Crack down on ‘phoenix’ business behaviour
The Australian Taxation Office (ATO) together with the Australian Federal Police (AFP), have executed six search warrants as part of an investigation into alleged illegal phoenix activity on the Gold Coast in Queensland.
The search warrants were part of the ATO and AFP's criminal investigations into alleged unpaid superannuation, the withholding of GST and income tax.
The ATO said: "the operation stemmed from the work of the members of the multi-agency phoenix taskforce, who collaborated to help stamp out illegal phoenix activity".
ATO deputy commission, Michael Cranston, said the firm response was part of their ongoing joint investigations into alleged illegal phoenix activity, where a company deliberately liquidated to avoid paying creditors, tax and employee entitlements.
"The perpetrators transfer the assets to a new entity, and continue operating the same or a similar business with the same ownership," he said.
Phoenix activity cost the Australian economy around $3.2 billion every year, he said. Honest businesses and individual had to suffer because their debts to suppliers were left unpaid, employees were robbed of their superannuation, and the community was denied revenue to fund essential services.
A phoenix company was often able to undercut contractors when bidding for jobs too, which would leave competitors out of work, while the controllers of the phonenix company continued to rip off employees and suppliers, Cranston said.
"There are a number of signs that a business you are working for may be involved in phoenix behaviour," he warned.
Employees could be pressured to take leave, have their employment status changed from permanent to casual, or they could notice frequency changes in the identity of the company who was paying their wages, or that their superannuation entitlements were not paid.
The ATO urged for those who suspected a company was showing signs of phoenix behaviour to contact the ATO.
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
