Category Archives: Corporate

Website Infringement

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by Steven Morris, Walsh Halligan Douglas

Many clients have had competitors or at times unrelated parties place something on their website which is in fact owned by you. More often than not it is a photograph, an article in whole or part or indeed your or your company’s name. The first step to remedy this situation is of course to request them to remove the offending material or photographs. Often such requests are ignored. What then?

The best and most effective remedy is to have the host of the offending website switch it off until the offending photographs, material or other items are removed by the website owner.

Our suggestion is for a three phase plan to be activated to achieve this:

  1. Have your IT people find out who is the host of the offending site. If you are IT savvy then you need to search the owner of the domain name and internet service provider (ISP).
  2. Send the host a Take Down Notice. This is a request which identifies the infringing photograph material or other content and requests that it be removed. It is the duty of the host to take down the website expeditiously (generally 48 hours) after receiving a Take Down Notice or the host can become liable themselves for the infringing copyright.
  3. Send a copy of the Take Down Notice to the offending site itself. Generally by this stage the site owner will realise that you mean business and usually will decide to remove the infringing item rather than risk the site being taken down unexpectedly.

If these steps do not achieve the desired result then there is always the legal approach and we can assist in protecting your rights.

Employee v independent contractor – ATO scrutiny

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We have previously published papers in relation to the position of whether you and/your staff are employees or independent contractors.  Many businesses seek to make their staff independent contractors to avoid numerous regulatory obligations including Pay As You Go Tax, Superannuation, leave entitlements and payroll tax.

The ATO has announced that independent contractors are high on its list for auditing this year to stop sham contracting.  Significant penalties can apply to businesses for failing to pay employee entitlements.

The ATO ‘s latest compliance program lists as high risk employers the following :

  • Cafes;
  • Restaurants;
  • Real Estate Businesses; and
  • Carpenters.

The ATO expects this year to contact some 13,000 employers in response to complaints from staff members about unpaid Superannuation in particular.

There have been many attempts to disguise employment arrangements as being something other than employment.  As Mr Justice Gray in Reporter: Re: Transport Workers Union Australia said:

“The parties cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck.” 

If you have any concerns regarding the status of your staff members whether they are indeed truly “independent contractors” or are in fact employees please contact us to have a review of your agreements and operating procedures.  The consequences for getting it wrong are quite considerable!

Directors’ personal liability for company debts

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The 2011 Budget introduced proposed changes to strengthen the operation of penalising directors’ personally for actions in respect of their corporate entities.   These changes were intended to protect worker’s entitlements to compulsory superannuation contributions and to address the situation where directors emerge in “phoenix” companies after having previous corporate entities liquidated.

It appears that these changes extend further than originally anticipated and create an increased liability risk personally for all directors.

These changes may expose directors to personal liability where a company has under-reported PAYG or SG withholding amounts due to it adopting a course of engaging a person as a contractor as opposed to being an employee.

Significant Aspects of the Changes

  • Directors are now to be personally liable for their company’s unpaid SG amounts (which will be in addition to PAYG withholding amounts);
  • The ATO will be allowed to immediately commence recovery action if the company’s liability remains unpaid and unreported 3 months after the due date;
  • Should a company’s liability remain unpaid and unreported for more than 3 months, then a director’s personal liability can only be extinguished by payment of the debt or penalty (i.e. placing the company into liquidation will not be      sufficient);
  • The ATO will have the discretion to prevent directors and their associates from      accessing the PAYG withholding credits on their own salaries if the company has an outstanding PAYG liability;
  • In addition, a new director can become personally liable for the company’s outstanding PAYG and SG liabilities after 14 days from the time they commence as a director of the company; and
  • Directors will be personally liable for their company’s unpaid SG amounts (which will be in addition to PAYG withholding amounts).

Recovery Process for Directors Penalties

Based on these changes it is likely that the ATO would commence recovery and impose penalties on a director where an unpaid liability remains unreported 3 months after the due date.

It would appear that once the 3 months has lapsed the ATO would no longer be required to provide 21 days notice to the director before initiating proceedings and the directors liability can only be extinguished by in fact paying the penalty and therefore extinguishing the underlying liability.

Implications for Directors

Whilst these changes were initially drafted to target “Phoenix” companies it is likely that the provisions will extend further. Directors need to be fully aware of their company’s employee and contractor taxation obligations and the status of any outstanding debts with the ATO. We would recommend that directors review their company’s superannuation obligations in respect of contractors and employees.

Additionally, if you are looking to join a company as a director it would be essential to ascertain the current liability of the company to PAYG and SG liabilities before signing the Consent to act as a director.

For further information about this and other corporate issues, contact Steven Morris via email stevenm@whd.com.au or phone 07 3232 5700.