Bankruptcy in Australia – Proposed Changes that can help Small Business and Entrepreneurs. |
Posted: June 21, 2017 |
Bankruptcy in Australia – Proposed Changes that can help Small Business and Entrepreneurs.
Do you realise just how much bankruptcy in Australia is likely to be changing? The Australian Government by the end of 2015 came up with some radical proposals and potential changes to the Bankruptcy Laws in Australia, especially when it comes to the length of insolvency. Right now, there is a minimum amount of time that you will need to stay bankrupt, having said that, this 3 year period may effectively be lowered to just 12 months. So if you are looking at insolvency, these changes are going to be relatively significant to you! Exactly how did this all come to be? Well, Mark Carnegie (an expert in this field) reviewed back in December 2015 in the Financial Review that there was going to be recommendations for "the proposed changes to ease the burden of bankruptcy laws didn't go far enough and the government should adopt US-style laws to protect the family home".
What issue is he attempting to resolve? Presently, the legislations don't have adequate protections, to the degree that Mr Carnegie, went on to point out in the Financial Review that providing security to family assets was needed since "banks just terrorise small business and the mental health consequences to society are enormous". The problem is Australia's bankruptcy laws prevented investors from assisting start-ups, and for that reason mentoring had been "driven out of the system" and lots of people are too worried to try and invest or attempt to run a business. "They naturally find it very intimidating themselves personally and with their assets at risk in a risky early-stage deal, but with their own money in the deal and a lightened-up provision I think we 'd probably see more willingness. It could be more important than the money". That indicates that currently, the current laws are costing the economy and they may benefit you, however they can possibly be exploited and occasionally the innocent fall within the voids and get unfairly penalized. Just what is being proposed? The recommendation is to have the 3 year bankruptcy period decreased to just 12 months when there is zero sign of fraud or unethical behaviour. These developments will signify a lot for bankruptcy and will take at least 18 months to execute.
What is Fraudulent Behaviour? Fraudulent behaviour is essentially a phrase that covers all the negative points. So when it involves bankruptcy, this means that it will cover behaving dishonestly, hiding assets, taking negligent risks, acting unethically or just generally trying to con people. One proposed idea is that while they are reducing the amount of time for those individuals acting truthfully, they could in fact carry out a counter proposition to pinpoint those behaving particularly dishonestly and maximize the amount of time. Certainly there are already some arrangements in effect for when you do not observe particular regulations (and I encourage you to read more about bankruptcy to make sure you don't inadvertently break these rules) but it will be interesting to see exactly how this develops. So is this a Win for Small Business? Yes, definitely! This is going to be excellent for business and I really hope that you read these alterations to bankruptcy and are getting as thrilled as I am.
These suggested changes will be good for small businesses because it will encourage additional people to get engaged and take calculated risks-- There will however be penalties in place, but it will not be unfairly reprimanding those who make genuinely honest miscalculations.
Many small business owners I help with bankruptcy, are hardworking, tax paying, companies that are keeping this nation going and so I am thrilled to observe what will be happening next with this, and how it will affect bankruptcy. Bankruptcy helps save lives, and it could save yours. If you really require some assistance with your financial obligations in Australia or are just considering bankruptcy, don't hesitate to phone us here at Bankruptcy Experts on 1300 795 575, or visit our website: www.bankruptcyexperts.com.au
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