Govt cracks down on phoenix companies
The Government is cracking down on fraudulent phoenix activity whereby companies are avoiding responsibilities by deliberately going into liquidation.
Companies engaging in such activities are avoiding paying tax liabilities, wages, superannuation and leave entitlements, costing the national revenue base up to an estimated $600 million.
The Assistant Treasurer, Senator Nick Sherry, has released tough new proposals to prevent companies from going into liquidation and then continuing in the form of another corporate entity, controlled by the same person or group of individuals.
"The days of using 'phoenix' arrangements to dodge tax liabilities owed to the whole community and to swindle hard-working staff out of their pay, their super and their leave entitlements are about to end," Sherry said.
"The latest estimates provided to me indicate that phoenix activity may be ripping up to $600 million from the national revenue base - that is simply unacceptable and it's hurting the whole community and hitting the integrity of the system."
Sherry said companies and individuals engaged in such activities will bear the full brunt of the law.
"I have met too many hard working people across Australia who have been the victims of these fraudsters. And the impact on revenue is hitting all fair, honest taxpayers in the community," Sherry said.
"This initiative is a significant step towards helping honest businesses to compete on a level playing field and will address dishonest and unfair behaviour that costs business significantly."
The proposed reforms are open for public consultation.
AUTHOR
By Munro
Recommended for you
The role of a financial adviser is becoming more about investor management than investment management, according to Morningstar, with a greater emphasis placed by clients on soft skills.
There has been 11 financial advice-related bannings by ASIC since the start of the FY2023–24 financial year, equating to one every month.
With more and more licensees looking at M&A activity, Business Health has shared 10 suggestions to ensure a successful onboarding process as the two firms come together.
Almost half of advised investors expect technology to become so advanced that they will no longer use a financial adviser by 2030, according to a global report by LSEG.
