Law Changes That Might Affect Your Business

Other Law Changes That May Affect You - 9 November 2017

Law Changes That Might Affect Your Business

Government Cracks Down On Illegal Phoenixing

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, announced on 12 September 2017 that the Government is taking action to crack down on illegal phoenixing activity to ensure those involved face tougher penalties. The Government’s package of reforms will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity.

The DIN will identify directors with a unique number. The DIN will interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people. In addition to the DIN, the Government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers.

The Government will consult on how best to identify high risk individuals who will be subject to new preventative and early intervention tools, including:

  • a next-cab-off-the-rank system for appointing liquidators;
  • allowing the ATO to retain tax refunds; and
  • allowing the ATO to commence immediate recovery action following the issuance of a Director Penalty Notice.

The Government put out a discussion paper in October containing numerous ideas for how to combat phoenixing behaviours.

Safe Harbour Reforms For Company Directors

The Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 (the Bill) passed both the House of Representatives and the Senate on 12 September 2017 and awaits Royal Assent. The Bill amends:

  • the Corporations Act 2001 (Cth) to create a safe harbour for company directors from personal liability for insolvent trading if the company is undertaking a restructure outside formal insolvency; and
  • the Payment Systems and Netting Act 1998 (Cth) to make certain contractual rights unenforceable while a company is restructuring under certain formal insolvency processes.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said that the Government has delivered on its commitment under the National Innovation and Science Agenda (NISA) to improve Australia’s corporate insolvency system with the Bill receiving passage through Parliament. Ms O’Dwyer also said the Bill promotes a culture of entrepreneurship and innovation by providing a ‘safe harbour’ for company directors from personal liability for insolvent trading if they are pursuing a restructure outside formal insolvency. It also makes “ipso facto” clauses unenforceable during and after certain formal insolvency procedures. The safe harbour provisions will commence on Royal Assent. The stay on the operation of ipso facto clauses will commence from 1 July 2018 to provide time for businesses to adapt.

The operation of the safe harbour will be subject to an independent review two years after commencement. The Government will shortly consult with key stakeholders on the Regulations to support the operation of the stay on ipso facto clauses.

Are you a company director? If so, don’t hesitate to contact us to find out whether this legislation affects you.

Other Legislation That May Impact On You Or Your Business

Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017

The Bill extends the crowd-sourced funding (CSF) regime to proprietary companies, making a new funding source available for small businesses, while maintaining adequate investor protections through additional obligations on companies. The measure extends upon the Corporations Amendment (Crowd-sourced Funding) Act 2017 to enable proprietary companies to access CSF without transitioning to public company status.

Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017

Choice of fund for workplace determinations and enterprise agreements

  • The Bill amends the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA) to ensure employees under workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions.

Salary sacrifice integrity

  • The Bill also amends the SGAA to improve the integrity of the superannuation system by ensuring that an individual’s salary sacrifice contributions cannot be used to reduce an employer’s minimum superannuation guarantee contributions.

Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017

Further to the Treasury Laws Amendment (Enterprise Tax Plan) Act 2017, this Bill amends the Rates Act to:

  • progressively extend the lower 27.5% corporate tax rate to all corporate tax entities by the 2023-24 financial year; and
  • further reduce the corporate tax rate in stages so that by the 2026-27 financial year, the corporate tax rate for all entities will be 25%.

Talk to us to see if any of these Bills will impact on you or your business.

9 November 2017

Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.

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