New laws tackle ‘phoenixers’
THE Federal Government is taking action to crack down on illegal ‘phoenixing’ activity that costs the economy up to $3.2 billion per year to ensure those involved face tougher penalties.
Phoenixing – the stripping and transfer of assets from one company to another by individuals or entities to avoid paying liabilities – has been a problem in the road transport industry for many decades, impacting terribly on drivers, owners, employees, creditors and ultimately taxpayers.
The government’s proposed package of reforms will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity.
The DIN will identify directors with a unique number, but it will be much more than just a number.
The DIN will interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people.
“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 penalise phoenixing activity for the benefit of all Australians,” Financial Services Minister Kelly O’Dwyer said.
In addition to the DIN, the government plans to introduce measures such as specific phoenixing offences to better enable regulators.
The establishment of a dedicated phoenix hotline to provide the public with a
❝ The government is committed to ensuring individuals who engage in illegal phoenixing activity are held to account...
— Kelly O’Dwyer
single point of contact for reporting illegal phoenix activity.
The extension of the penalties that apply to those who promote tax avoidance schemes to capture advisers who assist phoenix operators.
The ATO will also be awarded stronger powers to track deposits from suspected phoenix operators, which can be used to cover outstanding tax liabilities.
■ Making directors personally liable for GST liabilities as part of extended director penalty provisions
■ Preventing directors from backdating their resignations to avoid personal liability or from resigning and leaving a company with no directors, and
■ Prohibiting related entities to the phoenix operator from appointing a liquidator
The government will also consult on how best to identify high risk individuals who will 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
Consultation on the non-DIN measures will commence in the coming weeks.
MONEY GRABBERS NO MORE: Directors deliberately scuttling companies will be caught.
Minister Kelly O’Dwyer.