QRAMA Professional - Extracts February, 2001

e-Forms

From 15 January 2001, electronic versions of the Residential Tenancies Authority’s (RTA) approved forms – known as e-Forms – were made available free of charge on the RTA web site at www.rta.qld.gov.au.

By providing e-Forms free of charge, the RTA is improving the delivery of client services to all its stakeholders and meeting the demands of an industry moving more towards e-commerce.

The RTA designed the MS Word e-Forms to provide free and easy access to RTA forms, as part of its web site development. Clients can download the forms and customise them with their own business details on their computer screen (except signatures), print, and save to their business files.

E-Forms were developed using MS Word 97, as MS Word is the most widely used software program. Clients who wish to download the forms for inclusion in their own software can do so, and may choose to enter their personal details on each form and re-save them as templates for ongoing use. PDF versions of the RTA forms are also available from the web site.

The RTA has issued Terms of Use with the e-Forms, to notify clients that if they significantly modify the forms’ content and/or layout, the RTA has the right to refuse the completed forms. The onus, therefore, is on clients to update the forms consistent with directions issued by the RTA.

An accompanying disclaimer to the e-Forms states that:

the RTA is providing the templates free of charge
the forms have been created using Microsoft Word ’97
the RTA will not provide a Help Desk facility
if a client experiences any problems, they are to contact their software supplier or computer agent for information and/or assistance.

For software suppliers who download and imbed the e-Forms in their own software, the RTA will not endorse their products.

Existing customers of Forms on Disc will continue to receive support from Alan Liddle Pty Ltd (ADL), who will provide help desk support for each registered user for the duration of their existing client agreement. The RTA has assigned its interest in Forms on Disc to ADL. These customers can contact Alan Liddle direct for any software support. ADL have contacted Forms on Disc customers with further information.

Notice of future revisions of e-Forms – which will also be made available on the RTA web site – will be provided in the RTA’s industry newsletter Update, as well as other industry publications.

For clients who do not have Internet access, RTA forms are still available by:

calling the RTA’s forms ordering service on 1300 136 939
faxing the Request for Forms to (07) 3216 2258
posting the Request for Forms to PO Box 517, Virginia Qld 4034
collecting them from most Australia Post offices in Queensland (not all forms are available at APO).

GST on Sale of Businesses

By John Mahoney

Partner in Management Rights Specialist Law Firm Kinneally Mahoney

There have been some recent headline-grabbing reports, particularly in Gold Coast newspapers, about GST problems faced by sellers of management rights businesses. Some of the reports concern a private ruling about GST on a management rights sale transaction.

Remember though, a private ruling is limited to which facts, and how those facts, of a particular transaction are presented to the Taxation Office. You therefore have to be very careful about applying a private ruling across the whole spectrum of management rights sale transactions. Having said that, there are however at least some important points to come out of the ruling, none of which should be too surprising, that sellers and buyers of management rights should note:

1. To qualify for the sale of a going concern GST exemption, the seller must transfer to the buyer all that is necessary for the ongoing operation of the business

2. The right to occupy the manager’s unit (or an area of common property, the exclusive use of which attaches to the manager’s unit) is such a necessary item

3. Although the business contract is conditional upon the contract for the sale of the unit to either the buyer of the business or interests associated with that buyer, it is still prudent to state specifically in the special conditions of the business contract that the sale includes a transfer of the business seller’s right to use and occupy the unit. The unit contract should contain a similar acknowledgment

4. Ideally, when the manager and the manager’s unit are different entities, there should be a short written agreement of some description evidencing the manager’s right to occupy/use the unit. Such an agreement must address some key issues. Kinneally Mahoney have developed a concise plain English agreement that achieves this.

As a further safety measure, the latest version of the REIQ management rights contract includes a provision that should, despite the parties’ expectation that the sale is of a going concern and, therefore, GST exempt, GST is still payable, then it must be paid by the buyer. In that scenario, the buyer under normal circumstances would be able to claim the GST as an input tax credit.

Finally, a word of caution. GST is in its very early stages and a final ruling on the going concern provisions of the legislation won’t be available for another two to three months. Until then, sellers and buyers of management rights businesses should seek expert taxation advice from an accountant experienced in this area.

Unauthorised Use of Credit Cards:

Can you or can’t you?

Managers’ use of guest credit cards to pay for bookings or damages is a perennial issue that can be fraught with misunderstandings and financial risks if it is not administered properly.

Confusion over the use of guest credit cards is based on a lack of awareness of a manager’s right to charge a guest for damages discovered after the conclusion of the guest’s stay.

Can managers charge the cost of damages to the guest’s credit card?

The answer is yes, managers can use the guest’s credit card to cover damages provided the correct procedures have been followed. However, if the process is not documented correctly, managers may find themselves forced to reimburse the guest and cover the cost of damages themselves anyway.

There are often two outcomes of an unauthorised transaction, once guests’ receive their bank statement:

1. The guest may agree to the additional charge (usually by doing nothing), which means the manager (and hence the owner) retains payment for damages.

2. The guest may challenge the transaction on the grounds it was not authorised, by contacting the bank (and not the manager), at which point the bank will contact the manager and ask for valid grounds for processing the transaction without the cardholder’s consent. If the manager cannot convince the bank of the validity of the transaction, then the funds will be reversed out of the manager’s account.

Whether the first or second outcome occurs depends on the preparation of the manager.

To prepare for challenges to unauthorised use of credit cards for undisclosed damage by guests, managers should always have a guest registration card for guests to sign upon check-in, indicating their agreement to the accommodation conditions, agreement to settle all accounts, pay for any breakages and observe the Conditions of Booking.

“If managers do not receive signed authorisation for the use of a guest’s credit card, then guests can legally have their bank cancel any credit card transaction within 180 days,” said QRAMA Secretary John Anderson.

“A guest is entitled to reverse any situation where a guest’s credit card details are used without their approval to charge room expenses, such as damages or unpaid telephone bills,” he said.

QRAMA advises members to ensure all guests sign an accommodation registration card that clearly states all expense conditions. This could mean the difference between incoming revenue and out-of-pocket expenses.

If a charge is raised in this way, the manager should also write to the guest as early as possible and outline the damage, the basis of the costs and the action taken. Such a letter is not only good practice but keeps the initiative with the manager, is less likely to generate a hostile reaction by the guest and will be seen by the unit owner that the manager has the problem under control.

A similar situation can exist for phone deposits using a credit card. Although our conditions generally mean that the manager retains some or all of a deposit for a late cancellation, banks do not recognise our practices and treat us at hotels where bookings can be cancelled by 4.00pm or 6.00pm on the day of arrival without penalty.

To reduce the risk of the guest cancelling the deposit payment to recover funds from a manager due to some other dispute, it is wise to ask a g7uest who has paid a deposit by credit card to sign the voucher when they arrive before handing the guest the cardholder’s copy of the voucher.

There is little a manager can do to retain the deposit when a short-notice booking is cancelled in these circumstances and subsequently challenged by the guest. Fortunately, we meet mostly pleasant and reasonable guests and so the problem is minor.

	*Extracts from*	February, 2001
	*QRAMA PROFESSIONAL*

	e-Forms GST on Sale of Businesses By John Mahoney Unauthorised Use of Credit Cards: Can you or can’t you

e-Forms From 15 January 2001, electronic versions of the Residential Tenancies Authority’s (RTA) approved forms – known as e-Forms – were made available free of charge on the RTA web site at www.rta.qld.gov.au. By providing e-Forms free of charge, the RTA is improving the delivery of client services to all its stakeholders and meeting the demands of an industry moving more towards e-commerce. The RTA designed the MS Word e-Forms to provide free and easy access to RTA forms, as part of its web site development. Clients can download the forms and customise them with their own business details on their computer screen (except signatures), print, and save to their business files. E-Forms were developed using MS Word 97, as MS Word is the most widely used software program. Clients who wish to download the forms for inclusion in their own software can do so, and may choose to enter their personal details on each form and re-save them as templates for ongoing use. PDF versions of the RTA forms are also available from the web site. The RTA has issued Terms of Use with the e-Forms, to notify clients that if they significantly modify the forms’ content and/or layout, the RTA has the right to refuse the completed forms. The onus, therefore, is on clients to update the forms consistent with directions issued by the RTA. An accompanying disclaimer to the e-Forms states that: the RTA is providing the templates free of charge the forms have been created using Microsoft Word ’97 the RTA will not provide a Help Desk facility if a client experiences any problems, they are to contact their software supplier or computer agent for information and/or assistance. For software suppliers who download and imbed the e-Forms in their own software, the RTA will not endorse their products. Existing customers of Forms on Disc will continue to receive support from Alan Liddle Pty Ltd (ADL), who will provide help desk support for each registered user for the duration of their existing client agreement. The RTA has assigned its interest in Forms on Disc to ADL. These customers can contact Alan Liddle direct for any software support. ADL have contacted Forms on Disc customers with further information. Notice of future revisions of e-Forms – which will also be made available on the RTA web site – will be provided in the RTA’s industry newsletter Update, as well as other industry publications. For clients who do not have Internet access, RTA forms are still available by: calling the RTA’s forms ordering service on 1300 136 939 faxing the Request for Forms to (07) 3216 2258 posting the Request for Forms to PO Box 517, Virginia Qld 4034 collecting them from most Australia Post offices in Queensland (not all forms are available at APO). GST on Sale of Businesses By John Mahoney Partner in Management Rights Specialist Law Firm Kinneally Mahoney There have been some recent headline-grabbing reports, particularly in Gold Coast newspapers, about GST problems faced by sellers of management rights businesses. Some of the reports concern a private ruling about GST on a management rights sale transaction. Remember though, a private ruling is limited to which facts, and how those facts, of a particular transaction are presented to the Taxation Office. You therefore have to be very careful about applying a private ruling across the whole spectrum of management rights sale transactions. Having said that, there are however at least some important points to come out of the ruling, none of which should be too surprising, that sellers and buyers of management rights should note: 1. To qualify for the sale of a going concern GST exemption, the seller must transfer to the buyer all that is necessary for the ongoing operation of the business 2. The right to occupy the manager’s unit (or an area of common property, the exclusive use of which attaches to the manager’s unit) is such a necessary item 3. Although the business contract is conditional upon the contract for the sale of the unit to either the buyer of the business or interests associated with that buyer, it is still prudent to state specifically in the special conditions of the business contract that the sale includes a transfer of the business seller’s right to use and occupy the unit. The unit contract should contain a similar acknowledgment 4. Ideally, when the manager and the manager’s unit are different entities, there should be a short written agreement of some description evidencing the manager’s right to occupy/use the unit. Such an agreement must address some key issues. Kinneally Mahoney have developed a concise plain English agreement that achieves this. As a further safety measure, the latest version of the REIQ management rights contract includes a provision that should, despite the parties’ expectation that the sale is of a going concern and, therefore, GST exempt, GST is still payable, then it must be paid by the buyer. In that scenario, the buyer under normal circumstances would be able to claim the GST as an input tax credit. Finally, a word of caution. GST is in its very early stages and a final ruling on the going concern provisions of the legislation won’t be available for another two to three months. Until then, sellers and buyers of management rights businesses should seek expert taxation advice from an accountant experienced in this area. Unauthorised Use of Credit Cards: Can you or can’t you? Managers’ use of guest credit cards to pay for bookings or damages is a perennial issue that can be fraught with misunderstandings and financial risks if it is not administered properly. Confusion over the use of guest credit cards is based on a lack of awareness of a manager’s right to charge a guest for damages discovered after the conclusion of the guest’s stay. Can managers charge the cost of damages to the guest’s credit card? The answer is yes, managers can use the guest’s credit card to cover damages provided the correct procedures have been followed. However, if the process is not documented correctly, managers may find themselves forced to reimburse the guest and cover the cost of damages themselves anyway. There are often two outcomes of an unauthorised transaction, once guests’ receive their bank statement: 1. The guest may agree to the additional charge (usually by doing nothing), which means the manager (and hence the owner) retains payment for damages. 2. The guest may challenge the transaction on the grounds it was not authorised, by contacting the bank (and not the manager), at which point the bank will contact the manager and ask for valid grounds for processing the transaction without the cardholder’s consent. If the manager cannot convince the bank of the validity of the transaction, then the funds will be reversed out of the manager’s account. Whether the first or second outcome occurs depends on the preparation of the manager. To prepare for challenges to unauthorised use of credit cards for undisclosed damage by guests, managers should always have a guest registration card for guests to sign upon check-in, indicating their agreement to the accommodation conditions, agreement to settle all accounts, pay for any breakages and observe the Conditions of Booking. “If managers do not receive signed authorisation for the use of a guest’s credit card, then guests can legally have their bank cancel any credit card transaction within 180 days,” said QRAMA Secretary John Anderson. “A guest is entitled to reverse any situation where a guest’s credit card details are used without their approval to charge room expenses, such as damages or unpaid telephone bills,” he said. QRAMA advises members to ensure all guests sign an accommodation registration card that clearly states all expense conditions. This could mean the difference between incoming revenue and out-of-pocket expenses. If a charge is raised in this way, the manager should also write to the guest as early as possible and outline the damage, the basis of the costs and the action taken. Such a letter is not only good practice but keeps the initiative with the manager, is less likely to generate a hostile reaction by the guest and will be seen by the unit owner that the manager has the problem under control. A similar situation can exist for phone deposits using a credit card. Although our conditions generally mean that the manager retains some or all of a deposit for a late cancellation, banks do not recognise our practices and treat us at hotels where bookings can be cancelled by 4.00pm or 6.00pm on the day of arrival without penalty. To reduce the risk of the guest cancelling the deposit payment to recover funds from a manager due to some other dispute, it is wise to ask a g7uest who has paid a deposit by credit card to sign the voucher when they arrive before handing the guest the cardholder’s copy of the voucher. There is little a manager can do to retain the deposit when a short-notice booking is cancelled in these circumstances and subsequently challenged by the guest. Fortunately, we meet mostly pleasant and reasonable guests and so the problem is minor.
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