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Maybe people are dying earlier these days, but everyone seems to be having “once-in-a-lifetime” opportunities pitched at them every few months.

From your nephew at Christmas trying to get you into cryptocurrencies, or that guy at work raving about a hot new stock, or the woman next door telling you about being her own boss in a multi-level marketing scheme, it seems that everyone is promising you’ll get rich quick if only you give them your wallet.

Something ingrained in us as humans makes us want to be rich with little or no effort. Whether it is winning the lottery, or tripping over a gold nugget, the promise of instant riches holds a very powerful allure. We seem to turn our brains off, and for this reason, people who think they will get rich quickly are the perfect target for scammers. Of course, there are real opportunities out there, but these are hard to find.

But how can you tell the difference? Below are a few good questions to ask yourself when you stumble across a potential scam.

Who’s telling you, and what’s in it for them?

This is one of the most important questions. Be skeptical. Anyone saying you can get rich quick but isn’t rich themselves should be treated with caution. Do they get a fee for signing you up? Will they benefit if you buy their crypto/stock/shares? If they’re not impartial about the opportunity, you should be particularly careful. If they’re telling you, they’re selling you.

How are they describing the opportunity?

If anyone ever uses the words “risk-free”, just change the topic. Everything in life has risks. There are no exceptions. Words like “guaranteed” are equally suspect.

Are the returns reasonable?

Australian banks currently advertise interest rates of 0.10%. For example, if you deposit $10,000, in a year’s time you will have $10,010. Alternatively, if you go to the high-risk casino of the cryptocurrency market, you can deposit into a scheme advertising interest rates of 94,806.50%.

For example, if you deposit $10,000, in a year’s time you will have $0 because the scheme will have collapsed and this guy below will have stolen all your money.

“It’s fiiiiiiiiiiiiine” – This guy

What recourse do you have?

You should always buy into an investment assuming it will go to 0. That way, you’ll be prepared for the inevitable occasions when it does happen, and you’ll never invest more than you can afford to lose.

But before you invest, think about what would happen in that scenario. What are your options? If you’ve ordered a hundred pairs of yoga pants from your MLM-minded neighbour and discover you can’t sell them, what’s the return policy? If the company whose stock you just bought was shut down tomorrow, how much could a liquidator get back for you? Are you protected by a contract? Is the contract enforceable? If you sign a contract with a stranger in Russia and they’ve just made off with your money, that contract will make excellent toilet paper the next time Woollies runs out.

Is it a Ponzi/pyramid scheme?

Ponzi schemes and pyramid schemes are very similar in that they pay out interest, or returns, based on new buyers coming in, instead of actual profits from the production of real goods or services. Take a step back and think about the business model. If you had to hold onto those shares, or that cryptocurrency, or a hundred pairs of yoga pants, for the rest of your life, and nobody ever bought that investment from you, would you still go ahead? If it looks like the whole thing would collapse without new money coming in, you might be looking at a Ponzi scheme.

Takeaway

Speaking of takeaway, there’s no such thing as a free lunch. If anyone tells you that you’re going to get rich quick with no effort whatsoever, thanks to their exciting new scheme, you should either look at it a little closer or, better still, avert your gaze entirely.

If you’re thinking about an investment opportunity, call us today on 9664 4700. We can walk you through the documentation, the risks involved, and advise you on your options if things don’t work out as planned.

In the previous article (located in the February 2022 edition of CBD News), I discussed Sexually Transmitted Debt (STD), and the consequences of joint borrowings.

Now it is time to talk about the difference between guarantees and indemnities!

Be very careful! A guarantee means a demand must be made by the borrower to the lender, and generally the borrower must default over it or be sued by the lender. If the lender does not recover the loan, then your guarantee is liable. However, an indemnity effectively means the lender can pursue the person’s indemnities that occur without the borrower first defaulting.

The best you can hope for is to not have to make any payments, while at the same time, deriving no direct benefit. Quite often, you have no control over the events which may make you liable under the guarantee and the indemnities. In short, there is really no upside to the huge risk.

To those who have unfortunately already been infected by an STD, and the condition was a contributing factor to your relationship’s demise, my sympathy goes out to you. I do suggest you immediately seek advice on the best course of action to limit your continuing exposure and, if possible, terminate it. There are situations where the terms of the loan have been varied without the consent or knowledge of the guarantor. In some situations , this can prevent the lender relying on your guarantee.

For those who find themselves in a position where they cannot escape the temptation of exposure, let me tell you this…the fact is that lenders are reluctant to let go of anyone when an outstanding debt exists. From their point of view, the more people they can look to in the event of non-payment, the merrier it is likely to be!

You will all have heard the stories about parents losing their house or farm as a result of providing a personal guarantee for one of their children who was setting up a sure-fire business, which then failed to fire surely. I alarm you that these events are not stories, but true events. They really do happen.

One of our most eminent Judges, now deceased, was made bankrupt as a result of a personal guarantee given to an oil company to support his parents’ business. They tend to be even less sympathetic than banks, if you can believe that!

If you must provide a guarantee, or sign for an indemnity, firstly go chant “a guarantor is a fool with a pen” again, and have a long hard think about it. If, for some overwhelming reason, living stress free has no appeal, or you choose not to tread a lotus strewn path, then please seek legal advice before signing.

You must try to find any possible ways to limit your exposure as best you can.

It’s an unpleasant question to have to consider, but do you have someone you can trust in the event of being placed on life support? In the next article, I will look at Powers of Attorney in their various forms.

Peter Nevile

Partner

Nevile & Co.

On 29 March 2021, Victoria made significant changes to Residential Tenancies Act 1997. Landlords will be renamed as rental providers and tenants are now called renters. Leases are now called rental agreements. The rental providers and estate agents must ensure they are compliant with the new laws.

We would like to capture some important summaries in this article. Rental agreements must be in the “prescribed form”. Additional conditions can be included if the renter or rental provider requests them, but there are some conditions that are not allowed.

If one of these prohibited conditions is included in the agreement, it is not valid. The rental provider may also have to pay penalties for including a prohibited term in the agreement.

For example, renters cannot be required to:

Take out any form of insurance
Pay additional rent or penalties if they break the rules in the agreement
Pay for the rental provider or agent to prepare the agreement.

The changes to the law clarify the rights and responsibilities of renters and rental providers – from before you sign a rental agreement until after the agreement ends – and apply to all types of tenancies, private rentals, caravan, and residential parks, and rooming houses.

The law changes include a ban on rental bidding, new rental minimum standards, no eviction without a reason, pets, allowable modifications by renters, and urgent repairs. Some of the new rental laws which came into effect on 29 March 2021 will not apply to renters who are already in a fixed-term or periodic rental agreement before that date. A list of the changes that will not apply to existing rental agreements.

Want to know more changes in the new agreements?

If you would like to check your rights, we can arrange a lawyer to assess you shortly.

Disclaimer: This publication contains comments of a general nature only, and is provided as an information service.
It is not intended to be relied upon as, nor is it a substitute for specific professional advice.

The applicant in question is a Chinese citizen who applied for a protection visa. The Department refused to grant the application as the delegate for the Minister for Home Affairs was not satisfied the applicant was a genuine refugee. This is due to the belief that there is no real risk of suffering or significant harm to the applicant should they return to China.

The applicant claimed that they borrowed money from a loan shark, and is not able to repay the same. The unlicensed lender physically threatened the applicant upon learning they could not return the funds. As the lender is unlicensed, the applicant was unable to seek assistance or intervention from the appropriate governing body.

As a result, the applicant travelled to Australia claiming fears of harassment, bullying, torture, or death should they return to China.

Why Were They Refused?

Under s5J(1) of the Migration Act, a person has a well-founded fear of persecution if they fear persecution based on one or more of the following:

Race
Religion
Nationality, or
Membership of a particular social group or political opinion.

There must be a real chance a person may be persecuted for one or more of these reasons, and the reasons must be essential and significant.

As the applicant did not satisfy any of these four reasons, Australia has no obligation to provide protection to them under the Migration Act.

How Can We Help?

Many potential clients approach us by asking whether they can apply for a protection visa. If your story is similar to the above, your risk of refusal is very high.

However, each case is different, and should be assessed individually. If you want to know whether you have reasonable grounds to apply for a protection visa, you should contact our Nevile & Co. migration experts to request an initial free migration assessment.

Disclaimer: This publication contains comments of a general nature only, and is provided as an information service.
It is not intended to be relied upon as, nor is it a substitute for specific professional advice.

The Reserve Bank of Australia has made its last call on the official cash rate for this financial year.

As widely predicted, the RBA has held the cash rate at a record-low 0.1 of a percentage point, despite the housing market continues to boom.
RBA decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond; the parameters of the government bond purchase program; and the rate of zero percent on Exchange Settlement balances.

Meanwhile, the RBA issue a clear warning to investors noting that as borrowing increases, and given the environment of rising housing prices and low-interest rates, the bank will be monitoring trends in housing borrowing carefully to ensure lending standards are maintained. The RBA repeats its intentions to keep rates as they are until 2024 at the earliest.
Creditor Watch chief economist Harley Dale supported the RBA’s decisions. He agreed that the low interest rate has a positive effect on economic recovery. It can stimulate business investment and ensure our economic recovery remains durable.

AMP Capital’s Shane Oliver commented, “The jobs market is still a long way from full employment, wages growth at 1.5 percent is way below the 3 percent-plus paces necessary to sustain 2–3 percent inflation, and in any case, inflation is still well below its target zone. So, a rate hike remains some time off”.

However, some are still certain the RBA will be pushed to move in 2023. With the tightening monetary policy in the new financial year, the interest rates are almost certain to be up. However, the RBA states that they prefer to wait for other central banks (e.g. NZ and Canada) to move first before they take any action on the interest rate. Some of the big four are planning to take action on their loan policy and interest rate to slow the speed of property price growth. They will watch the housing market closing.

Nevertheless, the government is still putting in great effort to stimulate the economy. Investors can take advantage of the low interest rate and establish their investment plan. If you are considering buying a business or investing in the property market, you can always give us a call and learn your legal risks and obligations.

When first setting up a business, one of the very first questions that a business owner is faced with is ‘what business structure should I opt for?’. A seemingly simple answer can have major future implications as each structure has its upsides and downsides. Business people need to acquaint themselves with the options available to them.

1. Sole Trader A sole trader is the most common business structure that is usually adopted by an individual running his/her own business.

Advantages: – Unrestrained decision making as you are the sole operator of your business. – Cheap to set up and maintain. – Flexibility – easy to change to other business structures – Undivided profit – you get to keep all that you make
Disadvantages: – Unlimited liabilities – you are personally responsible for your business legal and financial liabilities – Difficulty in raising capital. – Harder to take breaks as you are the sole decision-maker.

2. Partnership A partnership is an association of two or more legal persons to carry on a business in common with a view to profit.

Advantages: – Access to bigger capital as partners will pool their resources together. – Shared decision-making responsibility – the sum is greater than the parts! – Cheap and informal to set up – a partnership can be established verbally without costs.
Disadvantages: – Unlimited liability – all partners are personally responsible for the partnership’s legal/financial liabilities. This may also mean that you may be liable for the other partners’ debts. – Conflicts – differences in viewpoints between partners.

3. Company A proprietary limited company (“company”) involves at least one shareholder and no more than 50 non-employee shareholders.

Advantages: – Limited liability – a shareholder’s liability is limited to only his shareholding in the company. – Transferability – easy to transfer ownership via selling shares. – Perpetual succession – testator can leave ownership to their heirs in a will/contract. – Tax consideration – corporate tax rate is lower than personal tax rate and more deductibles are allowed. – Access to bigger capital through shareholders, bondholders, and more willing lenders. – Delegated management – decision-making can be delegated to someone acting as a director.
Disadvantages: – Establishment and administrative costs. – More onerous obligations under public law and corporation law.

To find out which structure is the most appropriate for your business, contact us now. Our team of experienced lawyers not only will provide you with advice, but we can also help you set up your business structure and manage the risks that may come with it.

On 1 January 2021, the largest reforms to Australia’s corporate insolvency laws in 30 years took effect, following the end of the temporary insolvency relief measures that protected financially distressed businesses during the worst of the COVID pandemic in 2020.

The changes, which were outlined in the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth), comprise the following key elements:

A small business restructuring process under Part 5.3B of the Corporations Act 2001; and
A simplified liquidation pathway under Subdivision B to Part 5.5 Division 3 of the Corporations Act 2001

Small Business Restructuring Process

The new Part 5.3B of the Corporations Act creates a simplified voluntary administration process for Small and Medium-sized Enterprises (SMEs).

The process involves the directors or board of an SME appointing a Small Business Restructuring Practitioner (“SBRP”) to oversee the restricting of the company’s affairs.

In order an SME to appoint an SBRP and undergo the restructuring process, it must satisfy the following eligibility criteria:

The company must be insolvent or likely to be insolvent;
The total liabilities owed by the company must be less than $1mil, excluding related party creditors;
The company or the director of the company has not previously used the process or the simplified liquidation process in the previous 7 years; and
The company is not currently subject to other forms of external administration or restructuring arrangements.

Once the SBRP has been appointed, they have 20 business days to submit a restructuring proposal to the company’s creditors.

Those creditors then have 15 more business days to accept or reject the proposal. Once accepted, the SBRP must manage the distribution of funds to creditors, and in the meantime, no action can be taken against the company or its directors until the restructuring plan is completed.

The directors of the company remain in control of the “ordinary course of business” for the company during the process.

Simplified Liquidations

The new simplified liquidation process under Subdivision B to Part 5.5 Division 3 of the Corporations Act creates an alternative pathway for creditors of voluntarily wind up a company. Key features of this new liquidation process to note are:

The process is only available to creditors’ voluntary wind-ups. It does not apply to members’ voluntary wind-ups or wind-ups ordered by the Courts.
The company must have resolved to be wound up voluntarily;
The directors must have given the liquidator a report about the company’s affairs and a declaration that the company will be eligible for the simplified liquidation process;
The total liabilities of the company must not exceed the $1 million limit on liabilities; and
The company’s tax lodgements are up to date.

For further information and advice on how to take advantage of the new small business insolvency laws, feel free to contact us.

The Morrison Government is reforming business and investor visas to maximize the economic benefits for Australia. To that end, changes have been passed and are waiting to come into effect. If you are a prospective investor, an entrepreneur, or a businessperson who has been looking at Australia as a potential market, it is imperative that you be on top of these changes and prime yourself for them.

Here are the changes that you should know:

The quota under the program has doubled from 6800 in 2019-2020 to 13500 in 2020-2021.
The new program will be reduced to 4 streams: Business Innovation, Entrepreneur, Investor and Significant Investor
Provisional visa holders in all 4 streams will be able to apply for permanent residence if they meet the requirements after 3 years, but the provisional visa will now be valid for 5 years in comparison to the current 4-year duration currently.
The requirement for Business Innovation visa holders will be tightened with the $1.25 million business and personal assets threshold and an annual turnover of $750 000.

As the date (1/7/2021) is quickly approaching, it is important that you ready yourself for it to prevent any disruption to your immigration plan.

At Nevile & Co., we have the resources and expertise to assist you with these changes and provide a tailor-made solution to your problem.

Many of our foreign clients are interested in migrating to Australia; however, they are not sure if they can settle well due to language barriers.

The fact is Australia is a multicultural country. Based on the Australian Bureau of Statistics, the past decade has witnessed increasing numbers of Chinese and Vietnamese speakers migrating to Australia. At Nevile & Co, we are experienced in dealing with non-English speaking clients and we have experts in house who can speak your language.

Outside of visa applications, we can provide additional services for you and your family to settle well in Australia.

Need help? Contact us at nevileco@nevile.com.au to discuss further michelle.li@nevile.com.au . Read other related immigration articles.

A Caveat is a warning or proviso that can be lodged against a person’s property to protect the lodger’s right or interests in the property and receive notification if the registered proprietor sells, mortgages or deals with the property.

Caveat is a protection regime for unregistered interests in a property and people with qualified interests should all consider lodging a caveat. However, there are grievous consequences for lodging false caveat and therefore, you should always seek legal advice before taking any action.

Caveats are commonly used to protect:

A purchaser’s interest under a contract of sale
The interest of a beneficiary under a trust
A vendor’s lien for unpaid purchase monies
A mortgagee’s interest under an unregistered mortgage
A purchaser’s interest under an option to purchase land

For assets other than real estates, there is a caveat equivalent available at the Personal Property Securities Register (PPSR). You can register your security interests in the assets with the PPSR online. The registration effectively affords you the same protection with an interest in assets as caveats do to interest inland.

If you are not sure if you can lodge a caveat or how to do it, contact us now. Our team of experienced property lawyers can provide you with top-quality services. Get in touch now!

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