Financial and Accounting Skills for Lawyers 

11/11/19

A good lawyer understands their client’s legal position. However, a great lawyer also understands the financial context in which their clients operate. Whether in the courtroom or at the negotiating table, when the conversation with clients turns to numbers, are you able to keep up? 

So what are the common accounting concepts or tax issues that lawyers may need to consider:

·      Getting the Balance Right: Navigating Key Financial Statements - Accounting issues arise in many different areas of the law. From an M & A transaction to a family law property dispute, and from an allegation of fraud to conducting due diligence on the sale of a business, lawyers need to have at least a basic understanding of accounting concepts and associated analytical skills. 

·      Financial Reporting: The Regulatory Overlay - Preparing financial reports used to be simple, but successful ruses by the unscrupulous have resulted in successively more restrictive layers of regulation to ensure the accuracy of financial reporting – a high level understanding of rules and regulations surrounding financial reporting is now required.

·      From Theory to Practice: in financial statements - Knowing the theory is the first step towards understanding financial statements, but being able to practically utilise the information for the purposes of issue identification, advising, forward planning and negotiating can make all the difference when servicing your clients. 

·      Making Dollars and Sense out of Business Valuations - Whether advising warring parties in property settlement proceedings in the Family Court, or navigating the sale or purchase of a business, business valuations can be an important part of a lawyer’s practice. 

·      Capital Gains Tax for Lawyers – General Principles - CGT is a complex tax which can bite you when you least expect it.  Other than those who practice in tax, lawyers need to understand the general principles.  But, most importantly, you need to be familiar with the most common situations in legal practice which have CGT implications and that is the focus of the next two sessions.

·      Capital Gains Tax for Lawyers – Common Scenarios - Your client will not want to pay any CGT.  It’s your job in common commercial transactions to be able to recognise CGT issues in transactions so that you can seek expert advice on them before it’s too late!  

·      Division 7A: A Primer for Lawyers - Division 7A is designed ultimately to tax loans and transfers of property from private companies to their shareholders or associates as if the loans or gifts were dividends.  Both loans and transfers of property are defined in very broad terms and can easily catch the unwary or uninformed.  And the reach of Division 7A extends in oblique ways to certain trust distributions as well.  

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Regulating the Employee Relationship – what questions need to be asked?

11/11/19

The Australian workforce is constantly evolving and the challenges facing HR professionals and employment lawyers continue to grow. The employment law landscape during the last twelve months has been particular interesting and a number of key legal questions need to be considered when building the Employee Relationship.

1.   Casual Employment Post Workpac - Considerable media attention was afforded to the Full Federal Court decision in WorkPac Pty Ltd v Skene, which confirmed the tests for the characterisation of casual employment. The resulting outrage led to the Federal Parliament regulating to address “double dipping”. But is the issue now finally settled?

2.   Working Beyond the Nine to Five: Hours of Work and Employer Obligations - An employee can work a maximum of 38 hours in a week unless an employer asks them to work reasonable extra hours. Sounds simple enough in theory, but what is meant by ‘reasonable’? And, what are the risks of employers when staff are putting in more than the maximum hours of work? 

3.   Fit for Work and Employers’ Obligations - For employers to meet their safety obligations, it is crucial that they ensure their employees are fit for work.  While making these inquiries is often uncomfortable for employers, knowing what can be done to ensure employees can properly perform their roles and employers reduce their risk of unlawful discrimination.

4.   You’re Fired! Are Summary Dismissals Unfair? - Deciding whether an employee’s conduct is sufficiently serious to justify termination without notice or payment in lieu of notice can be a challenging exercise. What changes have the recent FWC unfair dismissal decisions and relevant principles made?

5.   Exiting Senior Employees: All Good Things Must Come to an End - Executive employees are a crucial part of any big organisation. When they leave, it can be a major disruption for your business. How can you ensure their contract covers all the essential termination clauses is key?

6.   When Your Data Flies out the Door with a Departing Employee - A significant and recurring problem for businesses is the loss or misuse of data including confidential information, especially when an employee is departing the organisation. How can you respond swiftly, and what steps can you take to mitigate against the risk in the first place?

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Free Trade Agreements for Agribusiness – the key points to consider

01/12/19

Accessing premium markets involves a mix of considerations for Australian farmers. Taking note of these legal considerations is the first step when developing international business relationships:

  • The legal environment should be as stable as possible. FTAs assist in that regard, and can provide important market advantages for Australian exporters that should not be treated lightly, even if not “perfect”. 
  • The Australian Government is trying to play its part in other ways, with limited success and even less appreciation. Understanding risk is essential, and covering off those risks in your own private arrangements with foreign buyers is critical. 
  • Consider also what happens should things not go well, as this will not only galvanise your foreign buyer to similar focus on the issue of compliance and to give your concerns due respect, but will also put you in the best position should something go wrong. 
  • Protect your rights, intellectual or otherwise, in accordance with the mechanisms afforded to you in the foreign country concerned. 

All things considered, these things are no different to the things you would probably do when entering into a significant business relationship here in Australia, except that “familiarity” is lacking. Therefore, go out and get the advice you need, understand the market, and get to know the people you intend to do business with - things that can best be achieved by research, travel, engagement and relationship- building. 

Author: Daniel Moulis | Moulis Legal
Presented: The 4th Annual Agribusiness Law Conference 2019

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FTAs in practice - Understanding the Agricultural provisions in Australia

04/12/19

What is available in which agreements. Some of the highlights of trade free agreements presently in force.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”)

  • The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”),5 in force for Australia since late last 2018, is beneficial to agriculture, given its liberalising effect across markets that are the destination for 23% of Australian agriculture exports. 

In Japan, this saw the abolition of tariffs on Australian sheep meat, wine, cheese, horticulture, cotton, wool and seafood. Beef exporters are set to benefit, even if slowly. For example, in Japan tariffs will be falling to 9% over 15 years (well below the 19.5% and 23.5% tariffs under the pre-existing 2015 Japan-Australia Economic Partnership Agreement (“JAEPA”), for frozen and fresh respectively). Dairy also will see improvements in Japan, with tariff removal or new quotas on a range of cheeses, milk powder and protein products. However, the moderating factor is that other signatories will receive the same reduced tariffs, losing the tariff advantage that Australian beef exporters currently enjoy. 
 

The China Australia Free Trade Agreement (“CHAFTA”)

  • The China Australia Free Trade Agreement (“CHAFTA”), in force from late 2015, did not arrive at tariff reductions even-handedly across all agricultural sectors. The sugar, rice and cotton industries, and some grains (wheat, canola, maize), achieved almost no improvements in their ability to increase the volumes of their sales to China, whereas the results for dairy products, beef, lamb and horticultural products were excellent. Some volume-limiting special safeguard measures apply to beef and to milk powders. Other winners were barley and sorghum, although barley growers probably do not think that they are “winners” at the present time. 
     

Japan-Australia Economic Partnership Agreement (“JAEPA”),

  • Winners under the Japan-Australia Economic Partnership Agreement (“JAEPA”), in force early 2015, were beef (in the form of front-loaded reductions over 18 years), pork (in the form of increased Australia-only quota), and horticulture. Tariffs were removed for barley and wheat (but for feed purposes) and for wheat gluten and major vegetable oils. Bulk wine and beer fared well too. The dairy sector was a loser, noting that Japan’s dairy markets have traditionally been closed to imports. Sugar continued to be discriminated against by reason of the Japanese system of allowing low grade sugar in tariff free, but not high-grade sugar. 
     

Korea-Australia Free Trade Agreement (“KAFTA”),

  • Under the Korea-Australia Free Trade Agreement (“KAFTA”), in force 12 December 2014, significant market opening was negotiated with respect to beef, wheat, sugar, dairy, wine and some horticultural products. Wheat, cotton, wool and sugar were already subject to only low or no tariffs. Cheese tariff quotas and quotas are subject to an unusual 20-year phase-in. Reductions, from high rates, for table grapes, nuts and cherries, even if not to zero, were still very substantial. Left out was rice, ginseng, honey, milk powders, streaky pork and selected horticultural products. 

The Malaysia-Australia Free Trade Agreement (“MAFTA”),

  • The Malaysia-Australia Free Trade Agreement (“MAFTA”), in force early 2013, delivered a fairly comprehensive result for agriculture, albeit with some short delays for some sectors. MAFTA requires annual increases in quota volumes for liquid milk; commences tariff reductions for rice in 2023 dropping to zero by 2026; and eliminated remaining tariffs on horticultural products in 2016. 

The Australia-US Free Trade Agreement (“AUSFTA”)

  • The Australia-US Free Trade Agreement (“AUSFTA”), in force as long ago as 2005, has its critics, because it failed to overcome US sugar restrictions and made only small and graduating changes for exports of beef and dairy products. 

The Thailand-Australia Free Trade Agreement (“TAFTA”),

  • The Thailand-Australia Free Trade Agreement (“TAFTA”), also effective from 2005, was more of an overall success for agriculture, noting that reductions to zero were postponed for beef and pork; butter and cheese; and sugar. However, all tariffs will be removed from these products next year (2020). For other dairy products (milk, skim milk powder and cream), all tariffs and quotas will be eliminated in 2025. 

Second, with respect to free trade agreements (“FTAs”) concluded but not yet in force, these are the key features for agriculture: 

The Australia-Hong Kong Free Trade Agreement (“AHKFTA”),

  • The Australia-Hong Kong Free Trade Agreement (“AHKFTA”), signed only a few months ago but not yet in force, will lock in zero tariffs on all Australian exports to Hong Kong, subject to the ability retained by Hong Kong to increase tariffs up to its bound levels under WTO rules. This will particularly benefit Australian seafood, beef, pork and winemakers. The Australia-Hong Kong agriculture, fisheries and forestry trade relationship was worth AUD1.4 billion to Australia in 2017-18. 

The Indonesia-Australia Comprehensive Economic Partnership Agreement (“IA-CEPA”)

  • The Indonesia-Australia Comprehensive Economic Partnership Agreement (“IA-CEPA”), concluded a few months ago, is set to benefit a wide range of agribusinesses. Grain farmers will get guaranteed duty-free access for 500,000 tonnes of wheat, barley and sorghum grains per year increasing at 5% per year to 775,664 tonnes. Duty-free access for live male cattle will be increased 4% a year to 700,000 head annually. All tariffs on beef and sheep meat will be removed over the next five years. Tariff reductions will also occur for dairy, mandarin, potato and carrot exporters. 

The Peru-Australia Free Trade Agreement (“PAFTA”)

  • The Peru-Australia Free Trade Agreement (“PAFTA”), concluded in February 2018, will remove 99.4% of the agricultural product tariffs affecting Australian farmers in their export trade with Peru. Given Peru is one of the most active FTA authors in the world, these tariffs have effectively shut Australian exporters out of that market. Duty-free access will be increased for sugar (90,000 tonnes in 18 years), dairy (10,000 tonnes in five years), rice (14,000 tonnes in five years) and sorghum (20,000 tonnes in five years). And, importantly, the “price band”: system for these goods will no longer apply against Australian exports. Beef tariffs will be eliminated within five years, while tariffs for sheep meat, seafood, almonds and wheat will be removed immediately. 


    In summarising the above, it is the recent FTAs - the IA-CEPTA, PAFTA and especially the CPTPP - that have significantly liberalized agricultural trade for Australian exporters. 

Author: Daniel Moulis | Moulis Legal
Presented: The 4th Annual Agribusiness Law Conference 2019

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