CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Australia To Tackle Illegal Phoenixing Activity

Australia To Tackle Illegal Phoenixing Activity

by Mary Swire, Tax-News.com, Hong Kong

12 September 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:

  • Introduce a Director Identification Number (DIN), which will involve the issue of unique numbers to directors, and will be used in conjunction with other databases to allow regulators to map the relationships between individuals and entities, and between individuals and other people;
  • Introduce specific phoenixing offences;
  • Extend the penalties that apply to those who promote tax avoidance schemes to advisers who assist phoenix operators;
  • Establish a dedicated phoenix hotline, to provide the public with a single point of contact for reporting illegal phoenix activity;
  • Give the Australian Taxation Office (ATO) stronger powers to recover a security deposit from suspected phoenix operators, which can then be used to cover outstanding tax liabilities, should any arise;
  • Make directors personally liable for goods and services tax (GST) liabilities, as part of extended director penalty provisions;
  • Prevent directors from backdating their resignations to avoid personal liability, and from resigning and leaving a company with no directors; and
  • Prohibit related entities to the phoenix operator from appointing a liquidator.

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."

TAGS: individuals | compliance | tax | small business | business | tax compliance | tax avoidance | entrepreneurs | goods and services tax (GST) | Australia | tax authority | small and medium-sized enterprises (SME) | financial reporting | penalties | services

To see today's news, click here.

Leave a comment

Read our Posting Guidelines

 






Close

Password Reminder

Please enter your email address to receive a password reminder.

 

Log into Tax-News+
Not registered yet? Find out about our daily news alert service »

 Email: 
 Password: 

Login »

Forgotten your password?







Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Tax-News+ Updates

Receive FREE daily updates from Tax-News.com, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...

 

Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »