• Illegal phoenix activity

    Illegal phoenix activity is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements. This illegal phoenix activity impacts the business community, employees, contractors, the government and environment, including:

    • non-payment of wages, superannuation and accrued employee entitlements
    • getting an unfair competitive advantage over other businesses
    • non-payment of suppliers
    • loss of government revenue and increased monitoring and enforcement costs
    • avoidance of regulatory obligations.

    Phoenix activity doesn't just impact those people directly affected. It deprives the whole community of necessary funds that could have contributed to hospitals, roads, education and other essential services. We are committed to stamping out this activity and prosecuting the worst offenders to the full extent of the law.

    Watch:

     

    Find out about:

    See also:

    Tackling illegal phoenix activity

    We are taking a whole-of-government approach to this problem. We are working with other government agencies through the Phoenix Taskforce to stamp out illegal phoenix activity and maintain a level playing field for business and protect the Australian revenue system.

    See also:

    Warning signs and how to protect yourself

    Whether you are a business owner working with other businesses, or a contractor or employee, there are signs to look out for that may indicate a company is involved in illegal phoenix activity.

    Watch:

     

    Employee or contractor

    If you are working for a company, look out for these warning signs:

    • you don't receive a payslip
    • the company ABN and name changes, but the phone number or address stays the same
    • your superannuation or other employment entitlements are not being paid
    • your pay is late, less than what it should be or you are being paid under the minimum wage
    • your pay slip records a different employer name to whom you believe you work for

    These may be warning signs that your employer is involved in an illegal phoenix operation. We encourage you to protect yourself by taking the following steps:

    • call your super fund and make sure your superannuation is being paid
    • if your employer changes their name or information on your payslip, or you are being paid irregularly – ask why. You can also call the Fair Work OmbudsmanExternal Link for advice
    • do an online search to check for any negative coverage.

    Visa holders

    If you are working in Australia on a subclass 457 visa, you must be working for the business that sponsored you. If you are working for a business that is not your sponsor business, you may be missing out on employee entitlements or being paid less than the award rate.

    There are a number of resources available to you to help you protect yourself from potential phoenix employers.

    Next steps:

    Business owners

    If you own a business, look out for any of the following behaviours from a company you are working with:

    • a competitor is offering significantly lower quotes or you are given a quote that is lower than market value
    • the directors of a company you are working with have been involved with liquidated entities
    • a company you are working with requests payments to a new company
    • recent changes of company directors and name, but the manager and staff remain the same.

    These may be warning signs a business you are dealing with is involved in illegal phoenix activity. There are steps you can take to protect your business. We advise doing your due diligence before entering into a business arrangement:

    • confirm the entity is registered and its Australian business number (ABN) is valid at abr.business.gov.auExternal Link
    • visit asic.gov.auExternal Link and search the ASIC Connect registers to ensure the company you are working with is a registered entity and if it is in liquidation or external administration
    • ask for references
    • do a credit check on the entity
    • complete an online search on the company and its directors for any adverse media reports.

    Where to go for help

    The government is committed to preventing phoenix abuse and assisting those who may have been victims of illegal phoenix activity. There are a number of ways in which we can assist.

    Australian Taxation Office

    Department of Employment

    Fair Work Ombudsman

    Australian Securities & Investment Commission

    We can assist you with chasing lost or unpaid super. We can also provide advice on what to do if you have been a victim of phoenix or you can report suspected phoenix companies to us.

    Find out more:

     

    The Department of Employment administers the Fair Entitlements Guarantee (FEG). This may help you claim unpaid employment entitlements if you lose your job due to liquidation or bankruptcy of your employer.

    Find out more:

     

    Fair Work can assist you with advice about minimum wages and conditions of employment.

    Find out more:

     

    If you are working for a company that is placed into liquidation ASIC can provide advice on:

    • whether you are an unsecured creditor of the company
    • making a claim against your employer

    Find out more:

     

    These are the main ways in which we can assist, but we encourage you to reach out to us if you have further questions. We are committed to putting a stop to illegal phoenix activity to protect honest Australians.

    Reporting phoenix activity

    We need help from all Australians to assist us in putting a stop to illegal phoenix activity. If you suspect phoenix behaviour, you can report it to us:

    Last modified: 30 Jan 2017QC 33609