Draft Legislation On Conduit Foreign Income Measure
The government has released draft legislation on the conduit foreign income measure.
The measure will replace the existing foreign dividend account rules and provide tax relief for the distribution of a broader range of foreign income, and implements the government’s decision in response to Recommendation 3.11(1) of the Board of Taxation’s report to the Treasurer on international taxation.
Conduit foreign income is foreign income received by a foreign resident via an Australian corporate tax entity. The measure will ensure those amounts are not taxed in Australia when distributed by the Australian corporate tax entity to its foreign owners.
The measure only applies to conduit foreign income that is ordinarily sheltered from Australian tax when it is received by the Australian corporate tax entity.
It is proposed that new Div 767 be inserted into ITAA 1997.
The new division will provide tax relief through a dividend withholding tax exemption.
Income tax relief will also be provided where conduit foreign income passes through one or more Australian corporate tax entities as an unfranked distribution.
The draft legislation and explanatory material are available on the Treasury’s website at www.treasury.gov.au
NSW Parliament Passes Workplace Deaths Bill
The Occupational Health and Safety Amendment (Workplace Deaths) Bill 2005 was passed by NSW State Parliament last month.
The bill targets the minority of employers whose reckless indifference to OHS results in a workplace death. The bill also provides for a defence for such persons who can prove there was a reasonable excuse for their conduct. The bill amends the Occupational Health and Safety Act 2000, by adding s 32A and B to Part 2 of the Act.
Maximum penalties for the offence will be $165,000 for individuals and/or up to five years’ imprisonment. Corporations will face maximum penalties of $1.65 million.
Under the bill, only WorkCover will be able prosecute a new offence, except in the case of a mine, where the Department of Primary Industries will prosecute. However, if either agency decides not to prosecute for a workplace death, a union can ask the agency for its reasons. Another person may bring a prosecution, with ministerial consent. The bill also makes a minor amendment to the Occupational Health and Safety Regulation 2000 regarding reasons given by WorkCover for not prosecuting under s 32B in relation to mines.
The other aim of the bill is to amend the Criminal Appeal Act 1912 to allow a person, convicted and sentenced by the Industrial Relations Commission to appeal to the Court of Criminal Appeal. In addition, if a person is acquitted of charges under s 32A, the prosecution will not be allowed to appeal.
The current bill replaces a previous draft bill that was strongly opposed by employers, who thought too much power was being given to unions to bring prosecutions.
The Occupational Health and Safety Amendment (Workplace Deaths) Bill 2005 is awaiting assent.
Are Your ‘Contractors’ Actually Employees?
Independent contractors are the fastest growing class of workers in the Australian labour market, and for good reason. It is often more cost-effective for a company to outsource non-essential functions because, if business diminishes, the contractual relationship can usually be terminated more easily than the employment relationship.
But engaging independent contractors can be false economy if your business gets it wrong. Courts and tribunals will award all the benefits of employment, including termination payments, and severance and leave entitlements, to workers it deems employees, regardless of the label they work under.
So, how do courts and tribunals decide whether a worker is an employee or independent contractor? And how can you make sure your exposure is minimised?
An employee by any other name?
It is not enough for a company to nominate someone’s title as ‘contractor’ when that person performs the same work, and in the same manner, as an employee. It is also not enough to give an employee the trappings of contractor status (such as payment on invoice) when in reality the worker continues to act as though he or she were an employee.
Whether a worker is an employee or contractor will depend on what that person actually does and how he or she does it. A court or tribunal will examine a range of criteria in order to answer that question.
Traditionally, the most important of these has been the issue of control.
Who’s in control?
Control by, or on behalf of, an employer can take a number of forms. There may be control over what work should be done, as well as when, where and how that work should be done.
The first three of these will not necessarily point to an employment relationship. There are instances where an independent contractor, e.g. a builder engaged to renovate a house, can be engaged by a principal who defines the first three criteria. That, on its own, does not make the builder an employee. Instead, it is the fourth element that is usually decisive under the control test.
In an employment relationship, the employer has the right to issue instructions about how the work should be performed when instructions become necessary. For independent contractors, the level of instruction is usually more limited.
Just how much instruction is required before the relationship changes from one to the other has been a question that has intrigued courts. For example, there may be instances where control appears to be exercised but may really amount to no more than cooperation.
In Roy Morgan Research Centre Ltd v Commissioner of State Revenue (1996) Sup Ct of Vic (Byrne J) (4508 of 1996) (13/8/96), it was even decided that it was not as much the exercise of control that mattered, as the right of the employer to exercise it. (The decision was affirmed on appeal (1997) and recently applied in VSC 186, 2/5/05.)
A multi-factor approach
In today’s highly specialised workforce, the shortcomings of the control test are obvious. A skilled employee, for instance a computer programmer, may have knowledge that requires him or her to operate with a high degree of autonomy. Similarly, there may be instances where a contractor is engaged, and the nature of the work or place of business is such that the principal must provide specific instructions about the manner in which the work is to be completed.
Tooling Industry Conference
On 19 June 2005 the Tooling Industry Forum of Australia (TIFA) held a conference entitled ‘Overview of the Australian Tooling Industry – Local and Global Collaboration’. Approximately 100 delegates from Australia, Europe, Asia and America attended the conference held at the Hilton Hotel in Melbourne. The strong theme to emerge from the conference is that the Australian Tooling Industry is facing the same challenges as those in other traditional western markets, namely the threat from low cost Asian markets. One of the speakers, Mr Bruce Gray, the Managing Director of Bishop Technologies, said that the opportunities for the Australian Tooling Industry lay in building on niche capabilities, looking to opportunities from Free Trade Agreements and focussing on becoming globally networked.
Victorian Government Business Development Manager For China
The Victorian Government has appointed James Xu as Business Development Manager for the Victorian Government Trade & Investment Offi ce in Shanghai. Mr Xu commenced in his position on 27 June 2005. Mr Xu has many years of experience in both the Chinese and Australian business environment. His role is to manage the Access China program and provide basic preliminary assistance to Victorian companies developing export opportunities.
The Access China office facilities are available to clients free of cost for the first 2 weeks. Companies are then charged at a subsidised rate of US$250 per month (or equivalent) for up to 3 months (excluding extraordinary expenses such as long distance phone calls). Facilities include an individual desk, computer with broadband connection, phone, printer, copier and fax.
Mr Xu’s details are as follows:
Business Development Manager – Exports
Victoria Trade & Investment Shanghai Office
Suite 308 Shanghai Center
1376 Nanjing Road (West), Shanghai, China 200040
Tel +86 21 6279 8681
Fax +86 21 6279 8575
Mobile 13 301 807 355
Email firstname.lastname@example.org .gov.au
GM Daewoo Commences Legal Action
General Motors (GM) Daewoo auto firm is suing a Chinese car manufacturer for allegedly copying one of its vehicles. The Beijing No 1 Intermediate People’s Court confirmed that the Court had accepted a lawsuit filed by General Motors (GM) Daewoo against China’s Chery Automobile Company. GM is asking for compensation of RMB80 million (US$9.6 million). GM Daewoo claims that Chery’s mini car QQ (below left) copied its Matiz and Spark (below right). Chery denies this, saying it developed QQ on its own.
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