesses that have faced financial difficulties and restructured or wound up their business can share their stories by completing a survey.

An interim report will be released in December with a final report to be handed down in February 2020.

www.asbfeo.gov.au

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THE Institute of Public Accountants (IPA) has commended the Federal Government for the Bill which will stamp out wage theft brought about by a loophole in the superannuation guarantee (SG) rules.

“The loophole came about where an employee salary sacrifices into his or her superannuation and the employer use that contribution to form part of the employer’s obligation to pay the 9.5 percent SG,” IPA chief executive officer, Andrew Conway said.

“The loophole will now be closed.  This integrity measure has been a long time coming.  In 2017, there was a Bill to fix this anomaly, but it lapsed before the election. 

“The IPA advocated for the measure to be brought forward from its proposed date of 1 July 2020, to the start of this financial year namely 1 July 2019.

“Employers have had enough warning of the government’s intention to stop this unscrupulous behaviour. We are pleased that the Senate agreed with our position and recommended the measure to be brought forward to 1 January 2020," Mr Conway said.

“When someone undertakes a salary sacrifice into superannuation, they are attempting to provide sufficient savings to live more comfortably when they retire. They are sacrificing spending money today to build their nest egg which is a good thing as it means less reliance on government support in retirement.

“Therefore, this measure is important to ensure individuals’ investments for their future are protected.

"t’s ironic that whilst we are discussing an SG increase to 12 percent, some employees may not have been receiving the current 9.5 percent whilst the loophole has been exploited,” Mr Conway said. 

www.publicaccountants.org.au

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has urged the Federal Government not to abolish the low-cost innovation patent regime. Ms Carnell said the impending move to do so would create a significant barrier to small businesses and Austalian innovation.

“It would be a mistake to phase out the innovation patent system without any replacement,” Ms Carnell said.

“Although we acknowledge the current system is not perfect, it’s the only viable way for SMEs to access temporary or short-term IP protections, which is essential, particularly when disputes arise. Abolishing the innovation patent system would effectively leave small businesses vulnerable to large businesses stealing their ideas and inventions. 

“Small businesses face significant hurdles when trying to protect their IP rights," Ms Carnell said. "They don’t have in-house lawyers or patent expertise and often experience difficulties in accessing risk capital.

“That’s why my office continues to strongly argue against phasing out the innovation patent regime and instead either improve the existing system or replace it with something better.

“Many small businesses rely on the innovation patent system to attract funding. Investors won’t even look at a company that doesn’t have those protections in place," she said.

“Standard patents are more expensive and can take over two years to get. It’s just not a viable option for small businesses that want to protect their products.

“The fact is, by phasing out the innovation patent system, many of these small businesses will look to import products rather than innovate and that has serious ramifications for Australia’s economy," Ms Carnell said.

“This week the Senate will debate the innovation patent as part of a suite of proposed intellectual property law changes and I urge them to support amendments stopping the abolition of the innovation patent regime.” 

www.asbfeo.gov.au

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