The Flow-On Effect for Business Owners

By Peter Biazos, Managing Director

Australia’s property market appears to be slowing, and falling property prices don’t just affect homeowners and investors.

For business owners who have traditionally relied on equity in their home or investment properties to support their businesses, this could have a flow-on effect.

Less equity means fewer people can borrow, reborrow or redraw into their account.

At the same time, interest rates are higher, so people’s borrowing capacity is already down. Loan applications are down, and approvals are down.

Source: https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release

Additionally, properties are staying on the market longer before they sell, and new stock isn’t necessarily coming onto the market either.

It seems that everything is grinding to a halt.

When the equity isn’t there anymore

For businesses experiencing cash flow pressure and carrying debt, access to equity has kept things going. They may have used money out of their own cash reserves or tried to access equity from their property. That’s getting harder now and losing access to that equity creates a problem.

And the problem is twofold. You have people who have only their matrimonial home, and you have people who own investment properties. If their mortgage repayments are going up and they see their property value coming down, the current market makes it hard to sell and unlock that equity. Rent prices will keep increasing which will also have a flow on effect on disposable income.

At the same time, creditor activity is increasing, and we’re seeing the ATO issuing a high number Director Penalty Notices and taking action against businesses.

Winding-up applications 2019 – 2026

Source: https://alares.com.au/insights/01-06-2026 

The risk of negative equity

There’s also the issue of negative equity for people who bought property with a small deposit.

With the 5% deposit scheme, unit prices under a million dollars suddenly started going up. Demand was going through the roof.

The RBA data below shows that the share of first home buyers borrowing at LVRs of 90% or more increased sharply after the Australian Government expanded the 5% Deposit Scheme in October 2025.

Now, if property prices continue to fall, we could see another potential flow-on effect: people who got into the market with a 5% deposit could end up in negative equity.

Source: 2. Resilience of Australian Households and Businesses | Financial Stability Review – March 2026 | RBA

It may take some time to filter through

From an insolvency perspective, we don’t anticipate a significant impact in the short term. It needs to filter into the economy a little bit more.

The impact is likely to become clearer as home owners start applying for loans and realise they’re getting knocked back or can only borrow less than they could a few months ago.

That will affect their ability to keep trading their business without that cash, and the question then becomes: can the company keep trading?

That’s where getting advice sooner rather than later becomes important.

Struggling business owners shouldn’t sit on their hands. They need to be proactive and seek advice from an insolvency practitioner or a trusted advisor.

What should accountants and lawyers be looking out for?

If a client comes to their accountant or lawyer and says, “I’m in a bit of strife and need to release some cash,” it’s time to consider their options.

Don’t necessarily rely on the big four banks.

There are other lenders out there who can assist. Obviously, we’re not talking about lenders of last resort, but second-tier lenders with slightly higher interest rates that may look at a borrower more favourably than a bank.

We’re also seeing more people relying on private lending.

You’ve got to be aware of the risk in going to lenders of last resort. If you’re seeing interest rates at 4% per month or equivalent, don’t jump in and sign up. Be wary of large establishment fees and the like.

We know that desperate situations can make people do things they probably would never have dreamed of doing.

People seem to be paralysed

Interestingly, we have seen a bit of a downturn in insolvency work in recent times which is due to various factors.  That said, in recent weeks the enquiry and conversion rates have increased but I would call things “patchy”.

Maybe things are so bad that everyone’s a little bit paralysed.  

For business owners facing these pressures, it’s about making the decisions you can with the information and data in front of you, and relying on a group of trusted advisers for that advice.

It’s not burying your head in the sand. It’s: “Okay, yep, this is a bumpy time. Let’s get all of the people in our corner to help us through.”

If you’ve got a client who is experiencing cash flow difficulties, you can reach out to us for a confidential discussion.

By Troy Graham, Senior Manager, Sydney Office

A profitable teaching college specialising in the food and hospitality industry was facing liquidation after accumulating a significant debt to its landlord.

B&T Advisory was approached by the company’s external accountant because, like many businesses, it had been heavily impacted during COVID. As a large proportion of its students were international, closed borders and restrictions on student intake meant that while the business did not necessarily suffer immediately, the follow-on effect of closed international borders affected the business post-COVID.

Because the college runs two- or three-year courses, the true impact did not end when COVID restrictions lifted – two years without new student intake continued to affect the business for years afterwards.

Looking beyond liquidation

When the accountant first approached our Sydney team, the initial thought was to place the company into liquidation. However, after reviewing the circumstances (a profitable business with a strong outlook), we questioned whether liquidation was the right outcome and suggested considering a voluntary administration option.

Keeping the business operating

The appointment of a Voluntary Administration occurred in the middle of a teaching term, so simply shutting the business was an unfavourable option.

Our team continued trading the business throughout the voluntary administration, keeping employees working while ensuring students could continue attending classes without disruption.

For six weeks, the business continued to operate while the team coordinated all the moving pieces.

A better outcome for everyone

The company ultimately entered into a Deed of Company Arrangement, satisfied its deed obligations, and creditors received their forecast distribution.

Today, the business remains profitable.

The outcome meant:

• Employees kept their jobs.
• Students remained in college with no disruption to their studies.
• Creditors received their forecast distribution.
• The business continued trading from new premises.

Why this matter was different

What made this matter unique was that there was really only one creditor who’s debt was unserviceable.

That creditor couldn’t simply compromise the debt through a commercial agreement, so the business was required to go through a formal insolvency process.

Ideally, if the director had been able to negotiate directly with the creditor, the process would have been much easier. The director had tried to do this, and ultimately the voluntary administration facilitated what the Director had been trying to achieve himself.

Working together to achieve a better outcome

The referring accountant played an important role throughout the process.

To put the Deed of Company Arrangement in place, the accountant worked with the director to obtain finance and bring the company’s financial records up to date.

Because the accountant had been involved with the business prior to our appointment, they had a detailed understanding of the financial position, whereas the director was naturally more focused on day-to-day operations.

Working together meant the company was able to continue trading, the accountant retained their client and continued supporting the business, and together we achieved a better outcome than a liquidation.

The importance of seeking advice early

One of the biggest lessons from this matter is that there isn’t always just one outcome.

Even if it doesn’t result in an appointment with B&T Advisory, it’s worth running ideas by an advisor to obtain a second opinion.

Commonly, there is one piece of the puzzle that seems insignificant to the referrer/director; however, such a fact can completely change the outcome.

Seeking advice early, sounding out the issues and keeping an open mind about the best outcome for the client can make all the difference.

Every little detail, even if it doesn’t seem important at the time, could be the game changer!

By Peter Biazos, Managing Director

The AUSTRAC “Tranche 2” reforms for anti-money laundering and counter-terrorism financing (AML/CTF) under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF), which went into effect on 1 July 2026, will bring many legal, accounting and insolvency practices into the regulatory framework for the first time.

In this article, our Managing Director, Peter Biazos, examines these new compliance obligations and their implications for trusted Advisors.

Background

This is a national change and will apply to designated services commonly provided by:

• Legal practitioners – property conveyancing, client account operations, company establishment, and trust-related services.
• Accountants – handling client funds, supporting the planning or execution of financial transactions, and creating companies or trusts.
• Conveyancers – facilitating the acquisition, sale, or transfer of real property.
• Real estate agents and brokers – arranging or brokering real estate transactions.
• Dealers in precious metals and stones – conducting high-value purchases, sales, or exchanges of precious items.

The expansion aligns Australia with international standards and imposes requirements on ‘tranche 2 entities’ similar to those already established in countries like the United Kingdom.

Classified as a reporting entity and supervised by AUSTRAC, the Commonwealth financial intelligence regulator, these practitioners are now required to meet anti-money laundering obligations whenever they provide a “designated service” as outlined above.

The primary objective of these obligations is to ensure that practitioners are alert to red flags that may indicate money laundering or terrorist financing and promptly report these concerns to AUSTRAC.

Activity-based, not profession-based

Importantly, the obligations related to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) are activity-based rather than profession-based. This means that AML/CTF obligations arise when a practitioner begins providing a designated service.

This also means that B&T Advisory will become a reporting entity, particularly in instances where we are required to:

• begin managing or carrying out a sale of assets
• participate in, or act for a person in, a financing or restructuring transaction
• take control of and manage funds as part of a transaction (such as receiving, holding and controlling sale proceeds)
• trade on a business and make payments or handle funds as part of that activity.

Source: How designated services apply to insolvency practitioners | AUSTRAC

Core Obligations

Under the reforms, a Reporting Entity is required to:

• Enrol with AUSTRAC by July 29, 2026
• Assess the money laundering and terrorism financing risks that their services could be exposed to.
• Develop and implement a documented AML/CTF framework setting out internal policies, procedures, and controls to identify, manage, and reduce those risks
• Implement customer due diligence measures, including identity verification, enhanced checks for higher-risk clients, and ongoing transaction monitoring.
• Appoint a management-level AML/CTF compliance officer, who will be responsible for training staff to recognise red flags and know what to do when they see them.
• Keep records for 7 years by setting up a record-keeping system that enables storage and simple retrieval of the right records.

• Submit mandatory reports to AUSTRAC through its online portal, including suspicious matter reports and reports for cash transactions of $10,000 or more.

Source: Your obligations | AUSTRAC

Key Red Flags

The suspicious matters that practitioners should be aware of are warning signs of potential money laundering or terrorism financing that may require investigation. These include:

• Unusual payment methods
• Sources of wealth that are unclear or cannot be readily explained
• Unnecessarily complex ownership structures
• Limited face-to-face interaction with clients who seek anonymity or are reluctant to provide requested information
• Rushed or overly urgent instructions that often accompany transactions that lack a clear legal or commercial purpose.
• A rapid change of advisors without a clear reason.

Source: Risk insights and indicators of suspicious activity for accountants | AUSTRAC

A Suspicious Matter Report (SMR) must be lodged when you have reasonable grounds to suspect that a customer or transaction is linked to criminal activity. Standard timing for submission is:

• 24 hours of forming the suspicion if related to terrorism financing
• 3 business days for other suspicions.

Source: Suspicious matter reports | AUSTRAC

What Are the Penalties for Non-Compliance?

AUSTRAC has extensive enforcement powers. Corporations found in serious breach of these laws may face civil penalties of up to AUD 22.2 million per contravention, while individuals may be fined up to AUD 4.4 million. For the most severe violations, criminal penalties, including imprisonment, can apply.

While AUSTRAC typically works collaboratively with businesses to encourage compliance, it has shown that it will impose substantial penalties on those who repeatedly or intentionally fail to comply.

What do these changes mean for our Referrers and Clients?

For AML/CTF purposes, the client is the person or entity being assisted through the designated service, not necessarily the person who appointed the practitioner.

Customer Due Diligence is a core tenet of the obligations. It requires Practitioners to establish who the client is, whether the client is a company, trust, or another structure, and to identify the individuals who control it.

This will require further layers of identity verification, including requests for passports and drivers’ licences, as well as more detailed questioning about the ownership and control of companies.

These requests are legal requirements, and all information collected will be handled in accordance with our privacy policy and only used for the purposes required by law.

For our existing clients and referrers, these checks only apply when you next engage us for a new appointment.

Looking Ahead

This overview article is intended as a starting point only.

Australia’s Tranche 2 AML/CTF reforms are broad, and many practical questions will continue to be worked through as firms implement new processes and regulators provide more guidance.

There is considerably more to discuss than can be covered in one article. For lawyers and accountants, the key task at this stage is to identify which activities within their practices may constitute designated services and to begin preparing risk-based compliance processes.

As the reforms move from legislation to implementation, and as practical guidance and industry experience develop, we will continue to revisit these topics and share further insights relevant to professional practice.

This article is general information only and should not be treated as legal advice. Law and Accounting practices that are unsure whether they fall within the remit of the AML/CTF Act may need to obtain independent advice.

 Important Resources:

Check if you may be regulated | AUSTRAC

Accounting program starter kit: Getting started | AUSTRAC

Legal profession program starter kit | AUSTRAC

https://www.lawsociety.com.au/understanding-designated-services-when-legal-services-trigger-tranche-2-amlctf-obligations

ABC Listen Radio Segment

By Timothy Pope, Senior Manager

This was quite a significant budget, as confirmed by the long-tail media coverage we’ve seen over the past few weeks.

From an insolvency and restructuring perspective, it’s clear that the budget was intended to support long-term reform objectives, but there’s concern about the short- to medium-term stress it may create for already fragile businesses and leveraged investors.

The budget clearly signals a shift away from supporting passive asset inflation and toward productivity, tax integrity and housing supply reform, or at least it’s certainly trying to. Whether that eventuates, we will have to wait and see.

The measures around negative gearing, CGT changes, discretionary trust taxation and broader anti-avoidance settings are significant structural reforms rather than just responses to recent cyclical economic measures.

From a restructuring perspective, that matters because Australian SMBs are deeply intertwined with discretionary trust structures, property-backed borrowing, leveraged investment strategies and intergenerational asset ownership models.

The proposed 30% minimum tax on discretionary trusts alone could trigger a major wave of restructuring activity over the next several years.

Whether that restructuring is informal or formal remains to be seen, but businesses will reassess entity structures, succession planning, and tax efficiency. Trust lawyers will certainly benefit greatly over the next few years!

Overall, it’s an economically ambitious, politically bold budget, and potentially destabilising for marginal businesses already under financial pressure.

Businesses Were Already Under Pressure

One of the biggest issues is that many businesses were already operating with weakened balance sheets before the budget landed.

Higher interest rates, compressed margins, reduced consumer spending and rising ATO arrears are all creating pressure across the SMB market.

Insolvency statistics probably aren’t yet fully capturing the underlying stress.

Many businesses are surviving through delayed creditor payments, invoice financing, funding from directors or related parties, and simply accumulating tax debt.

There’s also been a softening in asset values. During COVID, businesses couldn’t get cars or heavy machinery, so second-hand markets were extremely strong. That environment has changed significantly.

The Sectors Most Exposed

Construction, transport, hospitality and retail remain the sectors most exposed.

In construction, businesses are still dealing with fixed-price contracts signed during peak inflation, alongside labour shortages, fluctuating material costs and project delays.

One subbie goes down, or the project developer goes down, and the domino effect to other parties involved in the project can be significant.

Hospitality and retail businesses continue to feel the impact of reduced discretionary spending. People are staying at home and bunkering down whilst we ride these interest rate rises.

Transport and logistics businesses are also heavily exposed, particularly to fuel supply disruptions and broader economic slowdowns that are impacting freight demand.

If the temporary fuel excise reduction is not extended, and petrol & diesel prices go back up, transport and logistics are going to feel it.

Has the Budget Done Enough?

It’s not all doom and gloom.

There were some positive measures for small businesses in the budget, although they haven’t had the headlines that CGT and negative gearing reform received.

These included:

• the permanent $20,000 instant asset write-off
• expanded loss carry-back provisions
• startup loss refundability
• more flexibility around PAYG reporting and payments
• venture capital incentives

Those reforms should improve cash flow flexibility and restructuring options for viable businesses.

But at the same time, broader tax changes reduce investor confidence, property market liquidity, refinancing flexibility and access to private capital.

That combination can materially affect distressed businesses because Australian SMBs often rely on property equity, trust distributions, related-party lending and investor appetite to survive downturns.

What Accountants Should Be Looking At

With the May tax return deadlines now passed, this is a good time for accountants to conduct a thorough financial health check on clients’ businesses.

It’s a good time of the year to assess how businesses are looking.

Areas worth paying closer attention to include:

• ATO debt positions
• PAYG flexibility changes
• payday super obligations
• fuel-related support measures
• equipment finance arrangements

One practical issue many businesses overlook is equipment finance consolidation. Many businesses have equipment leased from multiple financiers and lenders, and consolidating those arrangements can sometimes improve cash flow and simplify repayments.

ATO Enforcement Pressure Is Rising

One of the biggest concerns moving forward is the increasing enforcement activity coming from the ATO.

Director penalty notices, garnishee notices and winding-up applications are all increasing, with directors increasingly being pursued personally for unpaid GST, PAYG withholding and superannuation liabilities.

There’s no meaningful relief from the ATO’s enforcement pressure.

Over the next two to three years, there will likely be:

• increased insolvency events
• more restructuring activity
• Higher voluntary administration volumes
• increased creditor enforcement

The trust restructuring measures will also create legal and transactional complexity that many SMBs simply aren’t prepared for.

Ultimately, the budget feels like a long-term play and an attempt to correct broader structural issues in the economy. For many SMBs already operating under pressure, the short-term fallout could be significant, so having trusted advisors in their corner will be a critical future-proofing strategy.

By Seth Cooper, Senior Insolvency Analyst

Small Business Restructures (SBRs) were introduced to help struggling companies deal with solvency issues without having to go through a formal insolvency appointment. They remain a viable solution for businesses willing to make an appropriate offer to creditors and address any major internal issues they face.

Many businesses going through a SBR are dealing with issues outside their control. Sometimes it’s industry pressures, sometimes it’s cash flow, delayed payments or supply issues, particularly in industries like construction. Other times, it’s broader economic pressures or personal circumstances that have put the company into a difficult position.

What makes  SBRs different is that it gives companies the opportunity to address solvency issues without immediately entering a formal liquidation.

Compared to liquidation or voluntary administration, a SBR is much less invasive. It allows companies to continue trading while they work through a proposal to compromise their debts with creditors. If creditors accept the proposal, the company can move forward in a much stronger financial position.

From a creditor’s perspective, it can also produce a much better outcome than liquidation. In a liquidation scenario, the odds of unsecured creditors receiving anything back are generally pretty low. Through a SBR, creditors generally receive anywhere from 20 to 60 cents  in the dollar (depending on the company’s/Director’s financial capabilities), which is obviously a much better outcome than receiving nothing.

Another important difference is that if a restructuring plan is not accepted, the company is not automatically forced into liquidation. That’s very different to voluntary administration, where a failed proposal can lead directly into liquidation, and the company stops trading.

The Current State of Play With SBRs

SBRs remain a viable solution and present a great opportunity for companies willing to make an appropriate offer and address the major issues they’re struggling with.

The 2025 financial year was really the peak for SBR appointments across Australia, with around 3,000 appointments recorded. Since then, appointment numbers have dropped back to levels closer to the 2024 financial year, with current figures expected to finish at around 1,200 to 1,400 appointments Australia-wide at the end of the 2026 financial year.

There definitely seems to be a bit of a lull in the market at the moment.

Part of that appears to come down to how the ATO is approaching restructuring plans. Earlier on, it felt like a very high percentage of plans were being accepted. Now, the ATO seems to have settled into a much firmer framework around what they will and won’t support.

Because the ATO is generally the major creditor in these matters, it often becomes the deciding vote on whether a plan succeeds.

How the SBR Process Works

The process usually starts with an initial conversation with the director about the company’s position, financial capacity, debt levels and whether the business is actually suitable for an SBR.

That first conversation is really important because there’s no point putting a company through a restructuring process if there are better options available. Sometimes, liquidation or voluntary administration are  genuinely the better financial outcome for both directors and creditors.

If the company is eligible and a SBR is considered the right option, the appointment begins, and the restructuring practitioner requests the company’s financial information, generally covering the previous four financial years.

That information is crucial because it forms the basis of the investigations into the company and the major report that will ultimately be sent to creditors.

An initial report is then issued to creditors confirming the commencement of the restructuring and outlining the current debt position.

Once the financials are received, work begins on drafting the major report to creditors and helping the company formulate an offer. That report outlines the company’s position, the investigations undertaken and why creditors should consider accepting the proposal.

The report must generally be provided to creditors within 20 business days, although an extension may be granted in certain circumstances.

Where possible, a draft version is often sent to the ATO beforehand so feedback can be obtained before the report is formally issued.

Once finalised, the proposal is sent to creditors, who then have 15 business days to vote on the restructuring plan.

If the plan is accepted, the company enters the restructuring plan period and continues trading while the plan’s terms are monitored. Once all funds are received, distributions are paid to creditors, and the restructuring is finalised.

What a Good Restructuring Plan Looks Like

A good restructuring plan is one that provides creditors with a higher return than what they would likely receive through liquidation while also allowing the company to continue trading.

The best plans are mutually beneficial. The company gets the opportunity to continue operating and maintain relationships with creditors, while creditors receive a better financial outcome than they would through a formal liquidation.

The Biggest Mistakes Directors Make

The biggest issue during the restructuring process is usually that directors do not provide information promptly or remain engaged throughout the appointment.

The process moves very quickly, and there are strict deadlines for reporting to creditors. If financial information is delayed, valuable time is lost almost immediately.

It’s also important for directors to understand that appointing a restructuring practitioner doesn’t mean they can step back from the process. There will be questions, requests for additional information and ongoing discussions throughout the appointment.

Trusted advisors such as accountants and lawyers can make a huge difference here by helping directors prepare all financial information before the appointment and by discussing what type of proposal the company may realistically be able to put forward to creditors.

If you’ve got a client that you think is a strong candidate for a Small Business Restructure, reach out to us for a confidential discussion.