Compliance Inferno: how to get on top of changes to the Australian legal and business landscape
By Eloise Preller
Setting up a business in Australia can be simple. Beyond choosing a registered office address, an Australian resident director, a corporate structure and a public officer, it is simply a matter of registering for a tax file number (TFN) and for Goods and Services Tax (GST) (if applicable). However, ongoing compliance issues can be much more burdensome.
In today's globalized marketplace, companies face numerous challenges in understanding the legal, political, regulatory, and business nuances of setting up business operations in another jurisdiction. In Australia, the ability to remain up-to-date with compliance issues has been complicated by major changes to the law. Meaning, it's even more important today than ever to consider your business' ongoing compliance.
What's compliance got to do with it?
When ensuring your business is compliant you should take a similar attitude to any initial due diligence you carried out, while also remembering that now you are operating in Australia you may face penalties for failing to remain compliant with any obligations your business has under relevant laws.
Office holders, such as directors, managers, secretaries and CEOs can be personally liable for the failings of a company. So, now is the time to get familiar with your Australian operations and how the Australian business landscape has changed. As a business owner, manager or director you should be asking whether you are up to date with the business landscape changes in Australia and whether your company is compliant with Australian requirements.
Rolling on the river of legal changes
As far as the last few years are concerned there have been some major changes to the law that businesses should be aware of. Privacy laws are ever-changing in an effort to keep up with technological advancements in business, consumer rights are strengthening, corporate culture is now, more than ever before, increasingly important at board level and slavery and anti-corruption clauses in contracts are no longer overlooked – they are given much greater consideration
In addition, regulatory and government authorities like the Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investment Commission (ASIC) and the Information Commissioner are exercising increased powers of investigation and enforcement.
Some key changes to the law and the way business is done in Australia (with more proposed changes on the way)include:
Privacy Laws
Effective 2018: Data Breach Notification Scheme – requires notification to information commissioner for breaches of privacy.
Effective August 2019: greater rights granted to consumers to access personal data in a convenient form.
Proposed: increasing penalties for non-compliance, increasing enforcement powers, introducing rights similar to those identified in the GDPR relating to social media and other online platforms and rules protecting children and vulnerable people.
Consumer Laws
Effective March 2019: IP Safe Harbour exemption removed.
Effective 2018: increased penalties for breaches of the Australian Consumer Law (ACL) to higher of $10m, 3 x benefits or 10% of turnover; mandatory wording for warranties given in Australia; and changes to gift cards given by businesses attracting fines of up to $30,000 for breaches.
Proposed: increase the threshold for a 'consumer' from $40,000 to $100,000.
Modern slavery
Effective 1 January 2019: businesses with more than $100m consolidated revenue need to report on slavery, trafficking and forced labour.
Proposed: businesses with more than $50m annual turnover (in NSW) will need to report on slavery, trafficking and forced labour.
Ipso Facto
Effective 2017 (though still comes up as unknown to some today): excludes a right of termination in business contracts when companies are experiencing financial hardship – puts a 'stay' on the ability to termination for at least 3 months.
Next Steps
Its time to take a look at your business and be aware of changes you may need to make to your processes in order to get compliant with new laws in Australia. Failing to adapt may mean you are not compliant with your obligations as a business. Directors and other office holders can be held personally liable for the failings of a company they manage.
Eloise Preller is a dual qualified lawyer, who knows a thing or two about moving to another country, having relocated from the UK to Australia. Eloise helps foreign businesses set up in Australia and provides continued support for their operations from the ground, including providing corporate legal health checks and rectifying any issues.
You can contact Eloise via email or phone at eloise.preller@mk.com.au or +61 2 8298 9587.
