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ATO urges businesses to be on the lookout for untrustworthy advisers

The Australian Taxation Office has urged businesses to be on the lookout for any untrustworthy advisers who may be offering inappropriate pre-insolvency advice ahead of the planned winding back of some key stimulus measures.

ATO urges businesses to be on the lookout for untrustworthy advisers
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  • AFlores
  • November 19, 2020
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In a recent website notice, the ATO noted that businesses may be seeking advice on whether to pause, change or permanently close their business.

The notice from the ATO comes as key business stimulus measures come to an end on 31 December, including the end of the insolvent trading moratorium, temporary increase in the statutory demand threshold, the first tranche of JobKeeper 2.0 and, for some states, the commercial eviction moratorium.

Further, the warning to businesses also comes as the federal government is seeking a range of small-business insolvency reforms deemed the most significant in 30 years.

The package draws from Chapter 11 of the Bankruptcy Code in the US and is expected to cover around 76 per cent of businesses subject to insolvencies today, 98 per cent of whom have fewer than 20 employees.

The ATO noted the potential of inappropriate pre-insolvency advice being offered to businesses, including illegal phoenix activity, and recommendations to remove your client’s assets before closing their business, for use in a copy of the original business.

As a result, businesses have been warned to check they’re seeking or receiving advice from qualified professionals, such as an accountant, lawyer, registered liquidator or registered trustee.

Further, the ATO said that if a business is seeking to wind up their company, they should refer to a registered liquidator or registered trustee.

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