Welcome to our final newsletter for 2011. During the year, we have attempted to keep you abreast of issues we believe may have a significant impact upon the way you and your clients conduct their business via our monthly newsletters and breakfast seminars.
We invite you to download our previous newsletters from our website.
Perhaps one of the most significant changes affecting directors is the noticeable change in the ATO’s receivables and collection policies. In April 2011, James Shaw provided his insight into strategies for successful repayment arrangements with the ATO, factors the ATO take into account when considering whether a business is viable and when the ATO should work with a tax payer to avoid insolvency.
In August 2011 we again visited the proposed amendments to the Director Penalty Notice (“DPN”) Regime and other far reaching changes impacting upon director’s personal liability for unpaid company tax and superannuation.
The ATO is the most common and often substantial creditor across insolvent estates, whether personal or corporate. The ATO is seen as an easy and cheap source of short term funding when cash flow tightens and an easy creditor to delay, sometimes without penalty. It was reported in the Australian Financial Review recently that money owed to the ATO by insolvencies had increased 20% to nearly $5 billion in the past year.
Whilst changes to the legislation have been delayed, the amendments are currently being considered by Parliament and it is expected that implementation is imminent. The major amendments include:
These amendments are intended to counteract the increasing level of fraudulent phoenix activity and to encourage directors to become more aware and accountable for outstanding tax liabilities.
In February 2011, Ben Irving, Manager in our Port Macquarie office, provided strategies for your clients to consider in avoiding or mitigating loss arising from an unfair preference claim bought by a Liquidator. Perhaps the key insight is that your client should recover it’s debts by whatever commercial means are available. The preference claim may never arrive and if one does its best to have recovered the debt and then address the alleged claim. Other strategies your clients may consider are:
In March and September 2011, Paul Gidley analysed the emergence of business turnaround advisers whom focus on rescue plans for small businesses in Australia. Paul provided an insight into what turnaround activities involve, the legal framework regulating turnaround activities and elements that are critical for a turnaround plan to be successful.
In June 2011, we invited a guest author to provide us with Leading Indicators to Employee Engagement, which is widely agreed as being one of the major drivers of business performance. Oliver Christen, director of Shirlaws also presented at a Shaw Gidley breakfast seminar providing key findings in recent research surrounding employee engagement.
Jeff Shute, Manager of our Corporate team in Newcastle, issued a two part series updating us on the personal exposure risks faced by directors including insolvent trading, personal guarantees, unpaid workers compensation premiums and payroll tax liabilities. It is evident that directors are becoming personally exposed to a much higher degree as it seems the corporate veil is lifting.
Finally Ben Ismay, Manager in our Port Macquarie office, delved into the world of Corporate Trading Trusts and the impact upon Trustees and beneficiaries, in the event a trading trust becomes insolvent as, of the recent decision in Apostolou v VA Corporation of Aust Pty Limited
Unfortunately it is a historical fact that many businesses will decide to close their doors in the weeks leading up to Christmas. Directors and business owners who have fought to keep the doors open throughout the year will often declare insolvency in the month of December as the holiday season approaches and they form the view that they cannot continue solvently into the New Year.
Other commercial reasons may stem from: -
If you believe any of your clients may be experiencing financial challenges please do not hesitate to contact us as we can provide invaluable and empathetic advice which often makes Christmas a little more bearable.
Finally, to all those who have supported Shaw Gidley over the last 12 months and before, we wish you all a very Merry Christmas and Happy New Year and thank you for your ongoing support.
Our offices will be closed from 12 noon 23 December 2010 and re-open on 3 January 2011. During the close down period we will have sufficient staff to deal with any new or current matters that remain active throughout the holiday break.