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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Protecting Inherited Personal Assets In the event of Bankruptcy

06/05/2013 by Michael Jones

One issue that frequently arises in relation to the administration of bankrupt estates is the difficulty of the bankrupt being a beneficiary under a Will. Divisible property is defined broadly in the Bankruptcy Act and it includes, not only property owned by the bankrupt at the time of the bankruptcy, but also property acquired by the bankrupt after bankruptcy up until the time of the discharge, which is usually three years. This is referred to as “after acquired property”. . . .

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Asset Protection for Directors and Business Owners

by Michael Jones

Antecedent transactions Business owners are often anxious about what might happen to their private assets should their business runs into difficulties and ultimately fail. Many individuals contemplate transferring private property into some form of entity separate from the individual (such as a company or a trust), or transferring the property to a close relative or friend in the hope that if something untoward happened to them creditors would not be able to access the property. Unfortunately the Australian Bankruptcy Act anticipates this kind of conduct and in certain circumstances affords provisions for a subsequent Bankruptcy Trustee to reverse the effect of a transfer. In

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ATO – Insolvency and the Tax Man Jekyll & Hyde

13/12/2012 by Michael Jones

The title of this paper is named after the character created by Robert Louis Stevenson commonly known today as “The strange case of Dr Jekyll and Mr Hyde”.  The Jekyll and Hyde description usually refers to a person with a split personality, one good and one bad.  So it is that in many cases the Australian Taxation Office (The ATO) seems to have a Jekyll and Hyde approach when it comes to tax payers who are unable to pay their debts due to insolvency. WHY IS THE ATO THE CENTRE OF ATTENTION When businesses get into financial difficulty, cash flow becomes extremely tight.  The simple principle is that the noisy cog gets the oil, thus employees are paid before critical suppliers, c

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Signs of Business Stress

13/04/2010 by Michael Jones

1) General (i)  A Statistical Approach A review of the Bankruptcy (Personal Insolvency) and Corporate Insolvency statistics reveal some interesting fundamentals about the movement of Insolvency in the Australian economy.  Surprisingly Personal Insolvency seem to be decreasing from a peak in 2009, current figures seem to be stabilising at 2008 levels.  The 2009 peak appears to have been the result of a continued sustained rise since at least 2005 and there is evidence that this pattern of sharp increases has been a feature of the Personal Insolvency statistics since at least 1988. It is clear from an analysis of the Personal Insolvency statistics that the vast majority of Personal In

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