Current COVID-19 Land Tax Relief Measures

Current COVID-19 Land Tax Relief Measures

In 2020, each state and territory introduced a number of land tax relief measures to alleviate the impacts of COVD-19. Below we discuss the current relief measures for each state and territory:


The Victorian Government introduced land tax relief measures which allow for land tax reductions and deferrals for landlords of commercial tenancies, and commercial owner-occupiers.

Single commercial tenancies

Landlords who provided rent relief consistent with the Commercial Tenancy Relief Scheme between 28 July 2021 and 15 January 2022 to an eligible tenant are eligible for a reduction of 25% on 2021 land tax for a relevant property.

Eligible landlords are also able to defer paying the remainder of their 2021 land tax assessment until or before, 31 May 2022.

Multiple commercial tenancies

Landlords who provided rent relief consistent with the Commercial Tenancy Relief Scheme for multiple commercial tenancies between 28 July 2021 and 15 January 2022 to eligible tenants are also eligible for a  reduction of land tax equal to the total amount of rent waived up to an amount not exceeding 25% of 2021 land tax for the relevant property.

Eligible multi-tenancy landlords may also be able to defer payment of the remainder of their 2021 land tax assessment until, or before, 31 May 2022.

Commercial owner-occupiers

Eligible landowners who:

  • hold an Australian Business Number;
  • carry on a commercial the business on the property or directly or indirectly control a business carried out on the property; and
  • would otherwise have been an eligible tenant under the Commercial Tenancy Relief Scheme,

are eligible for a 25% reduction of 2021 land tax for the relevant property.

Eligible landlords may also defer paying the remainder of their 2021 land tax assessment until or before, 31 May 2022.

Applications for land tax relief close 30 April 2022 and more information can be found here https://www.sro.vic.gov.au/2021-coronavirus-land-tax-relief.

New South Wales

The New South Wales government have announced land tax relief measures for residential or commercial landlords who have reduced their tenant’s rent due to Covid-19 during the period 1 July 2021 and 31 December 2021.

The land tax reduction will be the lesser of the amount of rent reduction provided to an eligible tenant for that period or 100% of the land tax attributable to the parcel of land leased to the tenant.

To be eligible, the landlord must:

  • be leasing the property to either:
    • a commercial tenant who has an annual turnover of up to $50 million, and is eligible for a microbusiness COVID-support grant, 2021 covid-19 NSW business grant and/or the jobsaver scheme; or
    • a residential tenant who has lost 25% or more of a household income due to COVID-19,
  • have reduced the rent of the affected tenant for any period between 1 July 2021 and 31 December 2021 and provided that rent reduction was without any requirement for repayment.

More information can be found here https://www.service.nsw.gov.au/transaction/apply-covid-19-land-tax-relief.

Australian Capital Territory (ACT)

Commercial Landlords

Although there is no land tax relief for commercial landlords, commercial landlords can receive 50% of any rent reduction provided to business tenants as a rebate from the government, capped at the lower of $10,000 or the amount equal to two quarters of rates for 2021-22.


To be eligible for the rebate, landlords need to have, during the period from 1 August 2021 to 31 December 2021:

  • reduced (not deferred) rent for a business tenant impacted by covid-19, which tenant must have an annual turnover of less than $50 million and experienced a decline in turnover of 15% for a not-for-profit business, or 30% for other businesses; and
  • reduced (not deferred) the tenant’s rent for a period of at least 4 weeks during the assistance period; and
  • engaged in good faith negotiations with the tenant regarding rent reduction.

Residential Landlords

Residential landlords can receive a land tax credit to cover 50% of any rental reduction during the period of 1 August to 31 December 2021, up to a limit of $100 per week.


To be eligible for that rebate, residential landlords need to have, during the period from 1 August 2021 to 31 December 2021, reduced (not deferred) the rent paid by a person renting and residing in the property by at least 25% and for at least four weeks during the period. The lease must also be to person and not a company in the business of short-term rentals.

Further information can be found here https://www.revenue.act.gov.au/covid-19-assistance.

Queensland, Western Australia and South Australia

Those governments announced several land tax relief measures in response to COVID-19 in 2020 for 2020-21 year. However, applications for these measures have closed and will no longer apply for the 2012-22 year.


Currently, there is no specific information regarding covid relief measures for 2021. However, the Tasmanian government website indicates that landlords currently experiencing financial hardship in paying land tax may apply for a payment agreement by completing a debt payment arrangement application online.

Further information can be found here https://www.sro.tas.gov.au/about-us/covid-19.

Northern Territory

Land tax is not payable in Northern Territory. As such no relief measures were offered.

How we can help you

JHK Legal has extensive experience in providing advice on property and commercial matters.

If you require any further information or any assistance to determine your eligibility for the above land tax relief measures or any other property or commercial matter, please reach out to the JHK Legal team to obtain advice.

Written by Rachel Feng, Lawyer



The Admission and Rejection of a Proof of Debt

Proof of Debt

A liquidator’s decision to accept a proof of debt was successfully challenged due to a lack of evidence that the amount was owed in the recent case of Tuscan Capital Partners Pty Ltd v Trading Australia Pty Ltd (in liq), in the matter of Trading Australia Pty Ltd (in liq) (Proof of Debt) [2021] FCA 1061 (Tuscan).

The processing of proof of debt is an essential part of the day-to-day work of insolvency practitioners. Creditors may lodge proof of debt during the insolvency administration to record their claims, participate in meetings of creditors and to participate in any dividends.

It is the creditors’ responsibility to prove their claim to the liquidators’ satisfaction. A creditor’s proof of debt may be accepted if there is sufficient evidence to satisfy the insolvency practitioner that the debt exists for the amount claimed.

The Federal Court decision in Tuscan highlights the court’s power to overturn decisions of insolvency practitioners in a company’s external administration. It serves as a reminder that insolvency practitioners must always exercise caution and diligence when assessing a proof of debt. They must also be mindful that they may be subject to an adverse costs order if they fail to do so.

What happened in Tuscan?

Fishbank Development Corporation Pty Ltd (FDC) submitted a proof of debt in the amount of $56,289.43 plus interest of $9,742.31. FDC’s proof of debt was premised on a claim for contribution against Trading Australia Pty Ltd (in liq) (TA) in respect of fees arising from a joint retainer for legal services. The liquidator accepted FDC’s proof of debt.

The applicant who is a director of TA contested the liquidator’s decision to accept FDC’s proof of debt claiming that no retainer had ever been entered between TA and the firm of solicitors in question. The applicant’s main arguments included that the retainer agreement was revoked by amended counter offers sent by FDC that were never accepted.

What did the court decide?

Perram J rejected the liquidator’s decision to accept FDC’s proof of debt and ordered the liquidator to pay the applicant’s costs.

In rejecting the liquidator’s decision to accept the proof of debt, Perram J first assessed the process by which the retainer was entered and noted that while the email from the firm of solicitors attaching the original retainer agreement had been copied to TA, the subsequent offer and counteroffer had not. These subsequent offers had the effect of revoking the original retainer and therefore could not be held that TA had accepted an offer of services and entered into such an agreement.

Although Perram J rejected the liquidator’s position, his Honour accepted it was a reasonable one and that the decision to defend the review application was appropriate. Despite this, the Court ordered the liquidator to pay the applicant’s costs.

Key Takeaways

Liquidators and administrators must carefully the basis for every proof of debt and must not admit a proof of debt without proper scrutiny of the surrounding circumstances to ensure the company in liquidation indeed owes the debt. This includes carefully reviewing any available documentation and evidence particularly when there is ambiguity in respect of the alleged contractual arrangements that give rise to the alleged debt.

Insolvency practitioners should be aware that despite acting reasonably in accepting a proof of debt and appropriately in defending a review application, they can still be exposed to adverse costs orders.

How we can help you

JHK Legal has extensive knowledge in insolvency matters and can assist in providing expert advice and general enquiries you might have.

If you are seeking advice in relation to insolvency, please reach out to the JHK Legal team.


Written by Meshal Althobaiti


Voluntary Administration and the Court’s Involvement

With a view to limit the Court’s involvement and allow for a speedy and flexible system involved in the administration of companies, the Court has evolved to partake in merely a supervisory role proving to serve as an improvement to the effectiveness of Part 5.3A of the Corporations Act 2001 (Cth) (“the Act”).

What is Part 5.3A?

In order to contextualise the essence of Part 5.3A of the Act and its effectiveness, one must first examine the way in which it came about. In 1993, the voluntary administration regime was instigated pursuant to the Corporate Law Reform Act 1992 (Cth). Voluntary administration is intended to provide a company ‘breathing space’ from its usual operations by the appointment of an independent administrator to assess the company’s assets and liabilities when it is not in a position to pay its debts. The purpose is for the company to avoid insolvency, examine how to restructure the company to enhance its performance, and if approved by creditors, enter into a deed of company arrangement (“DOCA”) with its creditors to agree upon how the company’s affairs will be managed.

Powers of the Court

The General Insolvency Inquiry (“the Harmer Report”) put forward a number of recommendations where one of the focuses was to put an end to what was seemingly the unnecessary involvement of the Court in the official management of voluntary administrations. At present, there are many instances where voluntary administration is able to progress with minimal need for the Court’s involvement and focus its attention to ‘speed, flexibility and informality’.[1] Notwithstanding the fact there has been a shift in the mechanism of Part 5.3A away from the reliance on the Courts, the part provides the Court with a great number of powers in relation to voluntary administration and thus, the Court’s powers may be inevitably invoked.

Section 447A provides the Court with a discretionary power enabling it to “… make such order as it thinks appropriate about how this Part is to operate in relation to a particular company’.[2] In Australasian Memory Pty Ltd v Brien[3], the High Court’s decision set precedence for the scope and extent to which the Courts can exercise their powers under s 447A. The High Court held that s 447A is a fundamental feature of Part 5.3A and noted that, ‘the powers under section 447A are wide but [not necessarily] entirely without limit’.[4] In contrast, there are controversial viewpoints contending that, ‘the wording of s 447A is extremely broad and provides scope for the provision to be used at any stage in a voluntary administration’.[5] Arguably, the Harmer Report fails to wholly clarify the purpose of s 447A, its limitations and the aspects the Court should consider when exercising its discretion.[6] It was merely suggested in the Harmer Report that the ‘Court be given a broad power’ not to enliven further ambiguities.[7] Some have argued that the explanatory memorandum to the Corporate Law Reform Bill was absent in explaining the objectives of s 447A and simply reiterated s 447A(1).[8] The Court’s role in s 447A is clearly depicted in Cawthorn v Keira Constructions Pty Ltd[9], where Young J said, ‘…whilst the Court is to keep on the sideline as much as possible, it is to be involved in a supervisory capacity’.[10] The Court’s position was clarified and it is apparent that the Court was not intended to hold the capacity of being on the frontline, but rather it is to oversee in a way that will safeguard secured creditors and ensure they are not prejudiced.

Innovation of Holding a DOCA vs Court-based approach

The formation of Part 5.3A was enacted as a ‘flexible mechanism’ replacing the Court’s role and in turn positioning a registered administrator to manage the voluntary administration of a company. Commentators have conceded that the short timeframe imposed by s 439A(5) for an administrator to convene a meeting and inform creditors presents a limitation. In this respect, the only way for an extension of time to be granted is by applying to the Court pursuant to s 439A(6) and thus the Court’s involvement is yet again invoked. With a view to circumvent the Court’s involvement, in practice insolvency practitioners have been implementing a ‘holding DOCA’ mechanism as an unconventional means which allows an administrator to extend the convening period to maintain the status quo, and continue their examinations to restructure the company through a future variation to the deed. Upon execution of a DOCA, the voluntary administration of the company effectively shifts from ‘Administrators Appointed’ to ‘Subject to Deed of Company Arrangement’ and the deed administrator is responsible for administering the DOCA.

The objectives of Part 5.3A are to expediate the administrator’s meetings with creditors. Importantly, this has been achieved where proceedings against the company cannot be initiated by third parties unless ‘with leave of the Court’ and ‘in accordance with such terms (if any) as the Court imposes’.[11] It is evident Part 5.3A functions to encourage the Court’s involvement to predominately be of a supervisory nature.

Jurisdictional comparative analysis

Part 5.3A forms a stark contrast to the legislation in the United States under Chapter 11 of the Bankruptcy Code where the Courts in America play a superior role in the voluntary administration process. Some critics of Australia’s insolvency law system have advocated for further enquiries in determining whether certain features of Chapter 11 should be implemented in the Australian legislation. By way of comparison, Chapter 11 comprises of ‘direct Court supervision’ which is the very reason that Part 5.3A opted for a supervisory capacity to avoid protracted decision making during proceedings and the significant costs invariably involved. It must however be borne in mind that Chapter 11 and the voluntary administration system in Australia were designed to achieve differing purposes.

Chapter 11 requires the greater involvement of American Courts whereas the objective of Part 5.3A, was to ensure Australian Courts would only play a supervisory role. Anderson and Morrison acknowledge that, ‘in Australia a sense of independence is sacrificed for expediency’.[12]
Chapter 11 requires the greater involvement of American Courts whereas the objective of Part 5.3A, was to ensure Australian Courts would only play a supervisory role. Anderson and Morrison acknowledge that, ‘in Australia a sense of independence is sacrificed for expediency’.

How we can help you

JHK Legal has extensive knowledge in insolvency matters and can assist in providing expert advice with regards to the above topics, as well as general enquiries you might have.

If you are seeking advice in relation to insolvency, please reach out to the JHK Legal team.

Written by Shayla Chedid, Lawyer



[1] Jenny Fu and Roman Tomasic, ‘Voluntary administration, professional innovation and dissenting creditors — Mighty River International in the High Court of Australia’ (2019) 34 Australian Journal of Corporate Law 230.

[2] Corporations Act 2001 (Cth) s 447A.

[3] [2000] HCA 30; (2000) 200 CLR 270.

[4] Australasian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270 [20].

[5] Jason Harris, ‘The constitutional basis of s 447A: Is it a power without limit?’ (2006) 14 Insolvency Law Journal 135, 136.

[6] Ibid.

[7] Australian Law Reform Commission, General Insolvency Inquiry, Report No 4 (AGPS, 1988) Ch 3 [62].

[8] Corporate Law Reform Bill 1992 (Explanatory Memorandum) (Cth) [620].

[9] (1994) 33 NSWLR 607; 13 ACSR 337.

[10] Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607; 13 ACSR 337 [341].

[11] Corporations Act 2001 (Cth) s 440D; s 440F.

[12] Dr Colin Anderson and Dr David Morrison, ‘The impact of changes to the Australian corporate rescue regime’ (2007) 15 Insolvency Law Journal 243, 246.



The current Covid-19 pandemic has impacted Tenants and Landlords with the recent changes implemented by the NSW Government on leasing regulations for leases signed before 26 June 2021. The various changes and impacts on Landlords and Tenants can be seen in the Retail and Other Commercial Leases (Covid-19) Regulation 2021.

For what period will these changes be in effect?

Leasing regulations will be impacted from 13 July 2021 to January 2022 (“relevant period”).

What changes have occurred?

There are various  requirements which will be discussed below as to how a Tenant will qualify as an ‘Impacted Lessee’. If a Tenant meets the requirements of an Impacted Lessee, the Tenant will be protected with no rental increase during the relevant period and will be entitled to request a commercial tenancy rent reduction, and Landlords will be required to renegotiate a Tenant’s rent and other lease terms (if requested) and will not be able to draw on bank guarantees for rental payment, demand rent be paid, or take any prescribed action against the Tenant (as detailed below)

“Impacted Lessee” Qualification

In order to qualify as an “Impacted Lessee”, a Tenant must:

  1. Meet the requirements of one of the following NSW Government Relief Schemes:
  • 2021 Covid-19 Micro-business Grant; or
  • 2021 Covid-19 Business Grant; or
  • 2021 JobSaver Payment; and
  1. Have a 2021-2022 revenue under $50 million.

It is critical for the Tenant to provide the Landlord with evidence of how the Tenant has been impacted and a Statement outlining that the Tenant is an Impacted Lessee.

Landlords are allowed to request evidence from the Tenant on a fortnightly basis showing they remain in an “impacted” status. If the Tenant is no longer impacted, the Tenant or the Landlord will be able to renegotiate the lease.

Obligations of Landlord and Tenants

No Increase in Rent

Rent must not be increased during the relevant period unless it is turnover rent.

No Action Against the Tenant

The Landlord cannot take prescribed action against the Tenant, meaning, the Landlord cannot proceed with any of the following:

  • provisions of the commercial lease;
  • issue court proceedings to recover damages;
  • demand rent;
  • recover any security bond;
  • evict the lessee from the premises;
  • draw on any bank guarantee;
  • terminate the lease; or
  • any other remedy at common law.

Obligation to Mediate

If there is a dispute between the Landlord and an Impacted Tenant, or there has been a breach of one of the prescribed terms of the lease during the relevant period, the parties must attend mediation.

How we can help you

JHK Legal can assist individuals in relation to disputes between landlords and tenants. We also regularly act in matters involving lease breaches.

If you would like any assistance with commercial or retail leasing, or understanding your rights as a Tenant or Landlord, please do not hesitate reach out to the JHK Legal team to obtain advice on your rights, interests and obligations on such a matter.

Written by Katy Sakoulas


[email protected] – What you should know about increased workplace protections

On 10 September 2021, the Sex Discrimination and Fair Work (Respect at Work) Amendment Bill 2021 (Bill) received Royal Assent after it was passed by Federal Government earlier this month. The Bill operates to amend the following legislations:

  • Sex Discrimination Act 1984 (Cth);
  • Fair Work Act 2009 (Cth); and
  • Australian Human Rights Commission Act 1986 (Cth).


In 2020, Kate Jenkin’s drafted the Australian Human Rights Commission’s 2020 “[email protected]” Report ([email protected] Report). The Federal Government adopted 6 of the 55 recommendations outlined in the [email protected] Report.  For reference, the [email protected] Report and the Government’s response to the [email protected] Report are found here:

The [email protected] Report found that the existing legal and regulatory frameworks for addressing workplace sexual harassment were restrictive, complex, and limited, highlighting Australia’s lag behind other countries in preventing and responding to sexual harassment in workplaces. This comes in the spotlight particularly at the height of media continuously reporting on sexual harassment at workplaces not only in Australia, but internationally.

These amendments to the current legal frameworks aim to ensure that more workers, particularly, the vulnerable are better protected and empowered to address unlawful conduct by simplifying, clarifying and minimising any confusion within legislative frameworks.

Here is what you need to know

Sex Discrimination Act (SDA)

  • Objective of the SDA – one of the findings in the [email protected] Report explained that gender inequality was a key driver of workplace sexual harassment. It was recommended that the SDA could better achieve its objects and clarify its underlying purpose and foundational principles, in order to provide guidance to workers, workplaces, the community and courts. As such the object of the SDA will now make it clear that in addition to the elimination of discrimination and harassment, it aims to achieve, so far as practical, equality of opportunity between men and women.
  • Sex-based harassment is expressly unlawful conduct – although sex-based harassment is already prohibited under the SDA, the [email protected] Report found that it was not well understood. If a person alleges that they are being harassed because of their sex, but the conduct does not amount to ‘conduct of a sexual nature’, the complaint can still be assessed and accepted as one alleging sex discrimination. As case law may not be understood readily by the community, the amendment provides further clarity by expressly prohibiting harassing a person on the ground of their sex. As such, this conduct is clarified by defining it as unwelcome conduct which needs to meet the threshold of offensive, humiliating, intimidating, and seriously demeaning. However, it does not capture mild forms of inappropriate conduct. Sex-based harassment may include the following:
    • Asking intrusive personal questions based on a person’s sex.
    • Making inappropriate comments and jokes to a person based on their sex.
    • Displaying images or materials that are sexist, misogynistic or misandrist.
    • Making sexist, misogynistic or misandrist remarks about a specific person.
    • Requesting a person to engage in degrading conduct based on their sex.
  • Broadening the scope to include all paid and unpaid workers – previously, unpaid workers were not protected against sexual harassment under the SDA. The change extends sexual harassment protections to all paid and unpaid workers including interns and volunteers. The new definition adopts the concept of ‘worker’ and ‘persons conducting a business or undertaking’ which is used in the Work Health Safety laws.

Fair Work Act (FWA)

  • Sexual harassment as a valid reason for dismissal – sexual harassment was only recently included in the definitions of what could constitute serious misconduct under Fair Work Regulations 2009 (Cth). The bill will now amend the FWA to further clarify and provide employers the explicit understanding that sexual harassment can be a valid reason for dismissal in determining whether a dismissal was harsh, just or unreasonable.
  • FWC stop sexual harassment orders – to prevent the risk of future harm, the Fair Work Commission (FWC) has the power to only grant a stop bullying order. In addition to these powers, the amendments now explicitly state that it is within the FWC’s powers to make an order to stop sexual harassment in the workplace. Both orders are to prevent risk of future harm. The FWC must be satisfied that that the harassment has occurred to make such order, and orders would not be available where there is no risk of harassment occurring again, for example when the person who harassed the worker is no longer employed at the workplace.
  • Miscarriage leave – previously, employees were only entitled to compassionate leave when a member of the employee’s immediate family or household contracts or develops a personal illness or sustains a personal injury that poses a serious threat to their life or died. The amendment expands this definition to ensure that a miscarriage constitutes grounds for compassionate leave. An employee/employee’s spouse/de facto partner is now entitled to two days’ paid compassionate leave. For casual employees, this leave will be unpaid.

Australian Human Rights Commission Act

  • Victimizing conduct can form the basis of a civil and criminal proceedings – the [email protected] Report highlighted that there was uncertainty as to whether a civil complaint could be made for victimising conduct. The change would make clear that a person who experiences victimisation as a result of making a complaint under the Sex Discrimination Act is now able to commence civil proceedings against the alleged perpetrator in the Federal Court or Federal Circuit Court. Note that criminal proceedings can still be initiated by the Australian Federal Police in relation to victimising.
  • Extended time period for complaints – the amendments extend the time period to make complaints to the AHRC from six months to two years. This reassures complainants that their complaints will not be dismissed within two years from when the alleged conduct took place.


By way of the Federal Government’s commissioning the [email protected] Report and adopting some of the recommendations, it makes clear that their objective is to facilitate a safe working environment. The amendments make clear certain conduct is unlawful and provides employers certain power to dismiss employees engaging in sexual harassment.

One of the key legislative recommendations from the [email protected] Report that was not implemented into the Bill was the imposition of a positive duty requiring employers to take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment, and victimisation.

Whilst the Government did not include imposing a positive duty on employers in the Bill, it would be prudent for workplaces to be aware of these changes, particularly ensuring they do not deny employees compassionate leave for miscarriage.

We recommend that employers take time to update their current training and policies to reflect these amendments at law. This may include protocol with reporting and dealing with sexual harassment in the workplace.

How we can help

At JHK Legal we are well versed in assisting businesses preparing and updating their workplace training and policies to ensure it is compliant with the existing laws. If you think you might require assistance with understanding the new changes or to update your policies to reflect these changes, please do not hesitate to reach out.

Written by, Belinda Taing


New, or near-new, exemption certificates for property developers

Generally, foreign persons require approval from the Foreign Investment Review Board (‘FIRB’) when entering into contracts for the purchase of Australian property. The purpose of obtaining FIRB approval is to ensure that the foreign person’s investment will benefit the Australian economy. However, foreign investors can now rely on a ‘New or Near-New Dwelling Exemption Certificate’ (‘the Exemption Certificate’) to purchase Australian property without obtaining FIRB approval.

For every new project, a property developer, or vendor, should consider whether they are able to secure the Exemption Certificate. Obtaining this certificate means that the developer’s foreign buyers do not need to seek their own individual foreign investor approvals, as long as the Australian property being purchased is covered by the Exemption Certificate. The FIRB has recently published guidelines on how a developer can obtain the Exemption Certificate, and also their obligations in applying for the certificate.

Eligibility for obtaining an Exemption Certificate

Australian and foreign developers may apply for the Exemption Certificate if the following applies to their project:

  • the development consists of fifty (50) or more dwellings;
  • development approval has been procured from the relevant government authority; and
  • the development has foreign investment approval (if applicable) for purchase of the land subject to development, and any conditions of that approval are being met.

Applications for the Exemption Certificate will be considered on a case-by-case basis to ensure they are not contrary to Australia’s national interest.

Approval conditions

Approvals for an Exemption Certificate are subject to the developer:

  • marketing the dwellings for sale in Australia;
  • selling no more than 50% of the total number of dwellings in the development to foreign persons under the certificate;
  • selling no more than $3 million worth of dwellings in the development to a single foreign person under the certificate;
  • providing a copy of the exemption certificate to each foreign purchaser;
  • reporting to the Australian Government, every six months (until all dwellings in the development are sold), on the dwellings sold to foreign persons under the certificate, including the purchaser details and the value of the sales;
  • notifying the Australian Government, within thirty (30) days, if the number of dwellings in the development is reduced to less than 50; and
  • paying a fee for each dwelling sold under the certificate. Note this fee is separate to the fee for applying for an Exemption Certificate.

Developers’ obligations when applying for the Exemption Certificate

Developers who have been granted an Exemption Certificate must report their sales every six months, until all dwellings covered by the Exemption Certificate are sold. As noted above, there is a separate fee per sale that is required to be paid to the ATO for each dwelling sold under the Exemption Certificate. This fee must be outlined in the sales report, and it must be paid to the ATO within 30 days of the end of the relevant six-month reporting period.

If developers are found to be non-compliant with their eligibility and approval conditions for the Exemption Certificate, it may be subject to strict penalties, including civil and criminal penalties, and also revocation of the certificate.

Relying on the Exemption Certificates will make it easier for foreign purchasers to purchase property in Australia from developers eligible for the Exemption Certificate. Without the certificate, foreign persons purchasing property in Australia will need to consider their requirement to obtain individual FIRB approval, or exemption, before entering into contracts for such purchase.

The main benefit for property developers would appear to be the ability to expand their range of purchasers to include foreign investors, though developers would need to also consider any limitations on their ability, or any other certificates required, to sell the dwellings on their development to foreign persons.

Should you have any questions or require any further information regarding this Exemption Certificate, please do not hesitate to contact JHK Legal Brisbane.

Written by, Jemerrie Golaw, Lawyer



Major Domestic Building Contracts: what you should know before signing one

This article is directed at owners looking to build residential property in Victoria.

We have recently provided advice to clients about how they, as homeowners, might terminate their home building contracts and/or recover money from a builder who is either:

  1. taking too long to complete the build; or
  2. carrying out defective work; or
  3. charging amounts above the contract price.

To avoid the above, one should be aware of the rules and regulations governing a Major Domestic Building Contract and domestic building work in general, before committing to an agreement with a builder.

The Domestic Building Contracts Act 1995

Domestic building work is regulated by the Domestic Building Contracts Act 1995 (Act). The Act applies to the following work:

  1. The construction of a home or any part of a home including, but not limited to, any associated work such as landscaping, driveways, fencing, carports, swimming pools etc.
  2. The renovation, alteration or any improvement of a home.
  3. The demolition or removal of a home or any part of a home.
  4. Preparation of plans or specifications for a home.

If you are engaging a builder or contractor to carry out any of the above work and the work is valued at over $10,000.00 (including materials and labour), and the work involves more than one specific type of work (e.g. not just painting), you and the builder are required to enter into a major domestic building contract. Only a registered builder can enter into a Major Domestic Building Contract.

Before signing a Major Domestic Building Contract, you should check the following:

  1. Your builder is registered with the Victorian Building Authority (VBA).
  2. Your builder has provided you with a copy of the Domestic Building Consumer Guide by the Consumer Affairs Victoria (CAV).
  3. Your builder has provided you with a copy of the builder’s current domestic building insurance (for work over $16,000.00) with the address of the building project. This protects you if the builder dies, becomes insolvent or disappears.
  4. The work to be carried out is clearly and comprehensively described in the contract.
  5. There are no unfair terms contained in the contract and any special conditions are properly reviewed and understood.
  6. Ensure that all building fees, lodgment fees, inspection fees and government levy charges are included in the contract price. Be aware of the charges not included in the contract price, which must be specified as excluded in the contract.
  7. Where possible, avoid prime costs items and provisional sums as they can increase the contract price.
  8. You understand the procedure for changes to the contract.
  9. Your contract states the start and finish date, which accounts for the days allowed for foreseeable delays.

It is a good idea to enter into a written contract with your builder regardless of the amount you intend to spend on your home build or renovations. A model domestic building contract can be found on the website of the CAV.

Implied Warranties

Under the Act implied warranties form part of every domestic building contract.  The builder warrants that:

  1. The work will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract.
  2. All materials used by the builder will be fit for purpose.
  3. All work will be carried out in accordance with law.
  4. The work will be carried out with reasonable care and skill.
  5. The work will be completed by the date specified in the contract.
  6. If the work is to be completed to a stage suitable for occupation, then the home will be suitable for occupation at the time of completion.
  7. If a particular purpose for the work is stated in the contract, then the work and material used by the builder is fit for that purpose.

If you believe your builder has not complied with the above, you should raise the issue with the builder and allow them an opportunity to rectify the issue. You must make attempts to resolve the issue before taking further action. If your builder refuses your request or is non-responsive, you can then take the dispute to the Domestic Building Dispute Resolution Victoria.

You cannot sign away your right to take advantage of a warranty under the Act.

Changes to the contract price

You should also look out for how changes can be made to the total contract price and take note of excluded costs in the contract.

The contract price specified in a Major Building Domestic Contract will be fixed, subject to legal changes. Legal changes include agreed variations, the actual costs of prime cost items and provisional sums. Excluded costs must be specified in the contract.

Your contract must specify prime cost items and provisional sum items and include a cost estimate for each item and selection. Prime costs items are selections of fixtures and fittings which are not specifically identified in the contract (e.g. kitchen appliances). Provisional sums items are works or potential works which an exact figure cannot be given for at the time of signing the contract (e.g. excavation works).

By law, you and your builder must agree in writing to make a variation to the contract and if it necessary, include a new contract price and completion date. You should not pay for the cost of a variation if your builder should have reasonably foreseen the cost at the time of signing the contract.

If you are asked to enter into a cost-plus contract (i.e. not a fixed contract and the builder charges by the hour), you should seek legal advice.

Deposit and Progress Payments

The law also sets out amounts for maximum deposits and standard percentages for payments at each completed stage of your build. Progress payments set out in your contract should not be front loaded i.e. large portions of the contract price payable in the first few stages, as this heavily favours the builder. If you do this, you risk the builder taking the money and not finishing the job. The domestic building insurance may also not cover advanced payments.

How we can help you

We can assist you with advice about a domestic building contract prior to entering into the contract or with a building dispute with respect to building works already commenced.

If you require any advice or assistance in relation to domestic building contract, please do not hesitate to contact us.


Written by Grace Beale, Solicitor


Modern Slavery – Should your entity be reporting?

Modern slavery is used to describe situations where coercion, threats or deception are used to exploit victims and undermine or deprive them of their freedom. It is a pertinent issue that has recently gained traction in Australia with the introduction of the Modern Slavery Act 2018 (Cth) (“Act”). Under that Act reporting is now mandatory for entities who fulfil a specific criteria.

Does your entity need to report?

Under section 5 of the Act, there are two limbs to determine if an entity is required to report.

First Limb

The first limb is an Australian entity or an entity that is carrying on business in Australia. While it may seem clear whether or not an entity is an “Australian entity” (i.e. registered in Australia), thought needs to be given as to whether entities which operate in other countries could be considered to be carrying on business in Australia. This is due to the fact there may be circumstances where an Australia entity is not required to report, but their parent entity which carries on business in Australia is required.

The general test to determine whether an entity carries on business in Australia is contained in section 20 and 21 of the Corporations Act 2001 (Cth) which outlines that an entity will be considered to be carrying on business in Australia, if that body corporate:

  1. has a place of business in Australia; and
  2. carries on business in Australia.

Carrying on business includes:

  • Establishing or using a share transfer office or share registration office in Australia; and/ or
  • Administering, managing or otherwise dealing with property situated in Australia .

Second Limb

The second limb is that the entity has a consolidated revenue of at least $100 million AUD for the reporting period in question.

Consolidated revenue is defined in section 4 of the Act as being the total revenue of the entity in question for the entity’s reporting period (this could be financial year or annual accounting period) or if the entity is in control of other entities – the total revenue of the entity plus all of the controlled entities considered as a group.

Determining whether an entity controls other entities, for the purposes of this Act, can be tricky given the Act makes reference to the accounting standards. As a result, making a determination regarding whether you are required to report may require both legal and accounting advice.

The reporting period is defined by section 4 of the Act as being the financial year or any other annual accounting period applicable to the entity after the commencement of that section of the Act. For instance, the Act commenced on 1 January 2019. As a result, an entity’s reporting period will be the first full accounting period after 1 January 2019. If an entity operates under a calendar year reporting period (January to December), the first reporting period would be January 2020 to December 2020 (assuming they fulfil the other criterion above).

Under section 13(2)(e) and 14(2)(f)(i) of the Act, a modern slavery statement must be provided to the Minister within 6 months after the end of the reporting period for the entity. Utilising the example above, a modern slavery statement would be due on 30 June 2021.

What are the consequences if you fail to report?

We should note, if an entity who is required to report fails to report within 6 months after the end of the reporting period, the Minister may give written request to that entity to do either or both of the following:

  1. Provide an explanation for failure to comply within a specified period of 28 day or longer after the request is given (“Specified Period”);
  2. Undertake specified remedial action in relation to that requirement in accordance with the request within a Specified Period.

Can you report even if you do not meet the eligibility criteria?

There is provision in the Act for voluntary reporting, however note that if you do so, you are subject to the same regulatory requirements as an entity that is required to report as well as consequences if you do not comply.


Modern slavery is an issue that the Australian government is not taking lightly. With further legislation in the works presently, it is important that both Australian entities and entities that carry on business in Australia consider whether they should be reporting under the Act.

How we can help

At JHK Legal we have assisted various entities in determining whether they are required to report under the Act, have conducted reviews of any existing international statements to determine if they are appropriate for the purposes of the Act and have prepared statements. If you think your entity might be required to report (now or in the future), please do not hesitate to reach out.


Written by, Georgia-Rae Swain, Lawyer

The Abolishment of the Peak Indebtedness Rule

On 10 May 2021, in a historical Australian decision, the Full Federal Court handed down a decision which abolished the peak indebtedness rule and found that a liquidator cannot apply the peak indebtedness rule in unfair preference claims involving running accounts.

The Full Court held that if there is a continuing business relationship involving multiple transactions from a company to a creditor (during the relation back period), in assessing whether the transactions (considered a single transaction) are preferential, a liquidator cannot select the highest point of indebtedness in that period. Ultimately, a liquidator must take into account all supplies provided by a company to the creditor, and all payments made by the creditor to the company during the relation-back period. This follows the Timberworld Ltd v Levin decision made in the New Zealand Court of Appeal in 2015 which also abolished the long-standing rule.[1]

Continuing business relationship

Pursuant to section 588FA of the Corporations Act 2001 (Cth) (the Act), an unfair preference is a transaction to which a company and the creditor/s are parties and which results in the creditor receiving in respect of the debt that the company owes to the creditor, more than the creditor would receive in respect of that debt if the transaction had been set aside and the creditor had to prove for the debt in the winding up of the company.

Section 588FA (3) of the Act treats a series of transactions entered into during the relation-back period as part of a continuous business relationship, as a “single transaction”.

Pursuant to the section:

transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including such a relationship to which other persons are parties); and

in the course of the relationship, the level of the company‘s net indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship;

then: all the transactions forming part of the relationship [must be considered together] as if they together constituted a single transaction.

Put simply; in determining whether there is an unfair preference pursuant to section 588FA(3) of the Act, the “single transaction” will be considered a preference if the payments made by the company to the creditor ultimately exceed the value of the goods or services it received, in a way that the payments caused a reduction in the balance of the running account.[2]

What is the peak indebtedness rule?

Traditionally, the peak indebtedness rule enables the liquidator to choose the “highest point” of indebtedness in the running account during the relation-back period as the point at which the net reduction indebtedness is to be measured. Ultimately, the liquidator can calculate the value of the preference by subtracting the debt owing to the creditor from the debt owing at the point of “peak indebtedness”.

The peak indebtedness rule first came about in the decision of Barwick CJ in Rees v Bank of New South Wales, where his Honour said:

“In my opinion the liquidator can choose any point during the statutory period [i.e. the 6 month relation-back period] in his endeavour to show that from that point on there was a preferential payment and I see no reason why he should not choose, as he did here, the point of peak indebtedness of the account during the six months period.”[3]

Background to the first Gunns Decision

Gunns Limited (Gunns) was placed into liquidation in 2013 at which time, it owed over $780 million to creditors. The liquidators of Gunns commenced various proceedings against creditors, including Badenoch Integrated Logging Pty Ltd (Badenoch). The liquidators claimed that 11 payments made by Gunns to Badenoch during the relation-back period were insolvent transactions and voidable under the Act. It was submitted by the liquidators that the peak indebtedness rule was the correct starting point to determine the quantum of the preferences.

Davies J held that the peak indebtedness rule was consistent with earlier authorities and that Badenoch was to repay over $2 million of the payments received from Gunns in the relation-back period.

Appeal of the Gunns Decision

An appeal was lodged on the basis that that the 11 payments should have been found to form part of the running account and the trial judge erred in applying the peak indebtedness rule.

The main issues to be considered were:

whether any of the payments were part of a ‘continuing business relationship’ within the meaning of section 588FA(3) of the Act; and

whether the liquidators were entitled to apply the peak indebtedness rule by choosing any point of the Gunns’ indebtedness within the relation-back period as the starting point for the single transaction.

The Full Court held that the peak indebtedness rule ought to be abolished and that it did not apply under the Act. The Court found that creditors should be provided with the benefit of earlier dealings with the continuing business relationship to be considered in determining whether or not an unfair preference exists.

Further, the Court found that section 588FA(3) should be applied so that a running account is taken as a “single transaction” encompassing “all transactions forming part of the relationship”.[4]


It goes without saying this decision will have a significant impact on liquidators and unsecured creditors moving forward.

Some argue that the abolishment of the peak indebtedness rule will ensure fairness between unsecured creditors, which is one of the main focuses of Part 5.7B of the Act. Further, the decision is likely to be viewed unfavourably by liquidators as the quantum of preferences recoverable in running account relationships is likely to be significantly limited.

How we can help you

At JHK Legal we regularly act for administrators, liquidators, and recipients of unfair preference payments. If you require any advice or assistance in relation to voidable transactions, or any other insolvency matters, please do not hesitate to contact us.


Written by, Anna Hendriks, Associate


[1] (2015) 3 NZLR 365 (Timberworld)

[2] Airservices Australia v Ferrier (1996) 185 CLR 483, 501-2 per Dawson, Gaudron and McHugh JJ and Bryant, in the matter of Gunns Ltd (In Liq) (Recs and Mgrs Apptd) v Edenborn Pty Ltd (2020) 381 ALR 190 at 233 [171] per Davies J.

[3] [1964] HCA 47.

[4] Badenoch [2021] FCAFC 64 at [82] and [112] per Middleton, Charlesworth and Jackson JJ) quoting Timberworld [2015] 3 NZLR 365 at [68].


The Supreme Court of New South Wales judgment of Re Western Port Holdings Pty Ltd (receivers and managers appointed)(in Liq) [2021] NSWSC 232 (“Western Port”) has provided liquidators with more comfort to pursue an unfair preference claims against recipients of third party payments and payments made during the course and operation of a Deed of Company Arrangement (“DOCA”).

What is an unfair Preference Payment?

An unfair preference payment is a voidable transaction pursuant to section 588FA(1) of the Corporations Act 2001 (“the Act”) and it is a transaction which may be able to be clawed back by a liquidator of a company if the preference payment made by the company to a creditor was made within 6 months prior to the company being placed into liquidation and provided that:

  1. the company and the creditor are parties to the transaction (even if someone else is also a party); and
  2. the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company.

Why is the case of Western Port Important in respect of unfair preference payments?

It is important to note that while section 588FA (1) of the Act sets out a clear criteria for what constitutes as a voidable transaction comprising of an unfair preference payment claimable by a liquidator, the case of Western Port considers when and how the operation of section

588FE(2B)(d)(i) of the Act might apply rendering a potential voidable transaction such as an “unfair preference payment” as not voidable at all. In this regard, Section 588FE(2B)(d)(i) of the Act provides that  that a transaction is not considered voidable if it was entered into under the authority of the administrator of the deed or the administrator of a company.

The relevance of section 588FE(2B)(d)(i) of the Act to the case of Western Port is as follows:

  1. Western Port was placed into a DOCA and then was later placed into liquidation.
  2. Upon the company entering liquidation, the liquidators claimed that Western Port made various voidable unfair preference payments to the ATO under section 588FA (1) of the Act during the DOCA.
  3. The ATO defended the allegation that it received unfair preference payments on the basis that it relied upon section 588FE(2B)(d)(i) of the Act by submitting that the payments were not voidable transactions as they were made with the “authority” of the deed administrator of the DOCA.
  4. Questions considered by the Court relevant to section 588FE(2B)(d)(i) of the Act were as follows:
  5. Were all of the alleged unfair preference payments made by the company to the ATO by or under the authority of the deed administrator of the DOCA within the definition of section 588FE(2B)(d)(i) of the Act; and
  6. What constitutes as “authority” of the deed administrators?

It was noted in the Western Port case that the deed administrators played an active role in ensuring the company made payments to the ATO and that it was common that deed administrators would take an active role in ensuring a company is adhering to its obligations under a DOCA. However, the extent of activity of the deed administrators’ role in this case consisted of:

  1. the deed administrators seeking details as to the company’s outstanding tax liability from the company directors;
  2. the deed administrators seeking confirmation from the directors as to whether they had attended to their obligations in paying their tax debt and consistent follow up in respect of same;
  3. issuing the company with several notices of default requiring the company to attend to rectifying breaches of the DOCA for failing to pay its tax liabilities on time which had accrued during the process of the DOCA.

Despite the level of involvement and the consistent role the deed administrators took in ensuring the company was adhering to the DOCA, Rees J in her judgment of Western Port considered the authority case of In Yeo, in the matter of Ready Kit Cabinets Pty Ltd (in Liq) v Deputy Commissioner of Taxation [2020] FCA 632 in answering the noted questions above.

Rees J found that the unfair preference payments made by the company to the ATO were not considered “authorised” by the deed administrators because the control of the company was handed back to the directors pursuant to the DOCA and the directors made those payments to the ATO by exercising their control as directors of the company and not under the authority of the deed administrators. In this regard, while it might be considered that the deed administrators

provided the authority to the directors to make payments to the ATO, Rees J made specific note in respect of the construction of section 588FE(2B) of the Act that: “[t]here is no occasion in section 588FE(2B) to look behind the authority of the directors to ask how that authority came about.”[1]

Based on this finding and consideration made by Rees J, it was found that the ATO in these circumstances was unsuccessful in attempting to rely on the exemption under section 588FE(2B) of the Act and found the payments were voidable transactions and unfair preference payments under section 588FA(1) of the Act.

Key takeaways of the case of Western Port with respect to deed administrators appointed to a company are as follows:

  1. Western Port highlighted the integral and involved role that a deed administrator can conduct themselves in when a company is in a DOCA.
  2. A deed administrator’s role is to ensure that directors are carrying out and fulfilling the company’s obligations under a DOCA.
  3. When a company is handed back to the control of the directors under a DOCA, despite the deed administrators being appointed, it is ultimately the directors who are carrying out an authoritative role on behalf of the company.
  4. The construction of Section 588FE(2B) does not suggest by way of provision that the court ought to “look behind” where the “authority” has come from.

How we can help you

JHK Legal regularly act for administrators, liquidators, and recipients of unfair preference payments. If you require any advice or assistance in relation to voidable transactions, please please reach out.

Written by Hayley Tibbie, Senior Associate.



[1] Re Western Port Holdings Pty Ltd (receivers and managers appointed)(in Liq) [2021] NSWSC 232 at [157]