In Check Issue 74 | March 2017

27 March, 2017
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What is new on LPLC’s website?

Cyber security page

We have a new risk management page dedicated to cyber security issues and a rolling banner on our website home page that will take you straight to the cyber security page.

Building and construction practice area page

We also have a new risk management practice area page for building and construction. All our risk management publications relevant to building and construction law and claims can be accessed through this page.

Snapshots

We have published the first in a new series called Risk Snapshots, designed to give practitioners an overview of the claims statistics and highlight the main causes of claims and risk management strategies in their area of practice.   The first Snapshot covers personal injury litigation. More snapshots will be added on different practice areas in the future.

You can see the first Risk Snapshot by clicking on the link above or hovering over the Resources box on the home page of our website and clicking on Risk Snapshots.


Continuing Professional Development (CPD)

LPLC has a new section on its website to answer common CPD questions. You can find it via our rolling banner on the home page.

LPLC is primarily focused on providing risk management seminars, however our seminars can cover any of the four fields set out in Rule 6. CPD obligations. To read about the LPLC events available and the fields covered refer to the LPLC training calendar.


What is happening in cyber risk?

Social engineering is not a new term but it is being used now to describe a means of tricking people in the cyber world into divulging information or giving access to their computer system or paying money. It comes in many guises but in more recent times the sophistication and targeting has improved.  Cyber criminals can gain significant information about you and others in your firm from the firm website and social media and use it to trick you.

Practitioners are reporting receiving emails purportedly from the senior people in their firms or from clients that look and sound real.  The email addresses are identical and the content contains accurate personal information about the person including where they may be travelling or that they are caught waiting for a train and so on. The email may require you to click on a link or do something else like send money.

Everyone in the firm needs to be vigilant about critically assessing any email or other requests they receive. It is essential that regular training on the subject is conducted in every firm.


Are you ready for the DBDRV?

The LPLC LIJ article in June 2016, Old claims and new building laws, heralded the arrival of a new dispute resolution service called Domestic Building Dispute Resolution Victoria (DBDRV). DBDRV will replace Building Advice and Conciliation Victoria.

DBDRV is established pursuant to Part 2 of the Building Legislation Amendment (Consumer Protection) Act 2016 (Vic) which amends the Domestic Building Contracts Act 1995 (Vic) (DBC Act) and will commence operation on 1 July 2017 unless proclaimed before then.

If your clients want to use the dispute resolution services of DBDRV they will need to do so before applying to the Victorian Civil and Administrative Tribunal (VCAT) because the DBDRV will have no jurisdiction once proceedings have been issued. See section 45(5) DBC Act.

Once the new provisions come into force applications to VCAT cannot be made unless the parties have a certificate of conciliation from DBDRV declaring that the dispute was not suitable for conciliation or it was not resolved at conciliation. See section 56 DBC Act.

DBDRV will have the power to issue binding rectification orders to builders and owners to facilitate dispute resolution.

Practitioners considering issuing proceedings in VCAT should advise their clients of the pending changes.


Common GST questions – GST and adjustments for sale of commercial property

Practitioners are requested to review the FAQs before they use our GST hotline enquiry service as the answers to many of the enquiries we receive can be found in the FAQs.

Q: I act for the purchaser of a commercial property. The vendor’s solicitor and I have agreed on the adjustments at settlement but we can’t agree on how the GST is to be calculated.  The purchase price is $550,000, the purchaser has to pay adjustments for rates, water, owners corporation rates of $1,355.20 (GST exclusive) and the vendor has to allow for registration fee of $92.70.  How should the GST be calculated?

A: The registration fee is not an item that should be treated as part of the consideration for GST calculation purposes, so the calculation of GST is as follows:

Contract price                                    $ 550,000.00

Adjustments                                      $       1,355.20

Adjusted consideration                    $ 551,355.20

GST                                                     $      5,513.55

The ATO has issued two rulings which are relevant to calculating GST on the sale of land – see:

GSTR 2004/9  http://law.ato.gov.au/atolaw/view.htm?DocID=GST/GSTR20049/NAT/ATO/00001

GSTD 2006/3  http://law.ato.gov.au/atolaw/view.htm?Docid=GSD/GSTD20063/NAT/ATO/00001

For further information on the treatment of GST on adjustments see the FAQs on our website.

Q: I have a client who is selling commercial premises as legal personal representative for her deceased father. There is currently a tenant at the premises. I am advised that the deceased was never registered for GST and that the rental does not exceed $75,000. Should the sale be plus GST?

A: A supply cannot be taxable unless the supplier is registered for GST, or required to be.

In the case of estates, if the deceased was required to be registered, then the legal personal representative will also be required to be registered in his/her representative capacity.

The legal personal representative also may be required to be registered even where the deceased was not, if the administration of the estate produce a turnover at or above the registration threshold.

The threshold for registration is based on turnover rather than profitability.  An entity is required to be registered if its GST turnover is at or above the GST registration threshold ($75,000 p.a.). GST turnover consists of current GST turnover and projected GST turnover and includes turnover from all sources other than salaries and input taxed turnover.

Section 188-25 of the GST Act excludes the proceeds of sale of a capital asset from projected GST turnover, avoiding a situation where the sale itself triggers a requirement to be registered; the exclusion does not apply where land is trading stock (for example, land acquired for resale).

So, where the supplier of a property is not registered or required to be registered and the property is not trading stock, the supply of the property is not taxable. If you find that there is a requirement to be registered, then the supply could qualify as a going concern given the property is tenanted.


2017 Risk Management seminars

We have a full program of risk management seminars planned for this year and the dates are listed on our website under Training to help you map out your CPD year.

This month we released the full program for 2017 Regional Risk Management Tour.

For those organised people who like to book ahead you can now book the sessions you want to go to even though the topics and brochures have not been finalised.

The brochures for each series will be emailed to you closer to the dates.


2017/18 Insurance renewals

Barristers should have received an email from the Victorian Bar Association about renewing their insurance online now.

Solicitors should expect to receive their insurance renewal information letter by mid-April with instructions on how to renew online.


Law Institute Journal articles

Each month LPLC writes an article for the Law Institute of Victoria’s journal. The articles are posted here on our website at the start of each month. Three articles have been published since the September issue of In Check.

December                  Not seeing the forest for the trees

Focusing on small details only can sometimes blind practitioners to the bigger picture. Not seeing the forest for the trees refers to someone who can’t see the whole situation clearly because they are looking too closely at the small details or are too closely involved. LPLC receives claims where practitioners become too bogged down in the finer details to see the matter as a whole.

January/February       Misplaced trust

Properly advising a purchaser client at the start of a matter is good risk management. The new federal government CGT withholding regime, which started on 1 July 2016, is a timely reminder to keep up to date on legislative changes so thorough advice can be given to purchasers of real estate.

March                          When tax needs to be raised

Do you help your clients make informed choices about tax issues? Every year the Legal Practitioners’ Liability Committee receives notice of claims where one of the issues was the alleged failure by a practitioner to raise tax issues with the client.