AFTA up­date

From AFTA’s chief ex­ec­u­tive, Jayson West­bury

Travel Daily - - News -

IN THE wake of the Reed Hol­i­days col­lapse, and as more de­tails are re­leased in re­la­tion to the sit­u­a­tion and amount of money owed by the di­rec­tors, more and more ques­tions will now be asked. It ap­pears AFTA was only pre­sented with part of the busi­ness op­er­a­tions and there does ap­pear to be a com­plex web of com­pany in­volve­ment and own­er­ship upon which AFTA had no knowl­edge. This is not an ex­cuse of this com­pany hav­ing been an ATAS ac­cred­ited busi­ness, but it does make us feel more con­fi­dent that our cri­te­ria, pro­ce­dures and sys­tems are work­ing, we can only rely on the in­for­ma­tion pro­vided to us.

No doubt this will all come to the sur­face as the liq­uida­tors un­ravel the mess that has been left be­hind and work out what if any­thing can be done to sup­port those who have lost their money. AFTA con­tin­ues to main­tain an in­ter­est in this mat­ter as the cir­cum­stances un­fold.

Cu­ri­ously, this week the Fed­eral Min­is­ter for Rev­enue and Fi­nan­cial Ser­vices, Kelly O’Dwyer, an­nounced a new pack­age to ad­dress what is known as “Phoenix­ing”. This il­le­gal ac­tiv­ity costs the econ­omy up to $3.2 bil­lion per year (not just travel, clearly) and per­sons found guilty of this in the fu­ture will be fac­ing tougher penal­ties as a re­sult of the new pack­age. Phoenix­ing – the strip­ping and trans­fer of as­sets from one com­pany to an­other by in­di­vid­u­als or en­ti­ties to avoid pay­ing li­a­bil­i­ties – has been a prob­lem for suc­ces­sive gov­ern­ments over many decades. In fact, it would also ap­pear to be some­thing that in the past may have re­sulted in travel agents col­laps­ing. I make no di­rect ref­er­ence to this or sug­gest that this may be the case in the Reed Hol­i­days mat­ter, but it is an in­ter­est­ing con­sid­er­a­tion nev­er­the­less. The new pack­age will include the in­tro­duc­tion of a Di­rec­tor Iden­ti­fi­ca­tion Num­ber (DIN) and a range of other mea­sures to both de­ter and pe­nalise phoenix ac­tiv­ity. The new DIN will op­er­ate in an in­ter­face within gov­ern­ment agen­cies which will al­low reg­u­la­tors to map the re­la­tion­ships be­tween in­di­vid­u­als and en­ti­ties and in­di­vid­u­als and other peo­ple. In ad­di­tion to this new DIN, a range of other mea­sures to de­ter and dis­rupt the core be­hav­iours of phoenix op­er­a­tors will be im­ple­mented. Th­ese will include:

• Spe­cific phoenix­ing of­fences to bet­ter en­able reg­u­la­tors to take de­ci­sive ac­tion against those who en­gage in this il­le­gal ac­tiv­ity;

• The es­tab­lish­ment of a ded­i­cated phoenix hot­line to pro­vide the pub­lic with a 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;

• Stronger pow­ers for the ATO to re­cover a se­cu­rity de­posit from sus­pected phoenix op­er­a­tors, which can be used to cover out­stand­ing tax li­a­bil­i­ties, should they arise;

• Pre­vent­ing di­rec­tors from back­dat­ing their res­ig­na­tions to avoid per­sonal li­a­bil­ity or from re­sign­ing and leav­ing a com­pany with no di­rec­tors;

• Pro­hibit­ing re­lated en­ti­ties to the phoenix op­er­a­tor from ap­point­ing a liq­uida­tor.

So, what this all means is for those peo­ple who might con­sider us­ing a travel busi­ness to un­der­take Pheonix­ing ac­tiv­i­ties, the Fed­eral Gov­ern­ment will now be in a bet­ter place to bring them to jus­tice and hope­fully the penal­ties will fur­ther de­ter any­one from think­ing this sort of be­hav­iour is ok.

His­tory has shown that failed travel busi­nesses in the past may have been in­volved in th­ese sorts of ac­tiv­i­ties. A fur­ther strength­en­ing of the laws in Aus­tralia will de­ter - and let’s hope stop - any­one think­ing of do­ing this within the travel in­dus­try in the fu­ture.

Phoenix­ing has been a prob­lem for suc­ces­sive gov­ern­ments over many decades. In fact, it would also ap­pear to be some­thing that in the past may have re­sulted in travel agents col­laps­ing.’

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