Protecting Personal Information

As businesses prepare for the Privacy Act reforms which are coming into effect in March 2014, it is important that they also look at the security of the personal information they hold.

The Office of the Australian Information Commissioner (OAIC) has released a "Guide to Information Security: reasonable steps to protect personal information."

This Guide provides information to businesses regarding the measures they need to be taking to protect personal information, including sensitive information.

Currently, the Information Privacy Principles (IPPs) and the National Privacy Principles (NPPs) require businesses to take 'reasonable steps' to protect the personal information they hold from misuse, loss and from unauthorised access, use, modification or disclosure.

This obligation is retained in the new Australian Privacy Principles (APPs), however it is important to note that APP 11 requires a business to take the further step of protecting personal information from 'interference.'

The inclusion of this is intended to recognise that attacks on personal information could also include interference such as computer hacking.

When the OAIC investigates a potential breach of the APPS, it will consider two factors:

  1. the steps that the business took to protect the information; and
  2. whether those steps were reasonable in the circumstances.

Here are some steps and strategies that businesses could consider in order to protect personal information:

IT Security - Using effective IT measures, as well as ensuring websites are secure and safe for individuals to use.

Physical Security - Regulating access to the workplace and securing workshops and storage areas.

Testing - Regular testing of security systems to identify any weaknesses that require attention.

Workplace Policies - Training staff on their responsibilities under the businesses privacy policy, as well as conducting compliance reviews.

The Guide also outlines what is considered to be a 'reasonable step' in ensuring the security of personal information. This includes the nature of the business holding the personal information, the nature of the information being held, the risk of harm and the data handling practices.

Whilst the Information Security Guide is not binding, the OAIC has stated that it will refer to the Guide when assessing a business's compliance with its obligations under the Privacy Act.

New Year's Resolutions For 2014

Around this time, every year people draw up a list of resolutions that they wish to achieve in the New Year.

The New Year offers a chance to reflect on the past year and focus on performing better in the year ahead… not just personally, but also in business.

Here are some New Year's resolutions to get started on in 2014:

Put It All In The Cloud
More businesses will be shifting their IT infrastructures to the Cloud in 2014 as online storage becomes cheaper, more reliable, and the connection to the Cloud becomes faster.

Cloud storage allows businesses to be nimble, efficient and cost-effective. It provides the flexibility of anywhere access and can be more secure than any security device a company can offer.

Adapt To Mobile
2014 will see a significant increase in customers accessing websites from their mobile devices.

Businesses need to adapt their website to the more compact screen size of contemporary devices.

Doing so will help customers access a business's website more easily and thereby encourage them to connect to them more frequently also.

Review The Marketing Plan
The New Year is a good time to review your business's marketing plan and identify new ways to reach the target market.

2014 is a good time to increase the focus on social media and consider adding more interactive tools to your business website, such as videos or blogs.

Legislative Framework
Businesses can expect legislative change and compliance regulations in 2014. For example, the new Privacy Act in March 2014 represents the biggest change to privacy laws in the last 25 years.

It is a good idea to begin preparing for these changes sooner, rather than later, to ensure your business is continually compliant with legislation.

Be Wary Of GST Clauses In Contracts

A recent legal case in the Victorian Supreme Court has highlighted the importance of ensuring that the correct GST clause is used in business contracts.

A properly drafted GST clause can avoid any problems or unintentional financial consequences. The recent Victorian case involved a contract that failed to list GST as being inclusive or exclusive of the purchase price. As a result, the purchaser was not required to pay an additional amount on account of GST.

Many businesses that draw up contracts rely on template GST clauses to address the GST issues involved within the contract. Whilst template GST clauses can be useful, they can also be a costly mistake if businesses use them without a thorough understanding of how the GST works.

It is important to draft the GST clause in a way that ensures that the parties' intentions are clear, and all GST matters are addressed. It is often a good idea to have contracts reviewed by a specialist before signing.

Update On Employment Laws

The past year has seen important changes in the area of employment law. It is essential that all employers are up-to-date with these changes and are taking the necessary steps to remain compliant.

The following are some of the changes occurring to employment laws that will affect employers in 2014:

  • the Sex Discrimination Amendment (Sexual Orientation, Gender Identity and Intersex Status) (2013) has made it unlawful to discriminate against an individual on the basis of sexual orientation, gender identity and intersex status. Businesses will need to review their policies and also conduct staff training to ensure employees are educated on the Act;
  • an increase of 2.6 per cent to the minimum wage, as well as to all modern award rates of pay, was granted from the first full pay period on or after 1 July 2013. As a result of this, the national weekly minimum wage has increased to $622.20;
  • the casual loading for award/ agreement-free employees has increased from 23 per cent to 24 per cent;
  • the superannuation guarantee contribution rate has increased from 9 per cent to 9.25 per cent. This will then increase to 9.5 per cent in July 2014; and
  • the Fair Work Amendment Act (2013) came into effect on 1 January 2014. This Act will introduce a new sphere of protection to workers experiencing bullying in the workplace. This amended Act will allow workers to directly lodge complaints to the Fair Work Commission, instead of notifying their employer. The amended Act also broadens the definition of 'worker,' and extends the scope of these changes to other employees such as volunteers, contractors and work experience students.

ATO Reminder About RFB

Employers are reminded that the ATO will be focusing on businesses not complying with the Fringe Benefits Tax (FBT) system in 2013-14.

The ATO will be paying particular attention to those employers who are failing to fulfil their FBT obligations, including disclosing the reportable fringe benefits (RFB) amount.

Employers should be recording the value of fringe benefits provided to each employee.

If the value of certain fringe benefits provided to an employee exceeds $2000 in an FBT year (which is 1st April to 31st March) employers need to record the gross taxable value of the benefits on the employee's payment summary for the corresponding income year (which is the 1st July to 30th June).

Generally, if there is an RFBA, there will be an FBT liability. However, this does not occur where benefits are exempt from FBT because an employee works in or for a public benevolent institution, health promotion charity, hospital, public ambulance service or is a live-in residential care worker.

If employees do not correctly report their RFB amounts in their income tax returns it may affect their government benefits and obligations.

Local Government Payments In ATO Sights

The ATO has previously sought from local government council and shire authorities throughout New South Wales, Victoria, Queensland, and Tasmania details of entities who provided contractor services in the 2011 and 2012 financial years. The ATO says it will now acquire details of entities receiving taxable payments from local government council and shire authorities throughout the country covering the 2011 to 2014 financial years.

The ATO says it will electronically match the information collected with its own data holdings to identify instances of non-compliance with tax lodgement and payment obligations. Records relating to 20,000 to 40,000 individuals are expected to be matched under the program.

TIP: Be aware of the ATO's use of electronic data-matching to check tax compliance. According to the ATO, most people are willing to meet their tax and superannuation responsibilities. However, the ATO says it uses a range of measures, including electronic data-matching, to identify the small minority of taxpayers who do not fully meet their responsibilities.

Property Rental Deduction Claims Mostly Refused

An individual has been mostly unsuccessful before the AAT in challenging the Tax Commissioner's decision to refuse a variety of deductions relating to rental properties. The individual, who worked full-time as an industrial chemist, owned rental properties with her husband and had done so for many years. In the 2003, 2004 and 2005 income years, they owned nine rental properties. The taxpayer declared a net rental loss for those years, arguing that she carried on a business of letting rental properties.

The AAT agreed that the taxpayer was carrying on a business of letting rental properties and allowed some claims, including part of her telephone, computer and other work-related expense claims. However, it refused most of the other disputed expenses, which included car expenses, travel expenses, repair and maintenance costs and the costs of investment courses and seminars. The AAT refused the claims, saying they either lacked the necessary connection with the individual's income-producing activities, or there was insufficient evidence to support the claims.

Daughter Found To Be "Puppet Director" Of Company Trustee

A married couple has been successful before the AAT in a matter concerning access to the capital gains tax concessions for small businesses. The key issue in dispute concerned a trust (in respect of which the couple were beneficiaries) and the trust's entitlement to the concessions in connection with a capital gain made on the sale of assets by the trust in the 2008 income year. Specifically, the main issue was whether the trust was controlled, either alone or with others, by the couple's daughter.

The Commissioner argued that the daughter was a controller of the trust and that therefore, the trust was connected with other entities controlled by the daughter, with the result that the trust breached the eligibility requirements for any of the capital gains tax concessions sought by the couple. However, the AAT found that the husband alone was the person who controlled the trust for the purposes of the small business concessions. Therefore, entities connected with the daughter, who was found to be a mere "puppet director" of the company trustee, did not have to be taken into account in determining the trust's entitlement to the concessions claimed by the couple.

In finding that the husband alone controlled the trust, the AAT noted, among other things, that the trust was not accustomed to acting in accordance with the daughter's wishes independently of her father's wishes in circumstances where her wishes and directions were actually her father's.

TIP: The tax law provides four concessions to reduce, eliminate and/or provide a roll-over for a capital gain made on an eligible asset that has been used in a small business. These concessions include the "15-year exemption", the "50% reduction", the "retirement exemption" and the "roll-over" concession.

The availability of the concessions is subject to satisfying a range of conditions, and these rules can be tricky to apply in practice… Improperly claiming the concessions can have devastating consequences. Please contact our office for further information.

Important Tax Dates

28 February 2014
Due Date for lodgement and payment of December 2013 Quarterly Activity Statement.

21 March 2014
Due Date for lodgement and payment of February 2014 Monthly Activity Statement.

31 March 2014
End of 2014 FBT Year.

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