Do I Need a Privacy Policy on My Website in Australia?
The answer is mostly likely “yes”, even if you are a small business with annual turnover of less than $3,000,000. Under the Privacy Act 1988 (Cth) (Privacy Act), various types of entities are, in summary, required to comply with a prescribed set of 13 “Australian Privacy Principles”. The first principle requires a clearly expressed and up to date privacy policy, so that personal information is managed in an open and transparent manner. Government agencies, private and not for profit organisations including individuals (e.g. sole traders), companies, partnerships, unincorporated associations, and trusts are all required to comply. There are exemptions. For example, small businesses (i.e. those with annual turnover of less than $3,000,000 and which are not for example related to a larger company that is subject to the Privacy Act) might be exempt in limited circumstances. However, the practical reality is that as soon as small businesses handle any personal information and trade in personal information, they will be caught under the Privacy Act. Various other scenarios may also render small businesses liable to compliance with the Australian Privacy Principles (for example, small businesses who provide services to or on behalf of government agencies, those who are “reporting entities” (a broad category) under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), or those who operate residential tenancy databases etc). Furthermore, as soon as a business receives Tax File Number information about an individual (for example in a Tax File Number declaration upon the commencement of employment), certain obligations arise under the Privacy (Tax File Number) Rule 2015 (issued under s.17 of the Privacy Act). Employers for example would be best advised to ensure that they have a privacy policy (and consent covering purpose of collection, use, disclosure, storage etc) in place, compliant contractual clauses, and provide collection notices where appropriate. Non compliance with the Privacy Act can lead to significant fines. As a bare minimum, a privacy policy needs to cover the following: (a) the kinds of personal information that the entity collects and holds; (b) how the entity collects and holds personal information; (c) the purposes for which the entity collects, holds, uses and discloses personal information; (d) how an individual may access personal information about the individual that is held by the entity and seek the correction of such information; (e) how an individual may complain about a breach of the Australian Privacy Principles, or a registered APP code (if any) that binds the entity, and how the entity will deal with such a complaint; (f) whether the entity is likely to disclose personal information to overseas recipients; (g) if the entity is likely to disclose personal information to overseas recipients, the countries in which such recipients are likely to be located if it is practicable to specify those countries in the policy.
Unfair Contract Term Protections for Small Businesses
BACKGROUND Following public consultation processes, new laws[1] came into force on 12 November 2016 which extended existing consumer protection laws against unfair contract terms to “small business contracts” (e.g. business to business contracts). Under these laws, small businesses can also have an “unfair” term in a “standard form contract” declared as void in specified circumstances. In doing so they would not have to comply with the term. Findings identified in the Explanatory Memorandum to the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 suggest that, like consumers, small businesses are vulnerable to the inclusion of unfair terms in standard form contracts as they often lack: the resources to identify unfair terms, appreciate their significance and determine whether they can manage the associated risks; the resources to engage in negotiations over the terms of a contract; the bargaining power to successfully negotiate the terms of a contract; and/or the resources and bargaining power to resist the enforcement of unfair contract terms. The stated objective of this reform[2] is to promote fairness in contractual dealings with small businesses with regard to standard form contracts. This will reduce small business detriment and have positive impacts on the broader economy by increasing small business certainty and confidence, and providing for a more efficient allocation of risk. WHEN DOES PROTECTION TO CONSUMERS / SMALL BUSINESSES APPLY The unfair contract terms protection provisions are contained in ss23 – 28 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law). Section 23 provides that a term of a “consumer contract” and “small business contract” is void if the term is “unfair” and the contract is a “standard form contract”. We do not examine consumer contracts which were protected prior to the amendments but examine the concepts of “small business contracts”, “standard form contracts” and when terms will be considered to be “unfair”. Small business contract In summary, in order for the contract to be a small business contract, each of the following must apply: The contract must be for the supply of goods or services or a sale or grant of an interest in land; At least one of the parties to the contract is a business that employs less than 20 people[3]; and The upfront price[4] payable under the contract is $300,000 or less, or the contract is for a duration of more than 12 months and the upfront price is $1,000,000 or less. Standard form contracts Standard form contracts are everywhere for example IT services contracts, advertising services contracts, mobile phone contracts, licences of office space, gym memberships etc. They are an efficient and effective way for businesses to contract. The Court will take into account any facts that it considers to be relevant however at the time of writing it “must” take into account the following in determining whether a contract is a standard form contract: whether one of the parties has all or most of the bargaining power relating to the transaction; whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties; whether another party was, in effect, required either to accept or reject the terms of the contract (other than certain excluded terms discussed below)in the form in which they were presented; whether another party was given an effective opportunity to negotiate the terms (other than certain excluded terms discussed below); and whether the terms of the contract (other than certain excluded terms discussed below) take into account the specific characteristics of another party or the particular transaction. Excluded terms: the protection does not extend to terms to the extent that they define the main subject matter of the contract, set the upfront price payable under the contract, or are terms required by law. Excluded contracts: the protection does not extend to contracts which are individually negotiated, or to certain types of contracts such as contracts of marine salvage or towage, a charterparty of a ship, and contracts for the carriage of goods by ship, constitutions of companies or managed investment schemes or other kinds of bodies. After 12 November 2016: The contract needs to have been entered into, renewed or rolled over after 12 November 2016. The law also applies to amendments to contracts after 12 November 2016 but not to the terms which have not been amended. Unfair terms There is a three limb test to unfairness. A term will be “unfair” if: it would cause a significant imbalance to the parties’ rights and obligations arising under the contract; it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by them; and it would cause detriment to a party if it were to be applied or relied on. The Court “must” take into account the extent to which the term was transparent[5] and the contract as a whole. Make sure your print is not too fine! Some prescribed examples of the types of terms which may be unfair are as follows: a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract; a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract; a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract; a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract; a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of
Australian business structures – choosing the right structure for your business
In this issue we examine the key types of business structures through which business can legally be conducted in Australia as follows: 1. Sole proprietors: individuals who are liable for the business. 2. Partnerships / limited partnerships: two or more persons or entities who are jointly and individually liable for the business (unless it is a limited partnership in which case the limited partner can enjoy limited liability). 3. Joint ventures: contractual arrangements between two or more persons entities usually for a limited time or specific project whereby the rights and obligations are governed primarily by the contract. 4. Companies: separate legal entities which basically have the same rights as natural persons and which can provide limited liability to their owners (i.e. shareholders). This can also include startups. 5. Trusts: a person or entity that holds assets or income for the benefit of others. Sole proprietors: Sole proprietors or sole traders conduct business as individuals i.e. in their personal capacity. Sole proprietorship is the simplest business structure, but provides no protection to the sole proprietor from debts or other liabilities. A different trading name for the business is often used (formally referred to as a “business name”). If so, the name must be registered in the name of the individual with the Australian Securities and Investments Commission (ASIC). Please refer to the business names section at the end of this paper which applies to all persons and entities wishing to trade under a different name to their own name for additional information. Aside from the usual laws which regulate all businesses in Australia, there are significantly fewer regulatory requirements imposed upon sole proprietors in comparison with other business structures. There is for example no need to publish financial information. Business income is declared separately to the Australian Taxation Office (ATO) but is taxed at the same rate as individual Australian residents for tax purposes. There is a tax free threshold available for individuals of $18,200. The rates of tax for income above $18,200 are as follows: $18,201 – $37,000 = 19% $37,001 – $87,000 = 32.5% $87,001 – $180,000 = 37% $180,001 + = 45% Tax offsets, levies, and deductions may apply depending on individual circumstances. Specific financial / tax advice should be sought from an accountant. Partnerships: A partnership is a relationship between two or more individuals or companies who carry on business in common with a view to profit. The relationship is primarily governed by a written partnership agreement entered into between the partners, as well as the Partnership Acts in each state and territory. Partners (other than limited partners discussed below) are jointly and severally liable for liabilities of the partnership. They also share the profits. As is the case with sole proprietors, there is no need to publish financial information relating to the partnership. The partnership does not pay tax on its income; it is the individual partners who must declare their individual share of the partnership’s net income or loss. The partnership must however lodge a partnership return with the ATO declaring total income less deductible expenses. Individual partners also account for capital gains tax in proportion to their share of each CGT asset, not the partnership itself. Limited partnerships are a species of partnership which need to be registered involving at least one general partner and one limited partner. Limited partners have different rights and obligations and liability is limited to an extent. Limited Partnerships are generally taxed in the same manner as companies. Joint ventures: Joint ventures are essentially contractual arrangements whereby two or more individuals or companies enter into a negotiated agreement to work together to achieve specific goals, usually for a finite amount of time, or the agreement is otherwise terminated. Joint ventures are typically used for specific projects, and are not usually appropriate for ongoing business commitments. Joint ventures are commonly established where each party has different assets / resources which, when combined, can provide advantages / synergies / efficiencies to all parties. The rights of each party primarily depend on the contractual terms of the relevant joint venture agreement that has been negotiated between them. Joint ventures can be incorporated (e.g. where the parties establish a new company as the vehicle for the joint venture), or unincorporated. The tax implications for joint ventures depend upon the parameters of the arrangement. Australian Companies: A company incorporated under the Corporations Act 2001 (Cth) (Corporations Act) is a separate legal entity and has the same rights as a natural person. The company must be registered with ASIC, and ASIC administers the Corporations Act and regulates companies. Australian companies typically provide limited liability for their owners (i.e. shareholders). The directors are responsible for the day to day management of the company. There are numerous obligations and reporting requirements prescribed under the Corporations Act. Companies can either be private (known as proprietary companies) or public (the capital of which is raised from the public e.g. those listed on the Australian Stock Exchange). The different types of company are as follows: company limited by guarantee: liability is limited to a guaranteed amount. This is often used by entities that do not trade. company limited by shares: liability is limited to the relevant amount which is unpaid for the shares held by the particular shareholder unlimited company: liability is unlimited. no liability company: only available to mining companies. The unpaid amount for shares cannot be called upon. The most common type of company is a company limited by shares. There are different requirements depending on the size of the company. Small business entities pay tax at a rate of 28.5% otherwise most companies pay tax at a rate of 30%. Foreign Companies: Companies that are incorporated in countries other than Australia must register with ASIC if they wish to carry on business in Australia. Trusts: Trusts can carry on business in Australia. The trustee owns and manages the business for the beneficiaries of the trust. Generally, the beneficiaries pay tax on their share of the