More Answers to Common Questions From our Hotline
As you’re probably aware we run a popular Insolvency Hotline. Whilst the actual appointments are down – the calls keep coming in.
Here’s an update on some common questions we are receiving at the moment, and our answers.
What’s happening with Insolvent Trading?
Good Question! Currently the official answer is Insolvent Trading laws are paused until late September 2020. If a company has incurred debts that it cannot pay (in the ordinary course of business) from 25 March to 25 September 2020, the directors cannot be held personally liable for insolvent trading. So does that then allow open slather for a director to incur debts … no. There are still many other laws that a director could breach, with the main being Section 180 which requires a director to exercise due care and diligence.
Rumour has it that the government is poised to extend this period, but there has been no official announcement yet.
What if I Don’t Qualify for the next round of Jobkeeper?
Directors should be aware of the eligibility changes under Jobkeeper 2.0. If the changes mean the company loses the government Jobkeeper support, there’s a very real chance it could become insolvent right around the time Insolvent Trading law kicks back in. We’ve had quite a few calls from directors preparing for this eventuality by starting the liquidation process now.
What is happening with the ATO?
From all reports the ATO are on a go-slow on chasing tax debts. One exception we have heard a few times now is that they are imposing personal liability on some directors issuing lockdown director penalty notices directly onto the director’s tax portal. In some cases, the directors claim that they didn’t receive a letter or any notification, they just noticed the DPN by logging into the ATO portal. Remember the ATO can issue a “lockdown” DPN for unpaid PAYG or superannuation that was reported more than 3 months late (or not at all), even if the company has been through a liquidation.
Any Specials for COVID Related Closures?
Yes, if you have a client that needs a company liquidation for a small company with no assets where closure was caused by COVID, we’ll do the liquidation for a fixed upfront contribution of $4,400. Conditions apply, please call to confirm eligibility.