Illegal phoenix case studies
Illegal phoenix activity can take many forms. Read our case studies to find out how the Phoenix Taskforce is taking action to disrupt illegal phoenix activity.
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Transport operator forced to hit the brakes
Coordinated Phoenix Taskforce action disrupted the business model of a road transport business with a long history of illegal phoenix behaviour. Working together, several Phoenix Taskforce member agencies issued simultaneous garnishees to trade debtors to collect a substantial amount of unpaid tax debt.
As a result, the operator entered into payment arrangements with each agency, and has returned more than $1 million to the community.
The director was also issued with a series of director penalty notices for non-payment of employee entitlements, which could make him personally liable for any further dishonest behaviour.
The taskforce action also prompted the operator's major fuel supplier to change its credit terms, limiting the supplier's risk of being impacted by further phoenix behaviour.
Information sharing results in cash seizure
The arrest of a man suspected of running a phoenix operation in the property and construction industry led to the return of revenue to the community.
During the man's arrest, police uncovered financial records and cash. Information sharing between Phoenix Taskforce members helped us confirm more than $1.6 million in unpaid tax debts, and allowed police to seize the cash.
Labour hire syndicate brought into line
A labour hire syndicate who used illegal phoenix behaviour to cyclically liquidate businesses has been ordered to pay back more than $2 million.
A tip-off from investigations into GST refunds exposed the phoenixing syndicate, who were regularly liquidating business entities after they had racked up significant debt.
Investigations found more than 100 people were employed by the syndicate's businesses, none of whom were paid any superannuation while working for the companies. In total, over $5.6 million in liabilities were raised. Not paying tax and superannuation debts gives illegal phoenix operators an unfair advantage over honest businesses that do the right thing.
The group has now been brought back into the tax and superannuation system, and are now paying their employee's superannuation on time. They have payment arrangements in place to repay previous debts, with more than $2 million repaid to date.
Bankruptcy for former property developer
Collaboration between Phoenix Taskforce agencies resulted in a property developer losing his building licence and being disqualified as a company director. The property developer had liquidated entities six times in five years, leaving creditors, including business partners, with more than $160 million in unpaid debts.
The development group had been subjected to 46 previous ATO compliance activities and owed more than $7 million in current and written-off debt to the ATO alone.
The Supreme Court found the man, along with his wife and their associated entities, guilty of falsification of bank statements, appointment of shadow directors, and unauthorised withdrawal of funds.
For their dishonest behaviour the taxpayer lost their NSW and Queensland building licences, and were ordered to pay over $9.4 million. As a result, the taxpayer entered into bankruptcy, and was disqualified from being a company director.
ATO action against liquidator
Sydney-based Mr David Iannuzzi was disqualified from practising as a registered liquidator for a period of 10 years. The Federal Court found he had been systemically negligent in his responsibilities as liquidator over an extended period of time and across more than 23 companies.
This case marked the first time the ATO initiated Federal Court proceedings using Corporations Act 2001 provisions to seek orders against a liquidator.
The Federal Court found that Mr Iannuzzi’s:
‘systemic conduct was certainly reckless; it fell very far short of the conduct that was to be expected of him; it demonstrates that he failed to observe the obligations of candour on him with regard to disclosing relevant circumstances to creditors; it reflects poorly on his character; and it demonstrates that he is not a fit and proper person to remain registered as a liquidator.’
These case studies show how the Phoenix Taskforce is working together to disrupt illegal phoenix activity.