Posted on April 11, 2016 by Christabelle Harris
Unfortunately, due to the current economic environment and the large number of businesses now facing liquidation, our office is seeing increased cases of liquidators contacting our clients in relation to the receipt of ‘preferential payments’ .
Preferential payments involve transactions that favour one creditor at the expense of other creditors whilst the company making the payment is insolvent. The main pool of creditors that are affected by preferential payments are unsecured creditors. If you are an unsecured creditor and receive a payment from a company ahead of other creditors during a time that company was trading insolvent, the liquidators can demand the repayment of funds received.
For the liquidator to claim a preferential payment that has been made to your business, they must be able to prove the following:
- A transaction was entered between your business and the company during a time of insolvency;
- The transaction occurred during the statutory period (generally six months for non-related parties) before liquidation commenced;
- The transaction gives you an unfair advantage over other unsecured creditors and;
- You suspected, or had reason to suspect, the company was insolvent (i.e. extending trade terms or payment arrangements being offered).
The best way to avoid an unfair preference claim is to take out security where possible, demand Cash on Delivery (COD) or up-front payments. Unfortunately this isn’t always possible when doing business especially in the current environment of restricted cash flow.
If you are sent a preferential payment claim from a liquidator, please contact our office to discuss the options available.
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Posted on October 29, 2015 by Christabelle Harris
Getting ready to retire? If so, it’s not too late to make your retirement more comfortable. Remember, retirement should be when you do all the things you didn’t get the chance to do earlier in life – so you want to make sure you have enough money to enjoy it!
Take time now to do a financial stocktake and see how prepared you are for retirement. Consider asking yourself the following questions:
How much superannuation do I have?
Your super account will be a major source of income during your retirement. Ensure you reap the rewards of clever management and investment strategies.
No matter what you choose to invest your money in, keep in mind diversification of assets is a good tactic. It will ensure any poorly performing investments don’t affect your super balance too heavily.
How much superannuation do I need?
To answer this question, you need to ask yourself another: how do I want to live? A comfortable standard of living is a very subjective concept. The ASFA Retirement Standards estimate that to fund a ‘modest’ retirement a couple would need $33,000 a year. For a ‘comfortable’ lifestyle, you would need an income of around $58,000 a year.
For some, this may indeed contribute towards a good retirement. However, for others used to a higher disposable income, a yearly retirement income of $58,000 will not be enough. We suggest that you may need to think in the long-term. If you are planning on using your retirement to do all the things you’ve been putting off, you should consider taking extra steps to build your nest egg.
What age can I retire?
Generally you can start drawing on your super in some form when you hit the preservation age of 55. To find out when you are eligible, check out ASIC’s retirement calculator.
Even if you can retire, that doesn’t mean you should. It’s a simple equation; the longer you work, the more super you will have. A foolproof means of building a bigger nest egg is to put off your retirement for a few years.
However, this does not mean you have to put off enjoying your super. If you are over 55 and still working, you can set up a Transition to Retirement Pension. This will allow you to access the transition pension and benefit from tax-free investment returns. You can continue to contribute to your super by setting up an accumulation account for your employer to pay into. Setting up a self-managed super fund (SMSF) will allow you to have both the pension and accumulation accounts in one Fund.
Working a few extra years before retirement will give you a few more comfortable years after it.
If you want to learn more about SMSFs, contact Helen Cooper, our Superannuation Senior Manager.
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