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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. 

In the past, companies did have the option of entering into a payment plan.  This solution has now been scrapped by the ATO.

SBR was designed to assist businesses to compromise with creditors while also allow directors to control affairs and business to continue trading. Many accountants are unaware of the process and few companies have been through it as of today.  Directors ought to be aware that certain conditions will apply ahead of the appointment, eg all tax lodgements up to date and unsecured debts must total less than $1m.Accountants fear insolvency will wipe out 10,000 businesses