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Taking Notes at Bank Meeting
In a recent case, a businessman sued his bankers for false and misleading conduct.
In early 1997 he became aware of three adjoining parcels of land coming up for auction in one week??s time and decided to approach a bank for finance.
Mr P saw Mr Q but they each had a different memory of what happened at their first meeting. According to Mr P, he told Mr Q that he needed a loan to buy the land and a further loan to construct about thirty units on it. He recalled that Mr Q told him that the best way to go about the loan would be to take out a housing loan to buy the properties, and to later apply for a development loan to finance the actual construction.
The loan was approved and Mr P purchased the properties.
When it came time to undertake the development, the application for finance was refused. The holdings were sold but there was a shortfall of approximately $300,000 and the bank sued for that. Mr P cross-claimed, arguing that he was mislead by the bank and that the bank should pay damages to him. Mr P essentially claimed that Mr Q gave the false impression that it was appropriate for Mr P to apply for a housing loan in the first instance and there was the prospect of a development loan being approved later.
Neither Mr P nor Mr Q took any notes of the initial conversation. In his judgement, the Judge said that he was sceptical of the ability of any witness, however intelligent, honest and careful, accurately to record the detail of any unrecorded conversation that occurred eight years earlier.
His honour then had to decide whether to accept the version of Mr P or Mr Q. He analysed what each witness said in the witness box and the surrounding circumstances and in respect of the bank officer he said:
??I am always reluctant to make a finding that person has acted deceptively, and given false evidence. However, I have concluded that such a finding must be made against Mr Q.??
The Judge therefore accepted Mr P??s evidence that he had informed the bank about the proposed development and that the bank through Mr Q, had indicated that he could apply for a loan later.
If notes had been taken at the initial meeting by either Mr P or Mr Q, it may be that the dispute would have been resolved much more quickly and at a lower cost. Therefore where matters of significance are discussed such notes should be made immediately after the meeting, dated and signed.
Nil Assessments
Until some recent amendments to the taxation law took effect, a nil assessment was not restricted to the normal 4 year time frame for amendment that applies to the ATO. Instead the ATO could make audit adjustments to any assessment where no tax is assessed. The government has now changed the law so that in relation to assessments for the 2005 tax year and subsequent years are now subject to the same 4 year time limit as would of applied if an amount of tax had been assessed on the notice from the ATO.
This is great news for taxpayers as it now means that a much greater level of security exists in relation to a notice of assessment received with an amount of tax assessed of nil.
If you have any questions in this matter please do not hesitate to get in contact with your usual contact at the firm.
ATO concessions to encourage record keeping
In a ??business friendly?? development, the ATO is trialling the giving of concessions to small business groups to encourage proper record keeping.
It has started with a national franchise group in the retail sector ?? Brumby??s Bakeries. The Tax Office said this group was deemed suitable due to the regular reporting arrangements already in place between the franchisee and franchisor.
Concessions provided include:
- Reduced period of retention for business records for tax purposes ?? from 5 to 3 years;
- Less likelihood of intrusive reviews or audits;
- Concessional treatment in relation to penalties where the businesses have made a genuine attempt to comply i.e. no penalty where a genuine attempt has been made to improve records, and a 75% remission where some effort is made.
The ATO says this proposal is the first of its type and is being conducted on a trial basis for 6 months. The Tax Office will evaluate the benefits of the arrangement when the trial has been completed.
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A New Year ?? A New Financial Plan
Equity markets, property markets, cash, fixed interest?? Which one to choose in 2006? Only a qualified financial planner can answer these questions for you. In fact, it is not legal for a person that is not properly licensed by ASIC to provide such advice.
We recommend you contact your financial planner for advice annually in these areas. If you do not have a financial planner, please contact us as our firm is able to assist you and contains properly licensed staff authorised by ASIC to help you in these vital areas. The old adage of ??fail to plan ?? plan to fail?? is most true in relation to your investments.
Please give us a call either side of Christmas to make a time to progress these matters.
Christmas
As has been the custom of this firm for many years, we do not send Christmas Cards to clients. We instead donate the cost of sending cards to the Salvation Army for that organisation to use in its valuable work within the community. We trust that you share with us the merits of using funds in this way and we therefore take this opportunity to wish you a peaceful and restful holiday season.
We look forward to serving you again in 2006 and as always, we ask only that if you have any concerns in relation to any matter where you feel we can assist, you take the time to call your usual contact at the firm to allow us to serve you. Indeed if you have friends or colleagues that could benefit from our services, please let us know.
Please note that our office will be closed for the Christmas break from close of business Thursday 22 December 2005 and reopen Monday 9 January 2006. Best wishes for the festive season.
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