Tuesday, September 12, 2017
The Australian Government has announced a package of reforms to deter and penalize illegal phoenixing activity.
Phoenixing costs the Australian economy up to AUD3.2bn (USD2.6bn) a year. It involves the stripping and transfer of assets from one company to another by individuals or entities, to avoid the payment of liabilities.
Revenue Minister Kelly O'Dwyer said: "The Turnbull Government is committed to ensuring individuals who engage in illegal phoenixing activity are held to account and that the regulators are equipped to take stronger action to both deter and penalize phoenixing activity for the benefit of all Australians."
The Government will:
The Government will also launch a consultation in the coming weeks on how best to identify high risk individuals. The intention is for these individuals to be subject to new preventative and early intervention tools, including: a "next-cab-off-the-rank" system for appointing liquidators; allowing the ATO to retain tax refunds; and allowing the ATO to commence immediate recovery action following the issuance of a Director Penalty Notice.
The initiative was welcomed by the Australian Chamber of Commerce and Industry. Chief Executive James Pearson said: "Australian businesses stand to benefit from the Government's action to address illegal phoenixing. Small- and medium-sized businesses in particular can find themselves significantly out of pocket when their invoices go unpaid because of this illegal behavior."
"The Corporations Act already imposes significant reporting obligations on companies and directors, however the business community is open to Director Identification Numbers. Action to stamp out illegal activity must be surgical in its approach, targeting the problem without discouraging legitimate entrepreneurship."