Dodgy ‘phoenix’ firms are facing a crackdown

Companies rising out of the ashes to avoid paying tax, wages and other debts will face a crackdown when regulators get increased powers.

Phoenix activity is when executives strip down their businesses and transfers assets to another company to avoid paying outstanding liabilities.

Under the Bill which passed the Senate yesterday, regulators will get beefed-up powers to detect and address phoenix activity through prosecuting company directors.

Unscrupulous pre-insolvency could also face penalties. The Government will give Australian Securities and Investments Commission $8.7million to help fund liquidators to investigate and report the shonky practice.

Labor’s push to have the laws reviewed after five years was agreed to by the Government, meaning the Bill will now return for final approval in the lower house. Government Minister Jane Hume said phoenix activity had been an increasing problem for decades. “The Morrison Government is committed to tackling illegal phoenix activity to protect honest and hardworking Australian small businesses and taxpayers”, she told Parliament yesterday.

Courier Mail 6 Feb 2020

If your business is facing any challenges on cashflow problems and can’t pay their debts when due and payable, please contact our office on (07) 5504 5700 to advise appropriate plans and strategies.

UPDATE:

The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 received assent as Act No 6 of 2020 on 17 February 2020. The Act includes a range of measures targeting illegal phoenixing including penalties for directors related to GST liabilities and retaining tax refunds.

Cordner Advisory - Your Business Advisory, Accounting & Tax Specialists. Catering for clients all across Australia, from the golden beaches of the Gold Coast and Sunshine Coast to the capital cities such as Brisbane, Sydney and Melbourne