Posted on September 13, 2019 by Ashley Dawson
Cash is king in any type of business, but what happens when debtors don’t pay? We often get asked what avenues for collection a client can pursue, and a Statutory Demand can be an effective tool to recover debts from companies.
What is a Statutory Demand?
It is a demand issued by a creditor, pursuant to the Corporations Act 2001 (“the Act”), to a debtor company requiring payment of a debt which is more than $2,000 within 21 days (“the Demand”). It is in writing, in the form prescribed by the regulations (Form 509H) signed by the creditor and accompanied by an affidavit of the creditor supporting the Demand.
It is important to note that a Statutory Demand can only be issued to a company, or if the entity is a trust with a corporate trustee. If the debtor is a partner in a partnership, a trust with individual trustees or a sole trader, a Demand under the Corporations Act cannot be issued, and we advise you contact our office to discuss further avenues for seeking payments from individual debtors.
What happens after the Demand is Served?
The debtor company will have 21 days to either comply with the Demand or make an application to the relevant court to have the Demand set aside. If the debtor company fails to do either there is an assumption under Section 459G(2) of the Act that the company is insolvent and provides that basis for a creditor to make an application to the court to have the debtor company wound up.
Setting Aside a Demand
A Demand will only be set aside if:
- The debt is subject to a genuine dispute;
- The amount in fact owed is less than the statutory minimum;
- There is a defect in the Demand (such as an incorrect address) that would cause substantial injustice to a party;
- There is some other reason why the court should set it aside (such as a Demand containing grossly inflated amounts, or the debtor has an offsetting claim for example).
It is important to note that the threshold for demonstrating whether a genuine dispute exists is a low threshold. A company that can provide even a potential weak defence before a court might successfully have the Demand set aside. If that happens, you, the creditor, will be faced with the likelihood of being ordered to pay the company’s legal costs of the court proceedings.
For this reason proper consideration must be given to the question of whether a genuine dispute might exist before a Demand is issued.
Having said that, Statutory Demands can be very effective to secure payment of a debt.
Legal Advice
The Statutory Demand procedure is a very technical area of law and care must be taken in every step of the process. Legal advice should always be obtained before making any decisions.
Please contact our office should you wish to discuss the possibility of issuing a Statutory Demand or if you are a Director of a company that has been served with a Demand, and one of our staff can advise you on the next step in the process and put you in touch with a contact in our legal network.
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Posted on July 23, 2019 by Kelsi Keep
The ATO have announced that they will be closely examining a number of work related deductions, one of which is the Motor Vehicle claims where taxpayers take advantage of the 68 cents per kilometre for work related travel up to 5,000kms work related car expenses.
Assistant Commissioner Kath Anderson said over 3.75 million people made a work-related car expense claim in 2016–17, totaling around $8.8 billion. “That’s a lot of money and Australians expect us to ensure people are not over-claiming.”
“While most people want to do the right thing, we know the rules can be a bit tricky for some and we are seeing a lot of mistakes. We are particularly concerned about taxpayers claiming for things they are not entitled to, like private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed.”
So, let’s talk about how to ensure that your motor vehicle claim is ATO audit proof.
When calculating motor vehicle deductions, you may use two methods; the cents per kilometre method or the logbook method.
THE METHODS
Cents Per Km Method
It’s true that claims of up to 5,000 kilometres under the cents per km method do not require a log book. However, you still need to have done the kilometres as part of your job and be able to show how you calculated your claim, for example by keeping a diary of places you have had to drive to for work, and how often.
Logbook Method
If you are claiming more than 5,000 kilometres you will need a log book and records of all of your motor vehicle expenses.
A log book is required to be kept for at least 12 continuous weeks during the financial year, and that 12-week period needs to be representative of your travel throughout the year (i.e. you cannot choose to keep your log book in a 12 week period where you drove a significant number of work related kms when you drove significantly less during the rest of the year)
Your logbook must contain:
- when the logbook period begins and ends
- the car’s odometer readings at the start and end of the logbook period
- the total number of kms the car travelled during the logbook period
- the number of kms travelled for each journey. If you make two or more journeys in a row on the same day, you can record them as a single journey
- the odometer readings at the start and end of each subsequent income year your logbook is valid for
- the business-use percentage for the logbook period
- the make, model, engine capacity and registration number of the car.
For each journey, record the:
- reason for the journey (such as a description of the business reason or whether it was for private use)
- start and end date of the journey
- odometer readings at the start and end of the journey
- kilometers travelled
I know it sounds like a lot of work but the good thing is that the logbook is valid for five years; (however, you may start a new logbook at any time) and there are a lot of Log Book Apps out there to help, for example here’s a link to GeersSullivan’s App http://www.gscpa.com.au/our-app/.
If your circumstances change, such as a change in the type of work undertaken by your business, you may need a new logbook.
In additional to your log book you must also have evidence of:
- your actual fuel and oil costs, or odometer readings on which you estimate your fuel and oil use
- evidence of all your other car expenses including:
- repairs and servicing
- interest
- lease payments
- insurance
- registration
The ATO has been investigating tax payers that are claiming expenses that they have been reimbursed for, so it is also a good idea to ensure you keep your bank statements so that you can prove you incurred the expense yourself and were not subsequently reimbursed.
DEDUCTIBLE TRAVEL
Now that we have determined what you need to be able to make a motor vehicle claim, let’s look at what travel is actually deductible.
What You Can Claim
You can claim the cost of travelling:
- directly between two separate workplaces – for example, when you have a second job (if one of these places isn’t your home)
- from your normal workplace to an alternative workplace that is not a regular workplace (for example, a client’s premises) while still on duty, and back to your normal workplace or directly home
- if your home was a base of employment – you’re required to start your work at home then travel to a workplace to continue your work for the same employer
- if you had shifting places of employment – you regularly work at more than one site each day before returning home
- from your home to an alternative workplace that is not a regular workplace for work purposes, and then to your normal workplace or directly home. This doesn’t apply where the alternative workplace has become a regular workplace
- if you need to carry bulky tools or equipment that your employer requires you to use for work which you can’t leave at your workplace – for example, an extension ladder or a cello.
What You Can’t Claim
You can’t claim the cost of driving your car between work and home just because:
- you do minor work-related tasks – for example, picking up the mail on the way to work or home
- you have to drive between your home and your workplace more than once a day
- you are on call – for example, you are on stand-by duty and your employer contacts you at home to come into work
- there is no public transport near where you work
- you work outside normal business hours – for example, shift work or overtime
- your home was a place where you ran your own business and you travelled directly to a place of work where you worked for somebody else
- you do some work at home.
If you have any questions in relation to your motor vehicle claim please contact our office on (08) 9316 7000.
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