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An important time to consider tax liability is following a relationship breakdown. A tax effective way to provide financial support for your children is by establishing a Child Maintenance Trust ("CMT").

The payment of child support is generally made from a person's after tax income. Unlike payments to children under 18 from discretionary family trusts, payments to children from a CMT are taxed at ordinary adult rates. Child Maintenance Trusts therefore provide a very tax effective mechanism of paying child support.

Requirements for establishing a CMT are set out in the Income Tax Assessment Act 1936. Essentially a transfer of income producing property is required, which can include real property, cash, shares or even a flock of sheep.

Other requirements for a CMT are:
• A family breakdown has occurred.
• An Order, determination or assessment has been made, by the Child Support Agency or the Court requiring the payment of child support.
• The assets of the CMT must be beneficially owned by the child, therefore the child ultimately receives the trust capital.
• The CMT must generate investment income, which is used primarily for the maintenance, education and advancement of the child.
• The transfer of assets must be at arms length, meaning they have their true value.

There is currently no capital gains tax relief on the transfer of assets to the CMT, stamp duty may also be payable on the transfer.

CMT are not for everyone, but when used correctly can provide significant financial benefits. At Cosgriff Orchard Legal we can advise whether a CMT is suitable for your circumstances and guide you through the process of establishing a CMT.

Posted by Skye Engwerda, Solicitor

On 20 June 2011, Fair Work Australia (FWA) granted an application made by the National Retail Association to reduce the minimum engagement period for casual employees under the General Retail Industry Award (Award) from 3 hours to 90 minutes.

The variation was intended to commence on 1 July 2011 and provided that school-aged employees could work for 90 minute shifts, provided that certain requirements were met.

On 29 June 2011 the Shop, Distributive & Allied Employees' Association (SDA) appealed FWA’s decision arguing the decision was discriminatory in that the new minimum was a guise by retailers to cut back hours for regular casuals who cannot compete with school casual rates and hours.

FWA rejected the SDA’s appeal on 14 September 2011 and confirmed that 90 minute shifts for secondary school students will be allowed. Once the Award is varied, employers covered by the Award are expected to be able to engage employees for 90 minute shifts if:

• the employee is a full time secondary school student;
• the employee is engaged to work between 3:00pm and 6:30pm on a day which they are required to attend school;
• the employee agrees to work, and a parent or guardian of the employee agrees to allow the employee to work, a shorter period than three hours; and
• employment for a longer period is not possible due to the operational requirements of the employer or the unavailability of the employee.

Retail employers should note that this decision is still in draft form only and has not taken effect. Employers must still continue to roster all employees for at least 3 hours work until the Award has been varied.

Posted by Heidi Deason, Solicitor

What is relocation?

Following separation, parents are increasingly relocating from the town or city in which they lived during their relationship. The children may live with one or both of the parents and one parent subsequently proposes to relocate with the children. The Family Law Act 1975 (Cth) ("the Act") does not expressly address relocation and accordingly the issue has increasingly become the subject of dispute in Court proceedings.

How have the Family Law Courts historically dealt with these disputes?

As the Act does not specifically address relocation, the Family Law Courts (the Family Court and Federal Magistrates Court) apply general parenting order principles under Part VII of the Act.

Firstly, the Court in deciding whether to make a parenting order (including whether a parent should relocate) in relation to the child must regard the best interests of a child as the paramount consideration . This will always be considered along with the presumption that it is in a child's best interest for both parents to have equal shared parental responsibility for the child . This presumption will be rebutted if there are reasonable grounds to believe that a parent (or a person who lives with the parent) has engaged in abuse of the child (or another child in the family) or family violence .

A Court will therefore consider the child's best interest in deciding whether one parent is permitted (or restrained) to relocate.

How does the Court determine what is in a child's best interest?

In deciding what is in the best interests of the child, the Court will take into account two tiers of considerations:

a) Primary considerations:
• the benefit to the children of a meaningful relationship with both parents; and
• the need to protect children from physical or psychological harm (from being subjected or exposed to abuse, neglect or family violence) .

b) Additional considerations:
• the child’s views and factors that might affect those views, such as the child’s maturity and level of understanding;
• the child’s relationship with each parent and other people, including grandparents and other relatives;
• the willingness and ability of each parent to facilitate and encourage a close and continuing relationship between the child and the other parent;
• the likely effect on the child of changed circumstances, including separation from a parent or person with whom the child has been living, including a grandparent or other relatives;
• the practical difficulty and expense of a child spending time with and communicating with a parent;
• each parent’s ability (and that of any other person) to provide for the child’s needs;
• the maturity, sex, lifestyle and background of the child and either of the parents;
• the right of the child to enjoy their cultural background, including maintaining their connection with that culture;
• the attitude of each parent to the child and to the responsibilities of parenthood;
• any family violence involving the child or a member of the child’s family;
• any other fact or circumstance that the court thinks is relevant . The Court must also consider the extent to which each parent has or has not previously met their parental responsibilities as well as any events or circumstances since separation .

Recent Developments:

The High Court decision of MRR V GR (2010) - ("MRR")

The recent case of MRR v GR (2010) 240 CLR 461 ("MRR") has altered the way in which the Court has historically decided the issue of relocation. The case was initially heard in the Federal Magistrates' Court before Federal Magistrate ("FM") Coker. At that time, both parents resided in Mt Isa and the child was living with both parents on a week about basis ("equal time"). Both parents were originally from Sydney and had moved to Mt Isa during their relationship to allow the father to pursue employment.

The mother made an Application to the Court to return to Sydney with the child. The mother was living in a caravan park in Mt Isa while the father remained in the former matrimonial home. The mother informed the Court that quality affordable rental accommodation in Mt Isa was scarce and she had limited employment opportunities there. The Court found that the mother was despaired about residing in Mt Isa and felt isolated from her family. Coker FM found that these issues could be dealt with through counselling and accordingly found that the child (and consequently the mother) should remain in Mt Isa. The father informed the Court that he would not move from Mt Isa and therefore the only way to continue equal time with the child was for both parents to remain in Mt Isa.

On appeal, the High Court decided that Section 65DAA(1) of the Act requires the Court to consider these questions:
A) Whether it is in the best interests of the child to spend equal time with each of the parents; AND
B) Whether it is reasonably practicable that the child spend equal time with both parents.
If both of the above questions are answered in the affirmative, then it is open to the Court to make an order with equal time. Therefore, if the Court is satisfied that it is not reasonably practicable for a child to spend equal time with both parents, then it is not open to the Court to make such an order. In this instance, an order for equal time would only be reasonably practicable if both parents remained in Mt Isa, Coker FM should have considered the circumstances of the parties (more specifically, the mother) in determining whether equal time was reasonably practicable.

In this case, if the mother was to live in Sydney, equal time would not be reasonably practicable and accordingly it would not be open to the Court to make such an order. The Court would next need to consider the child having substantial and significant time with the parent whom the child did not live with. The High Court allowed the mother's appeal and set aside the Orders of the Federal Magistrates Court. The matter was then remitted back to the Federal Magistrates Court to be reheard.

Full Court of the Family Court Cases

Vanderhum & Doriemus [2011] famCAFC 100 (6 May 2011)
The mother resided with the children in a rural town in New South Wales. The father resided in Sydney, 250 kilometres away. The father made an Application to the Court seeking time with the children for eight days each fortnight and half of the school holidays. The father also sought that this time occur on the basis that the mother reside with the children within 25 kilometres of the school in Sydney, selected by the father. The father's appeal to the Full Court of the Family Court was dismissed on the basis that equal time was not in the children's best interests or reasonably practicable.

Deiter & Deiter [2011] famCAFC 82 (12 April 2011)
The parents lived in Sydney during their relationship and following separation (and an incident of family violence), the mother returned with the children to Perth in Western Australia. The mother's family resided in Perth and she had resided there prior to commencing a relationship with the father. An interim parenting order was made compelling the mother to return to Sydney pending the final hearing of the matter. An appeal against the interim order was allowed as too much weight was afforded to the father having a meaningful relationship with the children pending a final hearing.

Forbes & Barlow [2011] FamCAFC 76 (7 April 2011)
The parents commenced a relationship on the Gold Coast in their early twenties. The relationship ended when their child was 7 months of age and when the child turned 8 months, the mother relocated to the Sunshine Coast where her parents and sister resided. The Court found that the mother (who was in receipt of Centrelink benefits) required support from her family and did not have her own resources to sustain accommodation on the Gold Coast. Wilson FM found that the father should spend time three days each fortnight with the child and have two other visits, and that the mother should return to the Gold Coast when the child turned three. The Full Court allowed the appeal as they were not satisfied with the FM's consideration of what time was reasonably practicable.

Sigley & Evor [2011] FamCAFC 22 (10 February 2011)
In this case, the mother was the primary carer of the child and sought to relocate from a country town in southwest Queensland to north Queensland. The father sought time with the child every second weekend. The Full Court considered the concept of a "meaningful relationship" between the father and child, and concluded that there was no reason on the evidence why the father could not have a meaningful relationship with the child if the move was permitted.

Hepburn & Noble [2010] famCAFC 111 (21 June 2010)
The mother made an application to the Court that she be permitted to relocate with two children from Wollongong where both parents lived, to Victoria. The mother was found to be unhappy and bitter if she was not permitted to relocate to Victoria. The mother sought relocation in order to pursue a new relationship. The Court granted orders permitting the mother to move with the children.

Factors to be considered in whether the Court will allow relocation

Existing parenting arrangements
The recent cases in the Family Law Courts demonstrate that even if existing parenting arrangements are for equal time, the parent applying to relocate may still be successful. This will be the case especially where the parent relocating is found by the Court to be the primary carer of the child.

Reasons for relocating
Although the best interests of the child will be the determining factor, the Court will invariably consider a parent's reasons for relocating. The reasons may include moving to be closer to family (for support), family violence, improved employment opportunity or to improve psychological wellbeing. The parent's reasons for opposing the relocation may also be examined by the Court.

Unhappiness, depression, inability to cope
The state of mind and mental health of the parent wishing to relocate will be a highly significant issue. Especially if the parent relocating is the primary carer and has the child residing with them, the Court will consider whether in refusing their request to relocate, the parent's mental health would compromise their ability to parent. Consequently, this would effect the best interests of the child and is a major consideration for the Court.

Financial and Socio-Economic matters
For some parents, financially maintaining themselves and the child following separation is difficult. Parents may not have access to the same amount of funds that they had previously while in a relationship. Accordingly, they may seek to relocate for the simple fact that living in the area (or perhaps away from their family without support) is no longer financially viable. It is also a consideration for the Court that if they did permit a parent to relocate, whether that parent is able to continue facilitating time with the non-relocating parent. This will be where the Court considers what time is reasonably practicable, given all the circumstances involved.

Conclusion
Following the decision of MRR V GR (2010), parents are finding it difficult to successfully oppose relocation. This is largely due to the Court's interpretation of the Act in that case, namely that the Court must consider whether time with the parents (whether it be equal or substantial and significant time) is reasonably practicable, before that order can be made. If the time proposed is not reasonably practicable, then it is not open to the Court to make that Order.

The practical consequence of this case is that despite parents in some instances residing in the same area and spending equal time with their child, one parent may decide to relocate. Depending on the circumstances (including distance), if equal time (or substantial and significant time) is no longer reasonably practicable, the Court is not able to make an order that the time continue. The Court has shown hesitancy to restrain a parent from relocating, especially if the reasons outlined above in paragraph 4 indicate that the child's best interests coincide with the relocation. Although relocation is frequently contested, it is increasingly difficult for a non-relocating parent to successfully oppose relocation of the other. It is therefore recommended that detailed and accurate legal advice is obtained prior to contesting relocation, as it will involve significant litigation costs for what may be an inevitable result.


*For further information please contact Heidi Deason of Cosgriff Orchard Legal on (03) 5480 6344

Posted by Hugh Melville, Solicitor

The Victorian Government is seeking to support the State's young farmers by introducing a unique stamp duty exemption/concession initiative for those buying their first farmland property. It is hoped that this will encourage young farmers to enter and stay in the primary production industry.

For contracts entered into from 1 July 2011 a full stamp duty exemption will be available to eligible young farmers for their first purchase of farmland worth up to $300,000 whilst a concession is available for purchases worth up to $400,000. Where a young farmer is purchasing several parcels of land, the value of at least one of the parcels cannot exceed $300,000.

To be eligible for the exemption or concession, applicants must satisfy the following criteria:

• the purchaser must be under 35 years of age at the date the contract is entered into
• the property being purchased must be farmland used, or intended to be used   primarily for the business of primary production
• the property must be the young farmer's, or their partner's, first farmland property (a young farmer will still be eligible if they have previously owned non-farmland property)
• within 5 years after purchasing the land, the young farmer must be substantially engaged in a full-time capacity in the business of primary production of the type carried out on the farmland

The young farmer is free to choose whether they want to receive the Young Farmers Duty Exemption or concession or the Principal Place of Residence Concession.

Where a young farmer is purchasing farmland through a trust or company, there are some additional criteria:

• where farmland is purchased through company - the young farmer, or the young farmer and their partner, must hold all the shares in the company
• where farmland is purchased through a fixed or discretionary trust - the beneficiaries, or capital beneficiaries, must be limited to the young farmer, or the young farmer and their partner
• the farmland must be the entity's first farmland property
• within 5 years of purchasing the farmland, the principal business of the company or trust must be primary production of the type carried out on the farmland

For More Information
Professional advice should be sought where young farmers are purchasing farmland.

For further information, please contact Hugh Melville on (03) 5480 6344 or by email at hughm@colegal.com.au.

Posted by Skye Engwerda, Solicitor

Minimum Wage Increase The Fair Work Australia Minimum Wage Panel ("the Panel") has increased minimum wages by 3.4%.   Modern Award determinations were published by Fair Work Australia taking into account the Panel's decision of 3 June 2011.  

The 3.4% increase applies across the board to the federal minimum weekly wage, award rates, junior employees, and employees under training arrangements. 

The increases will take effect from 1 July 2011 and include:

• an increase of $19.40 per week to the National Minimum Wage bringing the minimum weekly rate for Award/Agreement free employees to $589.30 per week (or $15.51 per hour);

• an increase in casual loading for Award/Agreement free employees from 20% to    22 %; and

• an increase of 3.4% to all Modern Award minimum wages.

The decision comes after submissions were made by a number of parties, including employer associations, unions and the Australia Government, who sought increases ranging from $9.50 per week to $28 per week. 

The Panel rejected arguments that increases should be delayed due to the exceptional circumstances of recent natural disasters, pointing to the difficulty of effectively targeting deferral to those groups in need and Australia's otherwise strong economic performance.

Employers who pay employees at minimum wage rates pursuant to a Modern Award, the National Minimum Wage or other instrument, should ensure that the revised pay rates are implemented from 1 July 2011. 

Employers who pay their employees above the minimum rates in applicable Modern Awards may be able to absorb the increases without making any changes. 

For Further Information

Professional advice should be sought where employers are uncertain regarding the applicability or implementation of the increase to their employees.

For further information, please contact Skye Engwerda on (03) 5480 6344 or by email at skyee@colegal.com.au.

Posted by Skye Engwerda, Solicitor

The Australian Government Paid Parental Leave scheme commenced on 1 January 2011. At this stage it is voluntary for employers, becoming compulsory on 1 July 2011. It was introduced to assist new parents in spending more time with their new child and to assist employers to retain their valuable staff.

It is important to note that the scheme does not give employees an entitlement to leave. Instead, it complements existing leave entitlements such as the 12 months unpaid parental leave as provided for by the National Employment Standards and paid maternity leave.

Paid Parental Leave is paid in accordance with the National Minimum Wage (currently $570.00 per week before tax) and eligible employees are entitled to a minimum of 8 weeks and a maximum of 18 weeks paid leave to be taken over one continuous period. Leave may however be taken at any time within the first year after birth or adoption.

A family can only receive one 18 week period of Paid Parental Leave per birth or adoption and families who receive payments under the Scheme will not receive the Baby Bonus unless there have been multiple births.

For employees:

To be eligible for the scheme you must be the primary carer of a newborn or recently adopted child, generally the birth mother or the initial primary carer of an adopted child. Furthermore, you need to pass:

• A work history test - you must have worked continuously for at least 10 of the 13 months prior to the birth or adoption OR worked for at least 330 hours in the 10 month period preceding the birth or adoption (approximately 1 day per week)
• An income test - you must have an adjusted taxable income of less than $150,000.00 in the financial year prior to the birth or adoption or the date of claim
• A residency test - you must be an Australian resident

Your eligibility for the scheme will be determined by lodging your claim with the Family Assistance Office which will require you to provide supporting documentation confirming that a child has been born or adopted.

 

You can decide whether you want to claim Paid Parental Leave or the Baby Bonus. The following table illustrates the differences between the two:

Payment	Income Test	Total Payable	Taxable?
Paid Parental Leave	Individual adjusted taxable income of $150,000 or less in the previous financial year	$10,260	Yes
Baby Bonus	Taxable family income of $75,000 or less in 6 months after birth/adoption	$5,294	No

A Paid Parental Leave Comparison Estimator is available on the Family Assistance Office website to assist you further in making a decision.

Your Parental Leave Pay will stop when you return to work, however you can still 'keep in touch' with your workplace. This means that you are free to participate in workplace activities for up to 10 days until the end of the Parental Leave Pay period and you must be paid for your time at work in addition to Parental Leave Pay. These days must not be taken in the first two weeks following the birth of adoption of the child. However, until the Government's proposed amendments to the Fair Work Act are passed, if you use a keeping in touch day, your entitlement to 12 months unpaid parental leave under the National Employment Standards may be affected because it must be taken in a single continuous period.

If you are self-employed you may still be eligible to receive Parental Leave Pay so long as you are on leave or not working from the time of becoming your child's primary carer until the end of the Paid Parental Leave period. You can still oversee business operations or perform the occasional administrative task without being regarded as having returned to work.

If you do decide to return to work before the end of your Paid Parental Leave period you need to notify the Family Assistance Office. Unused Parental Leave Pay may be transferred to your partner as long as they meet the eligibility requirements.

For employers:

You should also use this time before the scheme becomes compulsory to review payroll and record-keeping systems to ensure that they are capable of adequately processing payments. Leave policies and procedures should also be updated to include references to the scheme and to confirm that payments made under the Scheme are in addition to any paid parental leave provided by the employer.

The Family Assistance Office will let you know if you have an employee eligible for Parental Leave Pay and will ensure that there are funds available in advance of your obligation to provide Parental Leave Pay - there is no obligation to provide Parental Leave Pay until the funds have been received. You can choose whether to receive these funds as 3 payments of 6 weeks each or 9 fortnightly payments. However, payments under the scheme must occur in accordance with the employee's normal pay cycle with their payslip indicating the amount that is paid parental leave.

You will need to notify the Family Assistance Office when your employee returns to work before or during the Paid Parental Leave Period or if they cease to be your employee.

For more information you can visit the Paid Parental Leave scheme section of the Family Assistance Office website at www.familyassist.gov.au.