Proposed new laws – Personal Liability for Phoenix Companies

The move by regulators towards more personal liability for company directors continues.  Again the focus is on Phoenix Companies and Personal Liability.  Directors received a reprieve on other proposed new laws but Treasury recently released an Exposure Draft for proposed new laws for “Phoenix and Other Measures”.  They’re interesting amendments.  They won’t catch all Phoenix activity, and won’t be too difficult to avoid for the slightly tricky Phoenix operator, but it is a further move to personal liability for some directors. Click Here To Read More

Extra Director Personal Liability – a reprieve as new laws delayed

I’ve banged on about the proposed new Director Personal liability laws in numerous blogs in the past few months and how Treasury was pushing them through based on a few furphies.  The legislation was before Parliament this month.  Well directors can breathe a little easier … for a while.  It was announced this week that the legislation had been withdrawn but will be reintroduced in early 2012.

You’ll recall that the laws would have dramatically increased the prospect of automatic director personal liability for tax debts – don’t lodge your Quarterly BASs for three months then a director would have been automatically personally liable for PAYG and Super contributions.

I’ve expressed some firm views on this topic.  Click Here To Read More

Insolvent Trading Laws – broken, yes, but changes shelved

In 2010, it was announced that the Government would review Australia’s insolvent trading laws, which are amongst the toughest in the world.  In brief, the law currently says that if a company is insolvent and the directors allow the company to incur new debts, then the directors can be personally liable for those new debts.  It was recently announced that the proposed changes, which would have put Australia on a similar footing to other countries, have been shelved.

Let me make my view clear – Australia’s insolvent trading laws are completely flawed.  Let me explain. Click Here To Read More

Director Personal Liability for Tax Debts – the ATO and Treasury furphies

New legislation is currently before Parliament to dramatically extend Director personal liability under the Director Penalty Notice.  I think the legislation is well founded but, make no mistake, it is a very significant legislation and I remain dismayed at the reasons being proposed by the ATO and Treasury in support of the legislation. Click Here To Read More

A warning for your lazy clients – Director Information Sheet now available

I mentioned a month ago that Accountants needed to warn their clients of the impending changes to the Director Penalty Notice  regime – in brief, there is a substantial move towards automatic director personal liability for company PAYG and Superannuation Deduction liabilities.

I’ve prepared a Director Information Sheet at www.dissolve.com.au/director-info-sheet which is designed to provide Public Accountants with some ammunition to send to their …. recalcitrant… clients.   Click Here To Read More

Changes to Director Penalty Notice legislation – warn your clients now!

I’ve now reviewed the proposed changes to the Director Penalty Notice  legislation.  It is not law yet, but it is likely to be law in the not too distant future.  And make no mistake:  this is a very significant move towards automatic director personal liability for company PAYG and Superannuation Deduction liabilities.  I haven’t seen a change of this significance since Noah was in Sea Scouts.

I’ve provided a summary below.  There is a lot to cover so, in the next week or so, Dissolve will be publish an Advice Guide so that Accountants and Lawyers can inform their clients of the new world of director personal liability for tax debts. Click Here To Read More

Insolvency Reform: Some good ideas and one clanger!

Last night, the Government released its Options Paper on Insolvency Regulation.  The main thrust of the reforms is to weed out rogue operators and reign in liquidators’ fees.  The Paper has a number of good proposals and one clanger of a bad one.  Firstly, the good ideas:

• Creditors being given the power to remove a liquidator by way of a vote rather than a Court application – seems reasonable to me;
• Measures to constrain liquidator’s fees including creditors being able to set a cap on fees and easier methods for creditors to object to fees - all reasonable and already largely applicable for liquidators that are members of the professional body, the IPA;
• Harmonisation of company and personal insolvency provisions – again, seems reasonable;
• Measures to encourage more price (fee) competition – At Dissolve we saw this one coming a long time ago, so we already conduct the majority of our new jobs on a Fixed Fee basis.

And the “Clanger”?  At present to become a Registered Liquidator an applicant must meet educational standards and have at least 5 years professional insolvency experience.  A proposed option to “expand the scope for insolvency entrants” is that a person be eligible for registration as a liquidator if the person is an Australian Lawyer or if they have an MBA and 5 years commercial experience – but this requirement would “also not require any minimum level of experience in performing insolvency administration tasks”.  So read that carefully…. if you are an accountant you need 5 years insolvency experience to apply to be a Registered Liquidator … but if you are a Lawyer or an MBA you can apply if you have 5 years commercial experience (read that as no insolvency experience!!).

If that option is accepted you can expect a rush of MBAs and Lawyers into the insolvency profession who have no insolvency experience.  That will certainly expand dramatically the competition amongst Liquidators and drive fees down  – unfortunately it will also lower professional standards dramatically and give ASIC a bundle more work in supervising, and disciplining, at least hundreds and perhaps thousands of new Liquidators.  If the objective is to improve standards and weed out rogue operators I am struggling to think of a worse option.

Cliff Sanderson
Registered Liquidator
Dissolve