InFocus March 2021 - Volume 30 Issue 2
- Recent changes to our company director cessations and resignations
- Are you a registry gatekeeper – If so, are you meeting your obligations?
- Temporary restructuring relief - act before 31 March 2021
- Why it is important to provide the right information the first time
Companies can no longer cease the last remaining director on ASIC records. Lodgements submitted using a Form 484 Change to company details, or Form 370 Notification by officeholder of resignation or retirement, to cease the last appointed director without replacing that appointment will be rejected.
All director cessations notified to ASIC more than 28 days after the effective date (e.g. director resigned on 1 April 2021, but notified on 1 November 2021), will have the effective date overridden and replaced with the lodgement date (i.e. 1 November 2021).
Driven by the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020, passed by Parliament in February 2020, these changes aim to prevent directors from improperly backdating their cessation against a company and leaving a company without directors.
You can read more about the reforms here.
A registry gatekeeper is a third-party authorised to act as a conduit between ASIC and the business community such as companies, businesses, registered professionals and the searching public. They provide services and products to the public, commercial entities and government agencies and must be authorised by the person or entity engaging their services to act on their behalf.
Registry gatekeepers include Digital Service Providers, Registered Agents and Information Brokers. ASIC has agreements in place with these types of gatekeepers and our terms and conditions govern the use of our registry services.
All gatekeepers should be aware of the ASIC expectations of our registry gatekeepers including:
- it is a privilege to be a gatekeeper
- gatekeepers must act in the best interests of ASIC customers
- gatekeepers must not engage in deceptive or misleading practices and if they see something, are obliged to say something
- gatekeepers must act on reports to ASIC of poor behaviour, and
- ASIC can revoke this privilege at any time
Private Service Providers (PSPs) are also considered to be Registry gatekeepers as they interact with us and on online on behalf of customers with the customer’s authorisation. They too are expected to adhere to the guiding principles as well as the expectations of PSPs operating transparently, fairly and honestly in their business practices.
Further to this, ASIC sets out clear list of practices that we expect PSPs to adopt such as:
- customers understand they are not interacting directly with ASIC,
- ensuring that the words or images that you use do not suggest that you are authorised or endorsed by ASIC. For example, you must not use the term ‘ASIC Registered Agent’ and
- only offer to provide a service that you are capable of providing at the time. For example, you must not send a letter in the mail offering to renew a business name earlier than two months before the expiry date.
All registry gatekeepers should be aware of our expectations and act in accordance with their terms and conditions and our guiding principles.
A reminder, you can find the Application Programming Interfaces (APIs) for Digital Service Providers (DSPs) and registered agent terms and conditions on our website.
The Australian Government introduced insolvency reforms for small businesses that came into effect on 1 January 2021, including temporary restructuring relief.
If you are a company officeholder, temporary restructuring relief:
- Stops creditors who are owed less than $20,000 (up from $2,000) from issuing a statutory demand to wind-up your company,
- Gives you six months to respond to any statutory demand you receive (temporary increase from 21 days), and
- Provides a temporary safe harbour from personal liability for insolvent trading for debts incurred in the ordinary course of your company’s business.
Companies wishing to apply for temporary restructuring relief must do so by 31 March 2021.
You can find more information about how to apply for relief on our website.
ASIC Registry administers more than 30 legal registers and works to collect, store and make information publicly available from these registers.
The work we do ensures that the information on our registers is accurate, up to date and available in a timely manner, enabling business and consumer stakeholders to make informed decisions.
Customers are reminded to check that the information they provide is accurate upon lodgement, and unlikely to require typographical correction at a later stage.
Examples of checking the accuracy of the information may include confirming the spelling of full names (including middle names) and checking that dates and places of birth are correct.
Lodging inaccurate information can also have impacts for the company directors themselves as they attempt to open bank accounts, enter financial contracts and commence other business critical operations. Corrections made via a Form 492 Request for Correction may not be reflected on ASIC’s registers for up to five business days after lodgement.
Registered agents lodging on behalf of customers must ensure documents are accurate. Our registered agent terms and conditions outline this requirement.
What to do if your small business is facing financial difficulties
When a small business is facing financial pressure, there are a number of complex factors to consider. It’s important that small business owners understand any underlying issues causing the financial pressure.
Read more at: What to do if your small business is facing financial difficulties
Company facing challenges: information for company directors
If a small business owner starts to feel like running their company is becoming difficult, what should they do?
We know that small business owners put their heart and soul into their business. Ultimately, every business owner wants their business to be successful.
However, when faced with the pressure of trying to save a business that is facing financial difficulties, company directors run the risk of making poor decisions at the expense of others. Company directors have a legal obligation to act in the best interests of the company, which includes paying creditors, employees and tax debts when due.
Read more at: Company facing challenges: information for company directors
Importance of seeking advice: information for company directors
The legal obligations imposed on a company director are complex and serious. A company director can be exposed to personal liability or may be found civilly liable, or even criminally convicted, for conduct relating to how they run a company or how they deal with company assets.
It’s important that company directors get proper advice to try to avoid what can be very serious consequences.
Read more at: Importance of seeking advice: information for company directors
ATO Small Business tips
Start the year fresh with your record keeping. Good record keeping can help you keep track of the money you’ve made and spent and your cash flow position. While there will always be things that you need to do to meet your tax, superannuation and employer obligations, your record-keeping requirements will vary depending on the size, structure and nature of your business. Find out more.
If you run a home-based business and want to claim running expenses, you may be able to use, for example, the temporary shortcut rate of 80 cents an hour from 1 March 2020 until 30 June 2021 (which covers all your running expenses) or the fixed rate of 52 cents an hour (which covers heating, cooling, lighting, cleaning, and the depreciation of furniture and furnishings). Find out more.
Remember you can’t claim a deduction for private expenses. For example, if you use a motor vehicle for both business and private use, you must be able to identify the portion related to business use and only claim that part of the expense. Find out more.
Business travel expenses can include transport fares, accommodation, and meals if you’re away overnight. But remember, you can only claim the business portion of your expenses. For example, you can’t claim for private expenses such as costs associated with you or your employee taking a family member on the trip. Find out more.
ATO Small Business webinars
Good business relies on good planning so it’s fundamental to spend your time wisely and concentrate on areas that will help your business to succeed. In February and March, the ATO is offering 3 webinars to help you prioritise and focus on strategies to maximise your cash flow.
- Connecting online with the ATO: Sole traders
In this 60-minute session is for sole traders who want to know how to manage their tax and super online. You will also learn the ins and outs of GST, pay as you go withholding, pay as you go instalments, how to lodge your tax returns and more.
- Connecting online with the ATO: Businesses
This session has been developed for companies, partnerships and trusts that want to know how to manage their tax and super online. In this 60-minute session, you will learn how to register, lodge and pay online for GST, pay as you go withholding, pay as you go instalments and more using Online services for business which is replacing the Business Portal.
- Strategies for improving your cash flow
Cash flow management is critical to the success of any business, but it’s not always easy to find ways to improve your cash flow. This 60-minute session explores seven key strategies that may improve the cash flow of your business.
The ATO also recommend you sign up for their webinar ‘Cash flow for small business success’ which demonstrates free online tools you can use for cash flow management.
To register for these ATO webinars, please visit www.ato.gov.au/sbwebinars
Other links we like
- Website content – Changes to director resignations from 18 February 2021
- Act now: temporary restructuring relief for small business directors