Is a Bankrupt’s money his/her own?

06/09/2016 by

A question that is frequently asked by an individual that may be contemplating bankruptcy is what happens to the income they earn during bankruptcy. In short, the Bankruptcy Act 1966 (“the Act”) provides that the individual is assessed regarding the requirement to pay compulsory income contributions for each year of their bankruptcy. Given that the general term of bankruptcy presently is three (3) years, then typically the individual would be assessed for each year. Other discussions then flow from this question, in particular what are they able to do with monies after payment of any compulsory income contributions? A bankrupt may be assessed by their bankruptcy trustee as being l

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What impact does personal bankruptcy or other Insolvency proceedings have on individual’s credit rating?

02/06/2015 by Michael Jones

As a bankruptcy trustee I am often asked by individuals facing personal financial hardship what will happen to my credit rating if I formally declare myself bankrupt More importantly individuals are often concerned about their ability in future to borrow money for important things such as a house or a car. The legal position is that the bankrupt is unable to borrow money over the prescribed limit (presently $5,409) without disclosing the fact that the individual is bankrupt. Clearly a lender will be cautious about making an advance in such circumstances. The position changes however once the individual is discharged from bankruptcy or even better if the bankruptcy is annulled. Onc

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Will the Australian government’s “single touch payroll proposal” create more insolvencies?

19/03/2015 by Michael Jones

The Australian government announced measures to cut red tape for business and to provide a simplified payroll system that would mandate or a “single touch payroll system” The Australian Taxation Office (ATO) is currently conducting a consultation process in order to examine the consequences of this measure and has called for submissions from stakeholders. Under “single touch payroll”, employers will be required to electronically report payroll and super information to the ATO (Australian Tax office) when employees are paid, using standard business reporting – enable software. This is different to the current situation where employee tax deducted from payroll is reported in the em

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Why is risk-taking and entrepreneurship important to the Australian economy?

10/12/2014 by Michael Jones

Risk is essential to the business environment. Entrepreneurship relies on creativity and imagination but with every new endeavour comes risk. The usual paradigm is that there is a direct relationship between the level of risk and return or profit attributed to that activity. The Jones Partners’ economic research project into small to medium business (SME) Insolvencies in the Australian economy looked at the impact of risk and risk-taking on entrepreneurship. The attached video excerpt tries to answer the question -why is risk-taking and entrepreneurship important to the Australian economy? And provides an interesting narrative commentary on this issue Most new ventures carry with

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The effect of the environmental movement on Insolvencies in Australia

08/12/2014 by Michael Jones

There are three major contributors to Australian insolvency statistics Obviously the overall health of the Australian Economy is important and this was clearly demonstrated in the Jones Partners Report on Insolvencies in the Australian Economy launched in July 2014. In that report it was clearly demonstrated that there is an inverse relationship between the level of GDP and the number of Insolvencies. This was more pronounced with respect to Company Liquidations, Voluntary Administrations and Receiverships than with Personal Bankruptcies. It’s important however to realise that the management of individual businesses is more important. In fact the major reason for Australian compa

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Is Small Medium Enterprises — the heartland of the Australian economy?

05/12/2014 by Michael Jones

It is clear that SMEs are the back bone of the Australian economy and at a recent function launching the Jones Partners Report into insolvency administrations in Australia Craig James, chief economist of the Commonwealth Bank said that 97% of Australian businesses employ less than 20 employees. It is therefore not surprising that over 80% of companies that fail are in this category. The businesses that dominate the corporate failure statistics roughly parallel the businesses in the SME sector and are very highly represented amongst construction, retail and professional services. The Jones Partners Report looked in some detail at the effect on the Australian economy of the failure of c

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How does the Asian economic boom affect Australian insolvencies?

08/07/2014 by Michael Jones

There is no doubt that the global economy is going through enormous structural change as the weight of global economic activity increasingly shifts towards Asia. The above diagram demonstrates that in 2012 the Asia-Pacific region together with the Indian subcontinent accounts for in excess of 36% of world GDP. Australia has benefited greatly from this structural change. Three quarters of Australia’s exports are to Asia. We have a similar dependence on Asia with respect to tourism and immigration. Australia has just emerged from the largest resources boom in its history and this is largely as a result of the economic development of mainland China. Moreover the structural change seem

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Is Management the key driver of business success or failure?

11/06/2014 by Michael Jones

Although external factors do play a part in the success or failure of a business research shows that internal factors such as the quality of management is far more important. The report prepared by the Australian Securities and Investments Commission (ASIC) on the reason for company failures has consistently concluded that the major reason for company failures is “poor strategic management “. The second most common reason cited for business failure is a failure to maintain proper books and records. This of course can be seen as one in the same as bad strategic management. . . .

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Employee Entitlement Safety Net Scheme – Costs Escalating!

29/05/2014 by Pauline Yeow

Historically in Australia there is a general societal acceptance that employees should be protected in the event of insolvency. This arises largely from the premise that employee’s are the lifeblood of the business. Indeed Corporations and Bankruptcy Acts provide that employees are entitled to receive their outstanding entitlements in priority to other unsecured creditors. In certain circumstances, these priorities see employees rank ahead of secured creditors (ie Banks) regarding realisations made from certain assets. Practically, however this priority may not result in employees actually receiving some or all of their entitlements especially if the company does not have sufficient a

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Rates of Currency Exchange – Impact on Australian Businesses – Jones Partners

18/12/2013 by Michael Jones

According to a recent report issued by the ASIC the main reason for Corporate insolvencies can be related to ”bad strategic management” It may seem that exchange rate fluctuations are beyond the control of business managers and it is obvious that currency variations have a major contributor on Australian businesses. If a business relies heavily on sales to overseas customers, a high Australian dollar will cause serious problems.  On the other hand if the business purchasers goods and service from overseas a strong dollar will be a major advantage.  In some cases a minor variation in exchange rate can be the difference between success and failure. Whilst the exchange rate itse

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