The government has announced a range of reforms to crack down on illegal phoenix activity. The Phoenix Taskforce will comprise over 20 State, Territory and Federal government agencies, including the Australian Taxation Office (ATO), Department of Employment, Australian Securities & Investments Commission (ASIC), and the Fair Work Ombudsman. Sophisticated data matching tools have been developed to identify, manage and monitor suspected illegal phoenix operators.
Illegal phoenix activity is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts. Illegal phoenix activity poses substantial risks to employee entitlements, revenue, and to the integrity of the corporate system. It imposes an unfair burden on honest Australians and businesses and is estimated to cost the Australian economy over $3 billion a year.
The reforms include the proposed introduction of a Director Identification Number (DIN) and a range of other measures to deter and penalise phoenix activity. It is proposed that the DIN will allow authorities to track the activities of individual directors through various government databases and map their relationships with other directors and companies.
As well as the DINs, the Government will consult on a range of other possible measures to combat phoenix operators, including:
- introducing specific phoenixing offences
- preventing directors from backdating resignation to avoid personal liability or from resigning and leaving a company with no directors
- making directors personally liable for GST liabilities as part of extended director penalty provisions
- extending the penalties that apply to tax avoidance scheme promoters to advisers assisting phoenix operators
- increasing the powers of the ATO to recover a security deposit from suspected phoenix operators
The government will also look at how to identify high-risk individuals, who in turn will be subject to early intervention tools and new preventative measures.
Source: Australian Taxation Office
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