Over the last year or so, we’ve been keeping a watchful eye on the number of businesses that have fallen foul of business law in some way or another.
Whilst I’m not so sure the number of people engaging in business ‘crime’ is on the rise, I am sure that the various government watchdogs are getting more aggressive in their pursuit of business owners with less than adequate business practices.
Now I’m using the term less than adequate business practices because many business owners who fall foul of the law will often fall into the bucket of ‘I’m just trying to run a business here’ bucket. But as with all things government and legislation related, especially when it comes to business, ignorance of the rules is not a valid claim to be let off scot-free.
So what obligations must you be aware of? Here are a couple that we keep reading about in the news.
Company director legislation under ASIC. If you’re a company director – you must be aware of your rights and responsibilities under ASIC. Recent changes in legislation mean that you’re now personally liable for employees entitlements including superannuation and tax debt regardless of your company structure. If you’re not sure what your other obligations are or you tried to read the documentation, but found it heavy going, have someone go through it with you.
Your tax obligations – PAYG, GST and company tax. Once the lender of last resort, the ATO have become significantly less flexible in their approach to those owing them vast sums of revenue. Rather than readily agreeing to terms, if they’ve had to chase the business owner for what’s rightfully theirs, the ATO have the power to windup your company or if you’re not a company, declare you personally bankrupt. Two things you want to avoid at all costs – neither of which will free you from your ATO obligations. The ATO always get what’s theirs.
Regular superannuation contributions for your staff members, including contractors deemed employees. Whilst you might have your regular ‘staffers’ covered, long-term casuals and contractors who are ‘deemed employees’ from the ATO’s perspective is another ballgame entirely. If you have any contractors and casuals on your books, you might want to have a conversation with a business advisor, accountant or someone who knows payroll requirements like the back of their hand.
Award rates and staff entitlements. Recently there’s been a spate of prosecutions under Fair Work Australia against companies that aren’t paying their staff in line with award rates, or they’ve accidentally underpaid them or they’ve not added in appropriate penalty payments to staffers’ pays. There’s also been a number of warnings and prosecutions against those deliberately bringing in migrants on 457 visas to pay less than market wages. Yes, Australian wages can make it difficult to run a business, but you need to make sure you understand what your obligations as an employer are. If you’re unclear, seek advice.
Appropriate record-keeping. The ATO, as do many accountants, know that inadequate record keeping often means incorrect tax has been paid and that’s a big red flag on a business begging for an audit. The ATO has some very sophisticated income matching technology and they’ve got access to everything in banks via your tax file number (TFN). In addition, they also have benchmarks for almost every industry you can poke a stick at and if your income, expenses, etc falls outside those, you’ll likely get a knock on the door from the taxman. And of course, if your records aren’t up to snuff, let’s just say, it’s going to be more unpleasant than it needs to be.
There are many, many more things you need to be across if you’re running a business. However, if you make an honest mistake, it has been said that you won’t be prosecuted – as long as you make good very quickly (and it doesn’t mean you won’t cop a fine along the way either).
Ignorance isn’t bliss and you really can only make those mistakes once – before you must consider yourself to have been warned.
Of course, if we can do anything to help your business or provide advice on your obligations, we’d love to hear from you.
