New Australian Tax Regime Will Affect E-Commerce Platforms around the World

21/01/2018

In 2017, the Australian government passed new legislation on goods and services tax (GST) in order to level the playing field between Australian goods and imported products. The legal reforms aim to ensure that both Australian goods and foreign low-value products are subject to the same tax regime.

There are two main kinds of taxes:

  1. GST on low-value imported goods: This applies to imported goods worth less than AUD 1,000, whether they are sold by Australian retailers or overseas retailers;
  2. GST on digital products and services: This applies to digital goods and services (e.g. music bought online or digital streaming services).

GST on low-value imported goods

What has changed?

As of 1 July 2017, GST on low-value goods applies to products sold by Australian retailers.  

At present, goods imported from abroad that are priced below AUD 1,000 are exempt from GST. However, from 1 July 2018 onwards, Australian residents will have to pay an extra 10% on most types of products, regardless of their value.

The Treasury Laws Amendment (GST Low Value Goods) Act 2017 makes the following reforms:

  • make supply of goods valued at AUD 1,000 or less at the time of supply connected with Australia if the goods are purchased by consumers and are brought into Australia with the assistance of the supplier;
  • treat the operator of an electronic distribution platform (EDP) as the supplier of low-value goods if the goods are purchased through the platform by consumers and brought into Australia with the assistance of either the supplier or the operator;
  • treat re-deliverers as the suppliers of low-value goods if the goods are delivered outside of Australia as part of the supply, and the re-deliverer assists with their delivery into Australia as part of a shopping or mailbox service that it provides under an arrangement with the consumer;
  • allow non-resident suppliers of low-value goods that are connected with Australia to elect to access the simplified registration and reporting system; and
  • prevent double taxation.

Learn more about the GST on low-value imported goods.

Who is affected?

Under the new law, you may need to register for and charge GST if you are:

  • a merchant who sells goods;
  • an operator of an electronic distribution platform (EDP), such as an online marketplace through which merchants sell goods; or
  • a re-deliverer that helps to bring goods to Australia.

This will affect e-commerce platforms that are not Australian. For instance, China-based companies that sell goods worldwide through global e-commerce platforms such as Amazon or eBay may have to adjust prices for consumers in order to take into account this new tax.

Businesses that meet the AUD 75,000 registration threshold will need to take action to review their business systems to determine how the tax will be collected and ensure that they are able to comply.

Related reading: Essential Legal Considerations for Online Marketplaces

What do you need to do?

If your business meets the AUD 75,000 registration threshold, you will need to:

  • register for GST;
  • charge GST on sales of low-value imported goods (unless they are GST free); and
  • lodge returns with the Australian Tax Office.

GST on imported services and digital products

What has changed?

As of 1 July 2017, GST applies to sales of services and digital products imported to Australian consumers.

Learn more about GST on imported services and digital products.

Who is affected?

Overseas businesses that meet the AUD 75,000 registration threshold should consider whether they need to register for GST. This includes:

  • merchants who sells imported services or digital products to Australian consumers; and
  • operators of an electronic distribution platform (EDP) or online marketplace, such as an app store that supplies imported services or digital products to Australian consumers.

What do you need to do?

If you are an overseas business that meets the AUD 75,000 registration threshold, you will need to:

  • register for GST;
  • charge GST on sales of low value imported goods (unless they are GST-free); and
  • lodge returns with the Australian Tax Office.

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Bitcoins and other cryptocurrencies are the new currency for criminals

By Daniel Berke, Solicitor at 3D Regulatory Solicitors

Bitcoin first went online in 2009 as open-source technology, invented by a secretive, anonymous person using the pseudonym Satoshi Nakamoto.

Bitcoin and other cryptocurrencies are never far from the news, mainly when the value is rising considerably. This week the price of a single bitcoin rose to a little over £10,000. Early buyers have made fortunes; except for that guy who used them to buy a pizza.

It is an odd ‘currency’, as it is not backed by any government, and certainly not by an underlying gold stock. Bitcoin has no overall regulation, but it relies on the activity of ‘miners’; rather like (at least in principle) the prospectors who mined old in the California gold rush. The currency’s quantity can only be increased if it is mined by collecting pending bitcoin transactions and working them into complex mathematical equations. A minor who solves the equation will get a newly ‘minted’ bitcoin.

So, why the attraction, why would a person wish to convert £10,000 into one bitcoin, or a lesser amount for a share of one?

One of the main attractions of bitcoin is that it exists across borders, outside of traditional banking controls and with a secure cloak of anonymity.

Those three magic ingredients make this type of currency attractive to those seeking to launder the proceeds of crime.

Nobody is interested in the identity of the trader, the proceeds can be cashed in almost anywhere in the world (there are even cash machines in some countries including England), and Blockchain encryption has rendered law enforcement impotent in this brave new world of international finance.

This explains a rise in value, in just one year of 13 times that at the end of 2016.

But, the larger the sums that need to be laundered, the more complex and risky it is to make those initial transactions.

That is where the middle-man comes in, a person either knowingly or unwittingly agreeing to purchase bitcoin, or, more commonly, transfer monies on behalf of a money launderer, taking a fee for his or her trouble along the way.

Sometimes the amount could be as little as a few hundred pounds but extrapolated this sum becomes significant. Such individuals are known as ‘money mules’.

The government is keen to regulate these new currencies, and in a recent statement to parliament the treasury minister said:

“The UK Government is currently negotiating amendments to the 4th Anti-Money Laundering Directive that will bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas. The Government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.”

Until these protections are in place, people will be able to assist in the laundering of cash, with little that the authorities can do to stop it.

It perhaps sounds the stuff of fiction, but in the first nine months of 2017, there were over 8652 ‘money mule’ cases identified by Cifas, the fraud prevention service. This criminality represents just the tip of a money laundering iceberg.

The penalty if caught is potentially significant, with sentences of imprisonment as long as 14 years available to a court.

If someone close to you seems to have come into money, you may want to start asking questions, before it is too late. More information can be found on this government website:

https://www.moneymules.co.uk

When a person becomes unwittingly involved in money laundering it is important to step back from the position as seen with the benefit of hindsight and examine what truly went on. A careful forensic analysis of the circumstances will reveal any defences available to someone suspected of money laundering crimes. Making a silly mistake is not yet a crime.

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This article is a guest contribution by Daniel Berke, Solicitor at 3D Regulatory Solicitors, and was originally published on the 3D Regulatory Solicitors blog here. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About 3D Regulatory Solicitors

3D Regulatory Solicitors is a niche practice based in Manchester, England that specialises in providing legal advice to professionals facing disciplinary action or criminal prosecution. Learn more about 3D Regulatory Solicitors here.

The 5 Key Features of a Good Incentive Plan

20/01/2018

By Neo Shi Qin, DecodeHR

Incentive plans are becoming an increasingly popular tool to drive employee performance. A well-designed plan can help to accelerate business growth as well as achieve talent attraction and retention. Today we explore 5 key features of a good incentive plan.

1. Clear and Specific

 A good incentive plan should be clear, specific and easy to understand. Employees need to first have an unobstructed view of the plan and its objectives to reinforce behaviours which will lead to desired business outcomes. Such a plan also makes it easy to be administered with minimal errors, and this also helps to develop system credibility.

2. Agile

In today’s economic climate where competition is the norm, businesses must continually evolve to stay relevant and innovative. Likewise, a good incentive plan must also be agile enough to adapt quickly to changes while remain effective as a driver of performance.

In Singapore’s context, the Smart Nation initiative has huge bearings on how performance should be measured and quantified. The use of technology has allowed for the automation of many functions in the workplace and businesses need to rethink their KPIs. For example, administrative assistants may no longer be required to process and track department claims, and instead be expected to now take on a more analytical role in producing meaningful dashboard reports.

3. Attractive and Attainable

A good incentive plan must be attractive enough to motivate performance but also be attainable with stretched efforts so that employees will not be discouraged. As a rule of thumb, the average achievement level should be set as the target and 20% above that could be a stretch goal with upside earnings. The company can also decide if it wants to take an all-or-nothing approach or consider multiple levels of incentives for various levels of performance.

4. Measurable Results

The key objective of any incentive plan is to drive performance to achieve desired results. For the plan to be successful, results must be measurable with clear indicators and this begins with an effective goal setting framework. SMART goals which are Specific, Measurable, Attainable, Relevant and Time-based are useful in helping businesses set goals and measure results.

5. Consider Non-Monetary Incentives

Incentives do not necessarily have to be monetary. To build a successful incentive plan, businesses must identify the form of compensation that will be the most effective. In the absence of generous budgets, businesses can offer non-monetary incentives such as paid time-off or awards and recognitions as performance drivers. Incentive plans do not have to be expensive unlike what most people think!

Related Reading: How to Design a Successful Performance Bonus Plan

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This article is a guest contribution by Neo Shi Qin of DecodeHR. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About DecodeHR

DecodeHR provides strategic advice and high-impact solutions to clients primarily in Asia, specializing in the areas of Strategic HR Reviews, Competency Frameworks Development, Strategic Workforce Planning, Pre and Post Merger & Acquisition integration and Transformation projects.

Our strength is our deep knowledge of Singapore and Asia, and this is coupled with experience in the international arena. We distill the best global practices to bring to you practical solutions for maximum impact.

Paid Leave Benefits For Caregivers, Yes Or No?

19/01/2018

In our workplace today, money and salary no longer reigns. Instead, employers are delving into more innovative benefits and perks to boost productivity levels amongst other reasons. And most of us are no doubt familiar that tech giants the likes of Google and LinkedIn tend to be the forerunners when it comes to truly “innovative” employee perks.

Naturally, it would come as no surprise that yet another tech giant has now come under the public’s eye. Microsoft has recently extended its paid leave benefits to employees who need to take care of a sick family member. This tech giant is now offering four weeks of paid leave with an additional eight weeks of unpaid leave to its employees who are family caregivers as well. Previously, the company offered 12 weeks of unpaid leave to such employees.

While focusing on employees needs by providing exceptional perks is a common trend amongst employers these days, employees who serve as caregivers at home are not getting sufficient attention. This could in turn take a toll on their productivity levels when it comes to work. Being a caregiver could force an employee to cut back on their work hours, take long leave of absence or in a worst case scenario, even quit.

Related readingGoing Beyond Basic Compliance with Family-Friendly Leave Policies

Several other companies such as Netflix offer unlimited paid time off or discretionary time off whereby employees can use them for family care. Likewise, a common benefit offered by most companies include paid family care leave or extending such leave beyond immediate family members to include grandparents or in-laws. Similarly in Singapore, certain government bodies such as the Singapore Workforce Development Agency (WDA) provide their employees with eldercare leave whereby employees are allowed to take leave to look after their parents or parents-in-law when they fall sick or to accompany them for medical appointments.

Given that rapid aging is a currently a pressing issue in Singapore, there is certainly a strong argument to suggest the need for such leave benefits for these caregiver employees.

However, at the same time, employers are mindful that mandating more benefits for these caregiver employees can have a detrimental impact on business operations. While it would no doubt help employees ease the burden of caring for their family members, it could in turn create several disruptions to daily work processes.

Ultimately, it all boils down to the individual company culture. Some companies are already providing some form of flexible work arrangements, whereby employees make use of such arrangements to take care of their sick relative. Likewise, providing discretionary time-off could also allow employees to attend to their personal matters, which includes looking after their elderly parents or sick relatives. As such, implementing a specific caregiver leave benefit might not be necessary in this case. Nonetheless, managers and HR have to work closely together to create an effective work plan to manage absences that might be brought on by any unexpected caregivers situations.

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This a guest post by RenQun Huang of Gpayroll. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About Gpayroll

Gpayroll is an easy to use, self-run online payroll service that will redefine and revolutionize the payroll industry. Its intuitive and automated system will help business owners focus on their core business without the hassle of managing payroll.

What is a company secretary?

15/01/2018

No, it’s not the kind of secretary you’re thinking of – someone who is responsible for managing administrative work in a company and looks after visitors. The type of company secretary that we are referring to is responsible for something else entirely.

Company secretaries are, simply put, individuals in senior positions in a private company, usually in a senior managerial position or above. They are responsible for ensuring that an organization complies with standard financial and legal regulations around running a company, and on the whole responsible for maintaining high standards of corporate governance within a company.

If you’re thinking about expanding your business, it is important for you to think about how you can best help your company function as an organization. This is where the role of the company secretary comes in, as an individual who will help ensure that your organization remains functional, and that the various stakeholders in your company are able to get the most out of their investment in your company.

Broadly speaking, in most jurisdictions, the company secretary owes duties to three groups of stakeholders – the company, the company directors, and the company shareholders.

These are, in brief:

Duties to the company

The company secretary ensures that the organization complies with the regulations set out in the respective pieces of legislation governing companies, in the respective jurisdiction in which the company is founded. In general, he is tasked with maintaining the high standards of corporate governance in a company, that is ideal for its functioning.

Duties to the shareholders

The company secretary is also responsible for communicating with shareholders and ensuring their interests are protected. He also is responsible for ensuring that shareholders are able to take part in the decision making process at a company’s Annual General Meeting, and does so by disseminating financial statements and any other relevant information needed for shareholders to come to an informed decision.

Duties to company directors

It is also their responsibility to register and communicate with shareholders, to ensure that dividends are paid. They also assist in the managing of company records, which include information like a list of directors and shareholders, and the annual accounts of a company. A company secretary often takes minutes at directors’ meeting as well.

Do note that these are the general requirements and expectations for such individuals. There may be additional specific scopes of duties depending on which jurisdiction you are in.

Relevant Legislation in the Asia Pacific

Singapore: Companies Act (Chapter 50)

Hong Kong: Companies Ordinance (Cap 622)

Australia: Corporations Act 2001

New Zealand: Companies Act 1993

United Kingdom: Companies Act 2006

These acts will generally set out issues such as who may be qualified to serve as a company secretary, whether a company must have a company secretary, the specific duties owed by the company secretary, and the potential penalties for contravening any of the regulations related to serving in this capacity.

The importance of this role in a company should not be overlooked. While the internal governance of a company may sound like one of the least exciting aspects of your business that you have to keep an eye on, it is undeniable that your company will not be able to function without it.

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