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Insolvency Law Reforms
Legislation has been passed to bring in reforms to insolvency laws from 1 January.
The changes make it easier for small businesses to make changes or cease trading. Rather than being forced into winding up, businesses will have the option to restructure and adjust in order to survive a difficult period and continue to trade.
Some businesses will be able to restructure their debts and remain in control of the business, while for those that need to cease, the process should be easier, faster and cheaper.
Debt restructuring is available for incorporated businesses with liabilities of less than $1 million. The process involves a 20 day business period to develop a plan with a restructuring practitioner, followed by 15 days for creditors to vote on the plan.
Eligibility is also dependent on whether the business has paid all its employment obligations including entitlements and superannuation and having tax lodgements up to date.
Business owners can notify the ATO of the plan and upload supporting documents via the Business Portal.
The same eligibility criteria apply to businesses wanting to use the simplified liquidation pathway.
For more detail on the simplified liquidation pathway, read the
Insolvency reforms factsheet
ATO – New insolvency reforms to support small business