This is the fourth in a series of articles aimed at informing directors of their duties and options for small to medium enterprises if faced with insolvency.

Following on from our previous article, we will now look at one of the more prominent risks of, firstly not reporting activity and superannuation guarantee when due, and secondly not paying debts owed to the Australian Taxation Office.

Directors need to keep a sharp eye out for Director Penalty Notices from the ATO.

This is the third in a series of articles aimed at informing directors of their duties and options for small to medium enterprises if faced with insolvency.

This article touches on the commercial risks faced by the business itself, which will drive the turnaround plan. If a business is struggling and potentially insolvent, that is unable to pay its debts when they fall due, there are several risks that directors need to be prepared for.

This is the second in a series of articles aimed at informing directors of their duties and options SMEs if faced with insolvency. We now look at one of the more prominent duties, being insolvent trading and one of the options available to manage that risk.

This is the first in a series of articles aimed at informing directors of their duties and options for small to medium enterprises if faced with insolvency.

Unfortunately, the prime cause of business failure is poor management. Fortunately, however, for those business owners willing to be proactive and seek help with understanding the root cause of a particular challenged, help is literally only a phone call away.

After pausing its pursuit of unpaid taxes while jurisdictions were coping with COVID-19 outbreaks and lock downs, the ATO has started to chase debts again. So far, the ATO has targeted New South Wales, Victoria and the ACT.

From 1 November 2021, the Federal Government has implemented a new layer of accountability for company directors. Directors are now required to obtain a Director Identification Number, which will assist regulators and others to correctly identify the directors of companies

On 25 May 2020, the Justice and Other Legislation Amendment Act 2020 (Qld) came into force. It included amendments to the Legal Profession Act 2007 (Qld) (the Act) which broadened the meaning of suitability matter and a show cause event to include where a person is a director of a company (whether related to law practice or not), which becomes insolvent.

The QBCC announced on 8 February 2021 that as a result of the annual reporting and MFR process, their compliance action in December 2020 and January 2021 resulted in 12 licenses suspended or terminated and over 60 licenses suspended. We expect the QBCC will adopt a more hard-line approach in 2021 to MFR requirements so all license holders need to be certain they can provide the required information as part of submitting their annual financial reports and meet the MFR.

There were other changes, which commenced on 1 October 2020 aimed at improving contractors’ ability to recover outstanding payments.

There are often similar characteristics or issues which indicate potential insolvency or significant financial challenges ahead, and may make a restructure more difficult to undertake.

Further reforms to the Queensland Building and Construction Commission Act 1991 and other associated Acts came into effect on 1 October 2020 with one of the key aspects directlying affect those Accountants assisting licensees with Minimum Financial Requirements reporting.

Construction industry licensees must have sufficient working capital to meet Minimum Financial Requirements. Annual financial reports have been introduced to check the financial strength of contractor grade licensees in Queensland and its a big deal.

Newly released AFSA data highlights the importance of protective mechanisms such as the PPSR for suppliers (or anyone extending credit) and understanding the application of same in a business environment.