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According to an ATO report, a high proportion of high-profile groups have governance processes and procedures which are mostly undocumented.

To the end of August 2022, the ATO reviewed 5300 transactions, activities and events of the Next 5000 private groups which are valued at over $22 billion. Next 5000 groups often contain a dozen or more entities, which may include companies, trusts and self-managed super funds. Many of these businesses are established, multigenerational family-run concerns.

The move recommended is a more consistent tax governance framework for these entities.

Source:  PublicAccountant

According to Amanda Rose, founder of Small Business Women Australia, the government’s proposed IR reforms could be damaging to many SMEs and potentially threaten the continued viability of the more such vulnerable entities.

Any whole of industry bargaining scheme fails to take into account individual challenges of businesses, especially in finding and retaining employees especially in a tough market still recovering from the business effects of COVID. Wage increases may also be unsustainable and profit margins are already low with increased debt levels.

This reform could not come at a tougher time for SMEs, with landlords trying to recover COVD rent relief, ATO collecting tax debts and cost of money increasing, small business owners must go into the Christmas period taking care and using the ‘summer break’ to review and plan ahead for 2023.

Source:  Public Accountant News

Accountants have led the way in helping clients find alternative sources of finance, which has helped grow a whole new sector of non-bank finance.

Clients seeking funds see their accountant, who helps to work out their best possible solution. Some such as Assetline Capital have lent over a billion dollars in tailored credit. They’ve also introduced a 30-year debt product.

Source:  Accountants Daily

Accounting bodies and leading firms believe that some 10,000 insolvencies, leading to the loss of companies, are a distinct possibility – albeit only potentially so at this moment.

50,000 notices have been issued as a pre-warning, leading to possible action by the ATO.  The notices follow the strict collection regime known as the “Director Penalty Notice” where the receipent/s (both past and current directors) must within 21days deal with the tax debt overdue.  Options available include voluntary administration, liquidation and small business restructuring (SBR) advice. 

The ATO is now collecting outstanding tax liabilities after placing them on hold. This also brings changes to Director Penalty Notices (DPN).  

DPNs are issued when a director is held personally liable for unpaid tax liabilities including superannuation, PAYG and GST.

A non-lockdown DPN will be issued if lodgements were on time but with unpaid liabilities. A lockdown DPN will be issued if lodgements were late.

One implication is that companies are more likely to enter into an insolvency process once they have received a DPN.

Source:  Hicksons Insight News

High Court expends use of examination summonses1

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A recent court decision means that examination summons may now have expanded usage. The ruling overturned the NSW Court of Appeal’s decision to set aside the summons of a company’s shareholders to a former director. The scope and purposes for which an examination summons can be issued has been expanded by virtue of this ruling. The decision is a boost for shareholder class actions and can potentially increase litigation relating to corporate liquidations.

Business Owners Suffering from Anxiety

Depression and anxiety cases have increased among business owners in Australia, owing to the strains brought by COVID uncertainty. Financial and cash flow concerns have been overbearing, along with questions over the wider economic picture. This is especially true in transport, warehousing, retail and hospitality sectors which have been particularly affected.

Small business have the option of applying for the Government backed loan, which now has been extended until March 2022.  Our experts can assist with the application process and connect you with the major banks, unless of course your business banker is willing to assist.

Smooth out your BAS process by finding GST and ABN Errors

60% of Xero accounting files audited in the last quarter contained ABN or GST errors, commonly found in preparation of BAS statements as well as bookkeeping. These pertain to GST discrepancies as well as ABN status, as to whether a business has had its ABN cancelled.

A tool known as XBert AI Audit is designed to assist in identifying these errors, which can help reduce time for BAS preparation by 20 minutes. Without clicking through every transaction, XBert AI Audit will be able to resolve these issues, as well as create audit risk alerts.

Now is a good time to review your management accounts and make a time with your advisor to understand any gaps or discrepancies.  If the initial review of the position indicates items for further review it may be time to discuss the issues with an insolvency expert.  What is Liquidation is operated by insolvency experts who are happy to offer a 30min no fee obligation consultation.

Source:  Accountants Daily

Accountants as moral support

The practice of accounting today is no longer simply about crunching numbers and examining the financial performance and position of a business. It is also about providing moral support in view of the personal distress financial problems for a business can cause for business owners and staff. It also stems from the ability to build trust between accountants and their clients. Such relationships tend to be longer term.

Source:  Accountants Daily

Omicron will delay but not derail recovery

While Omicron COVID has caused a modicum of disruption, it appears this is more likely to delay rather than derail the economic recovery that is already underway. Some experts believe that impacts will either be short-lived, or that doomsday scenarios are overblown. We’ll see.

Source:  Accountants Daily

Revamped JobKeeper to benefit SMEs

The NSW government is revamping JobSaver in a way to benefit SMEs who have been hard hit by COVID. It is also hoped that staffing levels and customer bases will be shored up in the process. It is expected that Omicron will not derail economic recovery.

Source:  SmartCompany

Director ID – Who can apply and when

Beginning in November 2021, company directors will be required to apply for a Director ID. The qualification is being an eligible officer of a registered company, namely a director or an acting/alternate director of the following:

  • Companies
  • Aboriginal and Torres Strait Islander corporations
  • Corporate trustees, for example, of a self-managed super fund
  • Charities or not-for-profit organisations
  • Registered Australian body, for example, an incorporated association that is registered with the Australian Securities and Investments Commission (ASIC) and trades outside the state or territory in which it is incorporated
  • Foreign companies registered with ASIC and carrying on business in Australia (regardless of where you live).

CreditorWatch notes that business defaults rose by 20% in the past month, with an average of 10% increase over three months. They note that there is something of an artificial economic environment due to lockdown. This is compounded by uncertainty due to the duration of lockdowns.

Accountants are being relied upon to assist with grant applications and eligibility retests, but it is suggested that some accountants may propose business closure as a strategy. In general accountants have the measure of their SME clients, and a feel for whether such entities are viable or not. The decline in trade receivables (12.5%) plays into this.

Government support has prevented business closures on a wider scale that was feared, but a rise in external administrations seems inevitable. The outcome remains to be seen.

Business owners are encouraged to reconsider their future projections and the real possibility of restructuring their affairs ahead of what some are saying could be as bad or worse than the GFC.  Feel free to contact us for some expert guidance to see you through the next cycle.

Source:  AccountantsDaily