New Legal Changes

New Legal Changes For Small Businesses in Australia: 2022 Edition

Jan 14, 2022
Reading Time: 11 minutes
Written by Angela Omari

It’s no secret that small business owners and entrepreneurs like yourself have to constantly keep a tab on what’s changing in the industry—especially the legislative changes. 

Every year new legal changes are introduced and catching up with them can be overwhelming and stressful. 

The good news? We’re here to help you manage this stress so you can focus on what’s important – running your business efficiently for the busy year to come.

So if you’re a small business owner looking to figure out what legal changes might affect your business in 2022, you have come to the right place. 

 That’s right; we are here to help. 

 What’s new, you say? Have a read along.

1. Employee share scheme changes to tax

Employee share scheme (‘ESS’), can provide your employees with the opportunity to buy shares from your business and is a great way for your small business to attract, retain and motivate employees. 

ESS allows your employees to share the growth and productivity of your business and is a great motivator for them to stay put with your company. 

And while it is exciting, you need to be well aware that new legal changes relating to EES are in place.

As part of the 2022 federal budget, the government promises to change the ESS legislation and are introducing a suite of tax and regulatory changes.

What does this mean for your small business? Well, this change will make it easier for small businesses and startups to offer equity to staff members and reduce the tax burden on those employees.

So essentially, the new rules will affect how your employees will be taxed on the shares they receive through an ESS. This means that employees are no longer liable for taxation on their shares if they choose to leave your company.

We bet you’re wondering how this differs from what’s currently in place. Good question. Currently, employees have tax liability when they hit one of three points. These include:

  • When they leave the business
  • When restrictions on the sale of shares are lifted
  • 15 years from the date they were granted

Under the new rules, the first tax point will be removed. This means that your employees will be taxed on one of the other points or through the capital gains tax regime when they sell their shares. 

Still, unsure what this means? Here is a summary of the changes:

  • Employees who quit their jobs may be able to keep their ESS shares and not have to sell a portion of them to pay taxes
  • It gets rid of the hassle of having to value options or shares under complex tax rules 
  • It makes employee share option plans easier to structure and draft

Although these reforms are not yet final, the draft legislation is to be implemented in early February 2022, so make sure your business is keeping up to date.

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2. Director identification numbers 

An important new law has emerged for all company directors, so it’s time to get your legals in check.

This new legal change, which came into effect on 1 November 2021, requires all company directors to apply for and hold a valid ‘Director Identification Number’.

A Director Identification Number or Director ID or DIN as it may be known is a 15-digit unique identification number that all directors— future and existing, must hold. 

This 15-digit identification number is a director’s formally verified ‘identity’. 

As soon as a director applies for and receives a DIN, the number belongs to that director forever. Even if a person no longer serves as a director, changes companies, changes their name, or even moves states or countries, their DIN will remain.

So do you want to know when to apply for a DIN? Have a look below:

  • A 12-month transitional period applies to company directors appointed on or before 31 October 2021, with a deadline of 30 November 2022 for applying for a DIN.
  • Between 1 November 2021 and 4 April 2022, anyone appointed as a director for the first time has 28 days from the date of appointment to apply for a DIN
  • Those who become directors for the first time from 5 April 2022 will need a DIN before their appointment.
  • A director does not need to reapply for a DIN every time they change companies, personal information (name or address), or retires
  • Anyone wishing to become a director within the next 12 months may apply for a DIN, but the DIN will expire if they aren’t appointed within 12 months.

Okay, so you’re now across when to apply for a DIN; well done. It’s now essential to know where you can apply for a DIN. 

Keep in mind that each director must apply for their own DIN as no one can apply on their behalf. Here is where you can apply:

  • Online application through the ABRS website Australian Citizens with an Australian tax file number and myGOVID can use this method. Applicants also need to provide:
    • Their residential address as recorded by the ATO
    • 2 other identifying details held by the ATO (including bank details, tax payments, superannuation account)
  • Phone application on 13 62 50 (in Australia) or +61 2 6216 3440 (from overseas) – This method can be used by ​directors with a TFN (intended for use where there is no myGovID). Applicants also need to provide: 
    • Residential address as recorded by the ATO
    • 2 other identifying details based on information held by the ATO
    • Details of 2 Australian identity documents, such as an  Australian passport, Australian birth certificate or Australian citizenship certificate
  • Paper application form available on the ABRS website –  This method is best for directors without a tax file number. Applicants need to complete the application form and also need to provide:
  • Copies of 2 identity documents certified as a true and correct copy of the original
  • Documents made in languages other than English must have certified translations from an approved translation service

Say you fail to obtain a DIN number, are there any penalties? The short answer is – yes. Criminal or civil penalties may apply if you fail to apply for a DIN within the required time frame. So make sure you apply for your Director ID within your time frame to stay legally compliant.

3. New online privacy bill under careful consideration

Did you know that the Australian government is in the process of updating Australia’s online safety laws? 

The proposed changes to the Online Safety Act 2015 will impact small businesses that operate an online service. Unsure of what an online service can include, here is a list:

  • Social media platforms
  • Internet service providers
  • Online content sharing platforms
  • Businesses that operate forums and videos sites

If you’re one of those businesses listed above or have a similar online business, then keep reading. Some of the changes to the Online Safety Act will include:

  • Offering greater protection for children using the internet 
  • Providing more clarity on social media sites about online safety expectations
  • Monitoring harmful content on the internet by listing the types of content that can’t be distributed
  • Blocking offensive content and violent material 

If you operate a business in the online space you will need to be aware of the new obligations concerning what content your business can provide online according to the proposed changes listed above.

If you want to ensure that your online business complies with the changes, here are some practical steps you can take: 

  • Take the time to read and understand the proposed changes
  • Develop new processes, products, and services in accordance with online safety expectations
  • Set up a process for responding to take-down notices from the eSafety Commissioner
  • Implement your new internal policies on online safety by training your staff involved in handling your online content
  • Identify whether your company’s child protection tools need updating and if so, do it

Although the proposed changes are still in the process of being finalised, it is an excellent time to get ahead of the curve and begin preparing your business.

4. Remote witnessing is here to stay

As NSW continues to embrace the COVID-19 pandemic, the NSW Government has announced that the remote witnessing scheme is here to stay. 

This means that the Electronic Transactions (Remote Witnessing) Bill 2021 is now a permanent feature in NSW. 

As such, certain documents involving affidavits, wills, powers of attorney and appointments of enduring guardians, which must be signed in person or evidenced by an authorised witness, may be signed remotely over an audiovisual link.

Are you wondering what the benefits are for your business? They include:

  • Getting things done quickly – If you need a document signed, electronic witnessing will make it flexible and easy to use for all parties involved
  • Accelerates agreement completion – If you want to speed up the contracting process for your business, electronic witnessing will do just that 
  • Saves time and money – You can avoid the costs, errors and times involved with manual witnessing

So if you’ve been putting off discussing your legal documents due to lockdown restrictions or require documents to be signed in the presence of a witness by persons currently living outside of NSW, you don’t need to worry anymore. 

Lawpath online signature tool allows you to sign Lawpath documents online, send them to other parties for signing, or upload your own for signature.

5. The ease of travel restrictions is here 

With the ease of travel restrictions, foreign workers are once again welcome in Australia, which means you can now hire foreign employees for your business and grow together in 2022.

Now, many businesses like yours haven’t hired foreign employees for a while, and it can be, and it’s natural to wonder, ‘Have the laws changed?’ The answer is – yes. 

Don’t know how to start hiring foreign talent, not to worry. With the simple steps below, you’ll become a pro in no time. 

Firstly, as an employer, you must consider what type of foreign employee you wish to hire for your business. You can employ foreign employees in 3 ways:

  • Non-citizen in Australia already allowed to work – A non-citizen is an individual who is already in Australia. They already have a visa that will enable them to work, such as international students or working holiday visa holders
  • Non-citizen in Australia not currently allowed to work – This is an individual who is in Australia on another type of visa which doesn’t currently allow them to work that your business wishes to hire
  • Business sponsored – A business-sponsored individual is a skilled worker who lives overseas or temporarily in Australia for a work visa on a permanent or temporary basis

The second requirement is knowing what visa your employee needs. Now, this can be challenging since there are so many different options available, but the common types are:

  • Employer-sponsored visas – Allows skilled workers their employers have nominated to live and work full-time in Australia permanently
  • Skilled occupation visas – Available to individuals who are qualified to work or train in an eligible skilled occupation in Australia with full-time working rights 
  • Student visas – Available to students who participate in an eligible course of study in Australia for up to 5 years and must work up to 40 hours every 2 weeks once their studies begin
  • Working holiday visa – Available for individuals who want an extended holiday. They have full-time working rights for one employer for up to 6 months
  • Training visa – This allows an individual to participate in workplace-based training for up to 2 years with at least 30 hours of working per week
  • Partner visa – Partner visas have full-time working rights 

If you need more assistance, you can check your employee’s type of visa and what conditions apply through the Visa Entitlement Verification Online system (VEVO)

Finally, the most important changes in the law when hiring foreign workers that you need to know about is COVID-19 changes and requirements. With Covid-19 government regulations changing daily, it’s essential to keep up to date, but here is what you need to know now.

  • Vaccination requirements – Both vaccinated and unvaccinated employees can enter Australia
  • Australia Travel Declaration – All foreign employees must complete an Australia Travel Declaration before coming to Australia
  • Pre-departure testing – All foreign employees must provide a negative Covid-19 polymerase chain reaction (PCR) test. The results must be in paper or electronic form and should include the employee’s name, date of birth, test result, method and date of the PCR test
  • Testing and isolation requirements upon arrival – Vaccinated passengers must self-isolate until they receive a negative Covid-19 rapid antigen test or after 6 days of mandatory quarantine. Unvaccinated passengers must self-isolate until they receive a negative Covid-19 rapid antigen test or after a 14-day mandatory quarantine
  • Masks – Employees must wear a mask during their flight and in all Australian airports, and the airline will not let them check-in or board if they refuse to wear a mask

6. Affirmative consent laws

As an employer, workplace harassment is not something you should ignore. Inappropriate behaviour in the workplace can be detrimental and affect the morale, productivity, and performance of employees. 

However, with strong policies in place in your business, incidences of harassment can be handled effectively. A Harassment and Bullying Policy is the perfect way to inform your employees about what type of behaviour will not be tolerated in your business.

With recent reforms reinforcing that consent requires ongoing communication and that it should never be presumed officially passed in NSW, right now is the best time to update your workplace harassment policies

Updating your sexual and harassment policies in the workplace is the most effective way of communicating how complaints and reports should be made, as well as the consequences that may follow. 

With affirmative consent laws commencing in mid-2022, your business’s Harassment and Bullying policy should cover:

  • The new laws about consent and consensual sexual activity
  • Your business objectives and commitment to providing a safe space
  • What behaviour will be deemed as harassment or bullying, such as inappropriate touching
  • Clear processes for how employees should flag and report any instances of harassment and bullying

There is no better time to implement these new legal changes than now. Take action and protect your employees and your business.

7. A new bill to better protect SME’s from unfair contractual terms

Another new legal change that is on the horizon that your business should be thinking about is the legislative reforms to the Australian Consumer Law and the Australian Securities and Investments Commission Act 2001

The proposed reforms to the legislation aim to better protect small businesses from unfair contract terms (UCT). 

Your business will benefit from this as it reduces the frequency of unfair terms in standard form contracts. It will also improve confidence for small business owners like yourself when entering into standard contracts.

To better grasp what the draft legislation will do for your business, have a look below:

  • An unfair term may not be used, applied or relied upon in contracts
  • Making courts capable of imposing financial penalties for violations
  • Increasing the protections for small businesses
  • Increasing the existing protections to businesses from 20 employees to 100 employees

So if you want your small business to be protected from unfair contractual terms, it is a good idea to keep an extra close eye out for the legislative reforms and ensure that your business is always protected.

8. Ensure you’re operating within Covid-19 rules

It’s no stranger to us all that COVID-19 is here to stay. Keeping that in mind, there are new legal changes for small businesses. 

So whether you’re operating your business from home or your employees are returning to work, it’s important to remember that government regulations about Covid-19 are still in place in 2022.

The Covid-19 government laws change daily, and it is important to keep up to date. However, here are some of the most recent requirements: 

  • Isolation requirements – if your small business is in the food logistics and manufacturing industry and your employees are considered close contacts, they can leave self-isolation if they do not have any symptoms (Coughing, fever, sore throat). 
  • Masks – All employees over the age of 12 must wear a face mask in indoor areas (workplace) unless they have an exemption. If your employees are working from home, a mask is not required.
  • COVID -19 Safe check-in: If your employees are heading to work, they must check-in using your businesses COVID-19 Safe QR code 
  • Vaccination evidence – Most workplaces do not require proof of vaccination, but some premises may choose to only people to be fully vaccinated or to wear a mask as a condition upon entry
  • Notify Safework- You must notify SafeWork if a worker has contracted COVID-19 at work or was likely infectious in the workplace

Conclusion

To ensure that you and your employees tackle this year without a legal hitch, especially at the beginning of the year, make sure you’re up to date with all the new legal changes. 

Take the time now to consider the new rules above, so you know that your business will go in the right direction. 

Once again, below are the new rules to focus on: 

  • Employee share scheme changes to tax
  • Director identification numbers
  • New online privacy bill under careful consideration
  • Remote witnessing is here to stay
  • The ease of travel restrictions is here 
  • Affirmative consent laws
  • A new bill to better protect SME’s from unfair contractual terms
  • Ensure you’re operating within Covid-19 Rules

And if you’re still unsure about these new legal changes and how they may impact your business, feel free to hire a lawyer from our marketplace to give your worries a rest.

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