House of Representatives
Treasury Laws Amendment (2021 Measures No. 5) Bill 2021
Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing, the Hon Michael Sukkar MP)Productivity Commission 2015, 'Business Set-up, Transfer and Closure: Productivity Commission Inquiry Report',
https://www.pc.gov.au/inquiries/completed/business/report/business.pdf
ASBFEO 2020, Insolvency Practices Inquiry: Final Report
https://www.asbfeo.gov.au/sites/default/files/Insolvency%20Inquiry%20Final%20Report.pdf
OECD 2018, 'Going for Growth', p.97,
http://www.oecd.org/economy/growth/policies-for-productivity-the-design-of-insolvency-regimes-across-countries-2018-going-for-growth.pdf
A term used to describe one of the formal insolvency processes.
ASIC 2020, Australian insolvency statistics,
https://download.asic.gov.au/media/5841015/asic-insolvency-statistics-series-2-published-november-2020.pdf
ASIC 2020, Australian insolvency statistics
ASIC 2015, Productivity Commission: Review of Barriers to Business Entries and Exits in the Australian Economy, p. 39
OECD 2018, 'Going for Growth', p.91.
ARITA 2015, Submission to Productivity Commission review on Business Set-up, Transfer and Closure, p. 15
https://www.arita.com.au/documents/pc-submission-020315-website.pdf
OECD 2018, 'Going for Growth', p.97,
http://www.oecd.org/economy/growth/policies-for-productivity-the-design-of-insolvency-regimes-across-countries-2018-going-for-growth.pdf
Sewell and Kettle 2020, Liquidation,
https://sklawyers.com.au/faq/how-long-does-a-liquidation-last/
Productivity Commission 2015, 'Business Set-up, Transfer and Closure: Productivity Commission Inquiry Report', p. 75.
Illegal phoenixing occurs when a company is liquidated, wound up or abandoned to avoid paying its debts. A new company is then started to continue the same business activities without the debt. On 5 February 2020, the Government passed legislation to implement a suite of reforms to the corporations and tax laws to combat illegal phoenixing. The legislation helps the Australian Taxation Office (ATO) crack down on those who conduct or facilitate illegal phoenix behaviour. The Australian Securities and Investments Commission (ASIC) can now pursue new civil and criminal offences against those who promote or engage in illegal phoenixing. ASIC and liquidators have additional powers aimed at recovering assets for the benefit of employees and other creditors.
Liabilities would be calculated so that it encompasses a broad range of liabilities incurred by the company.
There is currently no uniform legislative definition of small business. A list of some of the statutory definitions was included in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry 2018, 'Background Paper 12: Financial services and Small and Medium-Sized Enterprises', p5-6.
Unfair preferences occur where a creditor has received an advantage over other creditors, by receiving payment (or other type of transaction) for their outstanding liabilities and does so in circumstances where they knew, or ought to have known, that the company was insolvent.
The relation back day is the date by which the prescribed period begins whereby transactions entered into by the company may be considered voidable.
ASBFEO 2020, Insolvency Practices Inquiry: Final Report
A debt agreement is a formal alternative to personal bankruptcy, where a debtor's creditors agree to accept part payment of debts owed in equal proportions. A debt agreement is made under Part IX of the Bankruptcy Act 1966.
A committee appointed from among creditors to advise and supervise the liquidator.
The Insolvency Practitioner Registration and Disciplinary Committees are Committees formed by ASIC on an ad-hoc basis used to register new Registered Liquidators and consider disciplinary matters. Each time a committee is formed by ASIC one committee member will be drawn from a Ministerial pool of appointees. The remaining two members of each committee consist of a representative of ARITA and ASIC.
During the period after which the temporary insolvency relief was implemented, Treasury held consultations, including with stakeholders from industry, to understand the dynamic of virtual meetings, and how these were being utilised and received by participants. This information has informed these assumptions.
Productivity Commission 2015, Business Set-up, Transfer and Closure: Productivity Commission Inquiry Report, p. 28.
ARITA 2015, Submission to Productivity Commission review on Business Set-up, Transfer and Closure.
ARITA 2020, Submission to the Insolvency Practices Inquiry, p. 23,
https://www.arita.com.au/ARITA/News/Submissions/Australian_Small_Business_and_Family_Enterprise_Ombudsman_s_Insolvency_Practices_Inquiry.aspx
ASBFEO 2020, Insolvency Practices Inquiry: Final Report.
Due to the proximity to the release of Budget 2020-21 the exposure draft legislation could not be released until 7 October 2020.
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