Asset protection is often not something that is considered when a business is set up. When times are good, it’s usually not a concern. However, with the complex taxation and legal framework it’s always worth taking advice on how best to protect your wealth. While many advisors provide general advice around asset protection, we bring a SME insolvency specialist perspective. We provide advice that covers the eventuality that something in the business goes wrong.  Are your clients protected in the event of an unexpected legal claim, a director penalty notice or an insolvent trading claim? We can review your client’s financials and provide expert assistance to protect their wealth.

The ATO has many recovery/collection options in its toolkit. It’s one of the biggest instigators of winding up court applications in the country. When SME businesses undergo a period of financial stress or distress it’s often the taxman that’s left empty handed as suppliers and staff take first priority. Understanding the ATO’s legislative enforcement options is critical to better protect your clients:

a. Garnishee notice.

The ATO can issue a garnishee notice to a third party such as a financial institution, trade debtor or supplier of merchant card facilities. This requires the third party to pay the amount in the garnishee notice directly to the ATO rather than paying it to, or continuing to hold the money for, the company. The third party must comply with the garnishee notice and is deemed authorised by the company.

b. Statutory demand

The ATO can issue a statutory demand to a company that has not met its taxation obligations. A statutory demand is a formal, written demand from a creditor, issued under the Corporations Act 2001 that requires the company to pay the ATO debt amount within 21 days.

c. Wind-up action

If a company fails to comply with a statutory demand within the prescribed period it may be deemed insolvent. The ATO may apply to the Federal Court to wind-up the company and a liquidator may be appointed through a creditor’s petition. The Federal Court will not issue the order if the company can demonstrate the ability to pay its debts when they are due and payable.

If your client has received any of the above, or has failed a payment plan, it’s important to act quickly. Call us and we will work together to find the right solution for your client.  

Directors have a duty to prevent a company from trading while insolvent. But what does that actually mean?

Directors who fail to prevent a company from insolvent trading may be ordered to pay compensation to the company, equal to the loss suffered by creditors. In our experience, these claims can run in the hundreds of thousands up to the millions of dollars. It’s often only by dipping into home equity reserves that directors are able to meet these demands. 

However, directors of a company may only be pursued for insolvent trading if the company is in liquidation and there are a number of defences available to them under law. Directors can undertake a number of pre-emptive steps to protect against insolvency (debt/operational restructuring) and insolvent trading (Safe Harbour).  

We’re here to help your clients navigate critical times and address complex questions. Clients who may have had a few rough months that turn into a few bad quarters. We know that many businesses that find themselves in liquidation need not have wound up that way. The earlier your clients can get the right advice, the more options they have to defend themselves.

When disruptions exist within the business environment, it is more likely that disputes will arise between shareholders, directors, partners and/or other stakeholders. These disputes are usually costly, time consuming, challenging and adversely affect the operations of a business. Stakeholder disputes are common in companies, businesses, partnerships or trusts and resolution often requires external assistance. We know that these problems are unique and complex.

Our dispute experts help you to navigate the conflict by establishing the facts, analysing the issues and planning the best response for your client. Our Deloitte Forensic colleagues use sophisticated tools and fraud analytics to solve the problems that businesses face in the data-driven world.

Call us to explore efficient, less costly and less time intensive ways to resolve complex disputes.

An individual or business facing current legal action, or possible future litigation, should take urgent and appropriate steps to resolve the matter. A pending claim against an individual or company may quickly turn into a costly expense, which may not be possible to defend or rectify if not promptly addressed. If your client has received a letter of demand, statutory demand or is aware of a debt which may result in further action against them or their business, we can help with the next steps. The Deloitte middle market team has long-standing relationships with legal professionals in a range of disciplines. We can connect you with the right legal advice to resolve your client’s present challenges and help plan for the future.

Director penalty notices can be issued by the ATO and state revenue offices. The penalty amount equals the amount of unpaid SGC, PAYG and (since 1 April 2020) GST. These penalties are applied against directors personally and do not extinguish over time.

Calculating the personal liability amounts can be difficult, as various ‘lockdown provisions’ apply based on lodgement timeframes.

There is a short window of time for directors to seek remission of the debt and we can help. When the deadline has passed, there’s no going back. Make the call now.

Preference payments? Insolvent trading? Unreasonable director-related transactions? The list of transactions that a liquidator might deem to be voidable is extensive and the law surrounding it complicated. Dealing with a claim can be extremely stressful, time consuming and beyond the expertise of most businesses and individuals.

This is where we can help. We can cut through the legalese to identify the merits of a claim against your client. We can also prepare a solvency report to defend your client from claims against them.

There are many types of financial misconduct, from employee fraud to cyberattack, from ransomware to fraudulent invoices. We have extensive experience in detecting, preventing and investigating fraud and helping businesses to recover lost funds (and recover from their losses). We have a well-established toolkit to help your clients improve their systems and operations to protect against fraud and misconduct.

We work closely with our Forensic colleagues, who are experts in all things digital. We can search a company’s electronic history to determine with accuracy who knew what and when. Our experts are regularly called before courts to give evidence.

How many of your clients have state of the art internal procedures? How many are at risk? We can help your clients strengthen their processes to prevent financial misconduct.

The invention of the lightbulb, social media and rideshare apps are some of the technologies that have changed the face of business. Market disruption changes the rules of the game and forces businesses to adapt and respond to complex changes in the marketplace. To rethink how they operate and compete in a fast-changing world.

Our advisory specialists can help your clients to navigate market disruption, to stay competitive and to find opportunities. Or, if the writing is on the wall, we have the tools and skills to ensure a seamless exit, to allow your clients to better deploy their skills and capital elsewhere. As with all disrupted industries, it’s the first movers who most succeed, so don’t delay.