Category Archives: Legal

General information on legal issues that could affect your business. We provide general discussion so you can seek professional advice from your legal advisor.

What is an Indigenous Business? The Many Definitions Are Confusing

Indigenous Business 50% or 51%
Indigenous Business 50% or 51%

So one would think that there would be a standard definition of what is an Indigenous business. Well unfortunately there is no single definition in Australia that is legislated as to what defines an Indigenous business. This creates much confusion for those wanting to seek out an Indigenous business as a supplier or to meet their contractual requirements such as under the Indigenous Opportunity Policy (IOP).

So before we go any further lets first clarify the definition of an ‘Indigenous’ person. Australia considers an Indigenous Australian to be someone who is

So what defines an Aboriginal or Torres Strait Islander person? We will use the Australian Bureau of Statistics definition adopted from Australian legislation. I have highlighted the key words

  • a person of Aboriginal or Torres Strait Islander descent,
  • who identifies as being of Aboriginal or Torres Strait Islander origin and
  • who is accepted as such by the community with which the person associates”.

So lets begin with the first definition that was around with Indigenous Business Australia (IBA). IBA has the following criteria for a business to be identified as being an Indigenous business.

  • at least one applicant must be of Aboriginal and/or Torres Strait Islander descent
  • at least 50 per cent of the ownership of your business must be by a person(s) of Aboriginal and/or Torres Strait Islander descent.

Okay, so IBA, a Federal Government agency, uses the definition that an Indigenous business is at least 50% owned.

We now go to Supply Nation, who provides ‘certification’ for being an Indigenous business. There definition is as follows to be a certified supplier or Indigenous business

  • Ownership – at least 51 per cent ownership of the company by an Indigenous Australian(s).
  • Management – the company is led / managed by a Principal Executive Officer who is an Indigenous Australian.
  • Control – the key business decisions regarding the company’s finances, operations, personnel and strategy are made by an Indigenous Australian(s).
  • For profit – the company is able to distribute its equity to members.
  • *Trading as a business – with a minimum annual revenue of $50,000.00 and a demonstrated recent history of trade (ideally, at least 6 months trade history).
    *If your business has low turnover (less than $50k) or is a start up (no trade history), then please refer to the Emerging Supplier section.
  • Business is located in Australia

So Supply Nation uses the definition as being at least 51% owned. This is important to know as Supply Nation (formerly known as Australian Indigenous Minority Suppliers Council (AIMSC)) is listed in the Indigenous Opportunity Policy as a reference point for Indigenous business.

So who else has a definition? Well the Queensland Government has its Black Business Finder (BBF) which is used by the Industry Capability Network (ICN) for contractors to source Indigenous businesses for major contracts. Note, that in order to be eligible to tender and work on these major projects, you have to be registered with ICN. So, Indigenous businesses are required to be listed for identification on the BBF. So BBF has for its definition

“Businesses defined as an Indigenous business are:

  • a majority-owned Indigenous business.
  • a 50% owned Indigenous business.

A non-Indigenous business that employees at least 75% of Aboriginal or Torres Strait Islander workers is eligible to register on Black Business Finder.”

Confused yet?! The Black Business Finder, which is required to be used by major contractors to source Indigenous businesses includes in its listings businesses that have 75% Aboriginal and or Torres Strait Islander workers. Do we need to go further as to what the definition of “75% workers” is? Does it mean 75% of the workforce? 75% of total wages? 75% wages/workers for the year? 75% of the wages/workers for the project life? This begins to create more questions then it answers. It is especially confusing for a company contractually bound by the IOP to source Indigenous businesses and they are required to use this register, yet they are not assured by the register the business meets the IOP requirements.

So are only government organisations limited to having different definitions? The short answer is no!
At the time of writing I am unable to find the membership application for Aboriginal Enterprise in Mining, Energy and Exploration (AEMEE) to locate their definition. But their historic position on being an Indigenous business was that if you say you are an Indigenous business, then you are accepted to be so.

Pilbarra Aboriginal Contractors Association (PACA) in their Review of Contractual Arrangements Between Australian Aboriginal Enterprises and the Resource Industry (2010) identified 25% ownership as their definition of being an Indigenous business.

In conclusion, there needs to be a single legislated definition of an Indigenous business. I sympathise with those organisations that are seeking Indigenous businesses but have to battle with this definition. In my opinion in a professional capacity, I see the definition of 50% Indigenous owned as being the best step forward. I see this as the opportunity for Indigenous business to grow through 50/50 joint ventures or partnerships. Think of the number of husband and wife partnership businesses where one is non Indigenous. Once there is an adequate and stable supply of Indigenous business that meet the requirements of capability and capacity to service corporate and government procurement, then there can be a transition to the 51% definition.

The employment percentage, to me, does not stand as an adequate definition as this is subjective and can be easily manipulated. If we used the definition of whether a company in Australia was an Australian business using the employee as a definition, then the majority of companies owned by overseas owners would be classified as being Australian owned because they employ Australian workers. Ownership is shareholding, not employment.

Please note I use organisations and their definitions as examples of where there is no consistency in defining an Indigenous business. At the time of writing, I myself am a member and Director of the South East Queensland Indigenous Chamber of Commerce (SEQICC) that uses the Supply Nation definition of 51%, but also a member and President of the Indigenous Construction Group Australia (ICGA) that uses the Indigenous Business Australia definition of 50%. When I am asked what is the definition of an Indigenous business, what would be my answer?

*UPDATE: On the 31st July 2014 the “Forrest Review” by Andrew ‘Twiggy’ Forrest on Indigenous Employment and Training was made public. As part of this, the review identified the significance of Indigenous business in contributing to employment outcomes and economic development. As part of the recommendation, the review gave the following part of its criteria for an Indigenous business for the purposes of being eligible for tax free status as being ‘…. At least 25% Indigenous ownership and board membership….’.

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Brisbane Lord Mayors Economic Development Business Forum- Rapid Business Growth

The night was one of two excellent speakers. Both young at age 36. I also invited along with me a young entrepreneur in the making. Dean is 25 and wanting to learn about business. I am glad I invited him to attend this particular forum.

Ian Davies, Managing Director and CEO of Senex Energy gave an excellent presentation of how he took a public company with $20m turnover in 2010 to become a $200m turnover business in 2014. All of this from a man who is only 36 years old. Ian noted the struggles his company faced as an energy explorer, from a flood wiping out roads and bridges and having to build new ones. To then be hit by another flood that wiped out that road and having to build another one higher. Some of the key points I took away from Ian’s presentation

  • Systems and Procedures– Ian noted that once you start to grow a business, the importance of systems and procedures becomes even greater to ensure the business is running course. Growth means more people, increasing the need to manage them more efficiently and keep them on course with a given framework of how the business is to operate.
  • Mentors– Ian as a young MD and CEO was targeted early by his now mentor to take on his current position. He quickly had to learn about all facets of the business. Ian stated that he is not a geologist, but he can talk with the best of them from his having to understand the core business of exploration. He did this by finding mentors whose knowledge and experience he could draw upon.

Anthony Yap, Managing Director of Good Price Pharmacy gave an inspiring presentation. From the time he left university aged 21 Anthony had one ambition, to own his own pharmacy. He started as a manager at a pharmacy working tirelessly to learn about how they ran their business. In one year he had purchased his first pharmacy. That quickly began to grow in numbers where the second pharmacy he bought for $270k he sold one year later for $1.2m. Anthony also told of his fight against a major competitor who setup a discount pharmacy only doors down from his own. At a meeting with his competitor, they told him they had the budget to drive him out of business. Anthony stood his ground to now run 44 stores. Some of the key points I took away from Anthony’s presentation

  • Systems and Procedures– This was the first thing Anthony learnt about while managing a pharmacy. He wanted to know every process that was involved in running a pharmacy so he could implement them into his own. This is how he could buy a business for $270k and sell it one year later for $1.2m.
  • Passion and Persistence– You need to be hungry for business to drive you to work at it. Anthony was asked “How do you know if you have a passion for business?” his response was “If you have to ask yourself that question then you don’t have the passion”. Persistence is what got him his first store and allowed him to endure the ordeals of his competitors.
  • Directors and Shareholders Agreements– As one of 4 partners initially, Anthony went through the ordeal of buying out his partners where there was no partnership agreement in place setting out the agreed buy out/exit procedure for a partner. This cost both time and money, taking a toll on the business.

 

How To Find The Right Networking Event For You

So you want to meet new people to network with. But where are they? And which is the right one for you?

Ideally, ask someone you know who is already networking to give you some ideas on where to network. Meet Up, for example, is an online place to find where people are meeting for different interest groups in a particular area. I strongly recommend this if you are new to anything, anywhere!

Below are some different organisations and types of ways to network.

Speed Networking | Chamber of Commerce | Business Networking Inc | Sporting Clubs | Exclusive Clubs | Industry Events | Meet Up | Art Exhibitions | School Events | Community Events and Organisations | Private or Exclusive Events | Online Forums and Communities | Social Media Linked In- Twitter- Facebook | Volunteering | Lions Club | Quota | Rotary | Seminars and Workshops | Book Clubs | Cooking Classes.

Remember, networking means different things to different people. Ask yourself the following questions

1. Who am I wanting to meet/what is my purpose? Business or pleasure? Are you wanting to meet new clients; new suppliers; new friends; colleagues from your industry; mentors; new business partners; investors; employees; people who are in a particular industry or have common interests? Don’t always assume that for business you need to go to events where only your potential clients are.

2. How many networking events do you want to attend each week or month or year? How frequently do you want to attend any one networking event? I can literally go to a networking event every day for almost every day of the year. But I wouldn’t get much work done if I did!

3. What are my limitations? Cost? Travel time/distance/location? Time to attend? Time to contribute to the organisation? Some networking events cost money to attend, not including the additional costs of meals, drinks, contributions etc. Where the event is and the time commitment to attend is also a factor. Some networking events are not just networking but also part of an organisations official meeting.

Networking is about meeting people. Don’t immediately dismiss an event because those attending are not the people you want to meet. Getting to know these people and making them a part of your network might open you to other people who you are wanting to meet.

If you want to find me, I have my “Where I Will Be” page letting people know what events I am attending for business. I also link a little blog I do on the event as well.

Personally, I use Meet Up to meet new people once a week for both the personal and professional interaction. I have made this part of my goals for 2014.

So now you can find events to network at. But what do you need to do to start networking? Find out in my next post!

~ Damien Foley

Brisbane Lord Mayors Economic Development Business Forum- Building an Online Presence

I am in the process of having a provisional patent done for a phone app idea I have. So this was a great event to attend to find out more about why business should have an online presence in our global online economy and what is being done in Brisbane to promote our IT innovations.

George Fidler, General Manager of Kixeye, gave his experience as a start up IT business. What I took away from George is that you have to persist. You learn more from your mistakes then you do from your successes. And as a result your mistakes make your business stronger. I agree, if you are going to make mistakes, make them early in your business life and make plenty of them. If you don’t make mistakes, then you aren’t pushing your limits! George also made reference to the book “Lean Start Up”. In talking to George after the presentation, he again gave me the advice to read this book (or listen as an audio!) for my future phone app project. He also gave me the advice to find a programmer to work on my project referencing the IT incubator, River City Labs, as a starting point.

Bob Dunne, Principal at Strateneering, gave his story of how he started capitalrater.com. He initially started with a local focus of Sydney and Brisbane but quickly expanded it to be a global provider. He doesn’t understand why anyone in business isn’t online and looking beyond their local geographical boundary. Business is made easier with the internet! I asked Bob on his advice on putting together a start up IT team and who he would bring on. He said he would bring in people he already knew, who complimented his own skills and had the ability to go into a start up business.

Kieran O’Hea, Brisbane’s Chief Digital Officer gave an interesting, but rushed, presentation on both the digital economy and Brisbane’s role in this. For Example, over 66% of people in Australia have a smart phone and use its additional features. 41% of phone users over 50 have a smart phone. Hopefully the organisers will send out his slide presentation!

At this event I met some other interesting people

Jim is the Development Executive at Scan Conversion Services. He assists organisations to convert their paper documents to an electronic document on mass. Handy if you have documents that need to be stored in electronic format.

Jeanette is a Business Development Manager from Commonwealth Bank. It was good to meet Jeanette as I want to find out more about her role on the Not For Profit Working Committee of the Institute of Chartered Accountants Australia (ICAA). Foley Business Management is a service provider to the NFP or Social Enterprise sector.

Clinton is a Patent and Trade Marks Attorney for Cullens. Clinton was incredibly helpful discussing the benefits of having a patent for IT ideas you are wanting to take to concept and then taking it to a full patent. Clinton is someone I will likely be wanting to talk to when I develop a working concept of my phone app.

To find out what other events I will be attending in the future go to my Where I Will Be page.

~ Damien Foley

‘Sham Contracting’ – The Difference Between Employee & Contractor

'Sham Contracting' ContractWith tighter times there is more pressure on workers to get an Australian Business Number (ABN) to become contractors to get work. ‘Sham Contracting’ is where a worker who is really an employee is working under an ABN as a contractor. The worker may ask to do this for the better pay or the employer may ask for it to reduce the costs and liabilities of employment. As a contractor, you are not able to receive the benefits of an employee such as unfair dismissal as it goes to the contract agreement terms to resolve. But should you be a contractor? And what are the implications for both the worker and the employer if you do but you’re technically not?

What The ATO Says

The ATO has guidance on whether you’re an employee or a contractor. Below are some of those guidances, or click here to go to the ATO website.

1. Control Over Work: An employee is directed by their employer in how the work is to be carried out. A contractor is, per the terms of their contract, able to carry out the work as they see fit.

2. Ability to Subcontract/Delegate: An employee cannot contract in someone else to carry out the work. A contractor has the ability to subcontract the work to someone else or get an employee to do the work.

3. Basis of Payment: An employee is paid on time; or price per unit/item; commission. A contractor is paid to deliver an outcome per the agreement.

4. Equipment, Tools and Other Assets: An employees equipment, tools and other assets are supplied by the employer. The employee may provide most of their own tools but they are paid an allowance or reimbursed the cost of the equipment to do so. A contractor supplies almost all of their own tools to carry out the work. They are not reimbursed or receive an allowance for this cost.

5. Commercial Risk: Commercial risk is liability over the legal reponsibility of the work and repair or cost of any rectifications. An employee takes on little if any of the commercial risk, this is taken on by the employer. A contractor takes on all of the risk subject to the agreement.

6. Independence: An employee is not independent of the business. They work for the business and under the direction of the employer. A contractor is independent of the business with their own business. They can accept and refuse work, negotiate terms of the contract and are only obligated to carry out work that delivers the outcome of the contract agreement.

Consequences Of A Contractor Who Is Actually An Employee

If you are using someone and treating them as a contractor and they are actually an employee, you may

  • Be required to pay their supperannuation. This includes any penalties for late payment or legal liability if you are a company director.
  • Have to pay for any unpaid Pay As You Go (PAYG) Tax Instalments, including fines, penalties and interest.
  • have to pay unpaid Workers Compensation. If the person is injured at work and you have not been paying workers compensation insurance, you could face legal and financial problems.
  • Have to pay Payroll Tax on payments. This could include any fines, penalties and interest.
  • Have to pay allowances or benefits required under Enterprise Bargaining Agreements or Awards. This could include tool allowances; travel allowances; meal allowances; time and half and double time penalty rates. Plus any superannuation, PAYG Tax and or Payroll Tax on these allowances and benefits.
  • Have to accrue or pay for leave entitlments such as annual leave, sick leave, Rostered Days Off (RDO), and long service leave.

Future Changes

The Australian Federal Government has discussed possible additional conditions or tests to be met to determine if a workers is an employee or a contractor. Part of this is the introduction in 2012 of the ‘Taxable Payments Annual Report’ reporting requirements for businesses in the building and construction industry to report on contractor payments to assist the ATO to identify sham contracting.

How Does This Affect You?

The above information should not be relied upon. If you are concerned about whether you are a contractor or an employee, or if you are being asked to get an ABN to work, or you are wanting to put someone on and don’t know if they can be contracted with an ABN, then speak to your accountant; tax agent; and or legal advisor for advice.

~ Damien Foley

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