QLD My business partner is threatening to sue me if I inform the ATO of wrong doings in our business

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NeedHelp77

Active Member
4 December 2022
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I am in a partnership governed by terms and conditions of the partnership. My business partner promised me that he would change the tax structure of the company once I become a shareholder and pay him the money.
I did that but he has failed to take any steps to rectify the company tax position. He is making wrong and false tax claims. I want to inform the ATO but he is now threatening to sue me if I contact the ATO. He is saying that the terms and conditions of the partnership strips me from my rights to contact the police or ato or any other organisation.
My question is: could any agreement overrides the law? In other words, could any agreement force me from doing the right thing as an australian citizen?
 

Tim W

Lawyer
LawConnect (LawTap) Verified
28 April 2014
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He is saying that the terms and conditions of the partnership strips me from my rights to contact the police or ato or any other organisation.
That is a lie.
My question is: could any agreement overrides the law? In other words, could any agreement force me from doing the right thing as an australian citizen?
No.
 
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NeedHelp77

Active Member
4 December 2022
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31
That is a lie.No.
Thank you.

Do you by any chance know what is the law that governs this in particular?
I mean there must be some sort of Act or similar that says the Law in Australia overrides any agreements or terms and conditions. Thank you
 

Tim W

Lawyer
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28 April 2014
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It's part of the general law of contract
that no term of a contract can be valid
where that term purports to require an unlawful act.
 

LostEcho

Well-Known Member
3 April 2023
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That sounds like a challenging situation. If I were in your shoes, I’d feel pretty torn, too. It’s never easy when business and personal ethics clash, especially with a partner involved. If you're considering going to the ATO, it might be worth considering all the potential outcomes. Your partner’s reaction is a big concern, but so is your peace of mind. Maybe it’s time to step back and evaluate what’s important to you. If things are feeling this tense, it might even be worth looking into list your business for sale to start fresh.
 

ClarenceJames

Member
28 August 2024
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What sort of money are you talking about? About 5 years ago I had a dispute with a business partner over missing money, dodgy practices etc. I was reasonably confident of winning because there was strong written proof. But the court action to resolve this commercial dispute ended up costing me 6 figures. I got the costs back because I won, but I I had lost I would have had to pay the other side's costs - so 2x the legal costs. Even when I had strong proof, spending that kind of money was a gamble. With legal action, you have to weigh up the cost Vs the amount you could win Vs the strength of your position. For example: Did you have a written contract? You say "My business partner promised me that he would change the tax structure of the company once I become a shareholder and pay him the money.", which infers to me it was a promise (verbal) not a written contract. If it was a verbal promise, how could you prove that in court? Apart from that, there is a doctrine called the "Unclean hands doctrine" which means any condition or agreement which breaches the law is unenforceable in court. I.e. you could never be successfully sued for a breach of contract if the contract term breaches the law.