Dealing with DIVIDENDS under $50

Please note this knowledge base article does not constitute advice on whether a dividend is payable in particular circumstances, the purpose of this article is to provide instructions on how you may use the insolvency software to exclude creditors (with claims under a certain amount) from receiving a dividend.

Dividend is less than $50.00

BANKRUPTCY REGULATIONS 2021 (F2021L00261) - REG 42 Minimum amount of dividend (austlii.edu.au)

CORPORATIONS ACT 2001 - SECT 553E Application of Bankruptcy Act to winding up of insolvent company (austlii.edu.au)

If you want to exclude small claim creditor from a dividend, you may split dividends to pay:

• one dividend for Under $50 creditors and
• another for all creditors who will actually be paid.

To exclude these creditors from the pay run you must first identify the creditors by flagging them as excluded creditors (for convenience let's call them "s553e creditors").

1. Setup an account called s553E creditors by selecting Add Account then creating Account name s533e as per below (Highlighted).

2. calculate the dividend to get a report of the amount due to each creditor. Flag each creditor with a dividend under $50 as a 553E creditor by highlighting the creditor. Right hand click and click Change Claim Account to s553e Creditors as per below.

Then delete the dividend.

All other creditors should already be under Trade creditors. (NB for cases converted from IPS creditors will either be flagged as unsecured or will not be flagged at all).

Run the dividend for all trade creditors 

Sort your trade creditors by clicking on Trade Creditors under Creditor class (your s553e creditors should be excluded from the list).

Run your distribution to these creditors.

For creditors under $50

Setup a liability account “Dividends under $50” and a bank account “Under $50 creditors dividends”.

Filter the Creditor class by s553e Creditors

Run a dividend for s553E creditors and pay them from the Under $50 creditors bank account.

Once the S553E dividend has been posted you will need to process a journal removing the funds from the Under $50 bank account and posting them to the liability account for Dividends under $50.