In Part 1 of this three-part series, commercial litigator and insolvency expert Demian Walton joins Managing Director Andrew Henshaw to dissect the concept of insolvency.
The conversation delves into how financial statements can misrepresent solvency, particularly when company assets are tied up in shareholder transactions or related party transactions. These arrangements often intersect with Division 7A, where informal loan agreements and unpaid present entitlements (UPEs) can give rise to deemed dividends—triggering significant tax consequences for both companies and directors.
With the ATO’s scrutiny and audits intensifying, this episode highlights how integrity measures and compliance with benchmark interest rates are critical to avoiding breaches. The discussion also addresses the potential relief available under Section 109RB, and how poor structuring or delayed action can lead to statutory demands, Director Penalty Notices (DPNs), and personal exposure for directors.
This is a must-listen for professionals navigating the risks of corporate distress in today’s high-debt, post-COVID business landscape, where the intersection of insolvency law and tax risk is increasingly under the spotlight.
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