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  • 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 impacts the business community, employees, contractors, the government and the wider community through:

    • 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're committed to stamping out this activity and prosecuting the worst offenders to the full extent of the law.

    Watch:

    Media: Avoid falling victim to phoenix activity
    https://tv.ato.gov.au/ato-tv/media?v=bd1bdiubc71sejExternal Link (Duration: 00:54)

    Find out about:

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    Tackling illegal phoenix activity

    We're taking a whole-of-government approach to this problem, and working with other government agencies through the Phoenix Taskforce to stamp out illegal phoenix activity. The Phoenix Taskforce is dedicated to maintaining a level playing field for business and protecting the Australian revenue system.

    New legislation will help us crack down on those who conduct or facilitate illegal phoenix behaviour. ATO and the Australian Securities and Investments Commission (ASIC) can now pursue new civil and criminal offences for those who promote or engage in illegal phoenix activity.

    ASIC and liquidators will have additional powers aimed at recovering assets for the benefit of employees and other creditors.

    The new laws will also allow us to:

    • estimate and recover the anticipated GST, luxury car tax (LCT), and wine equalisation tax (WET) liabilities for businesses that aren't meeting their lodgment obligations
    • make directors personally liable for their company's unpaid GST, LCT and WET liabilities
    • retain a tax refund where a taxpayer has failed to provide a notification to us which affects, or may affect, the amount of the refund.

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    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 by:

    We take all reports seriously. Due to privacy laws, we can’t inform you of the outcome of the information you provide, or provide updates on our progress.

    Warning signs and how to protect yourself

    Whether you're running a business, working as a contractor or an employee, or looking for a tradesperson to do a job, there are signs to look out for that may indicate a business is involved in illegal phoenix activity.

    Watch:

    Media: Signs of phoenix activity
    https://tv.ato.gov.au/ato-tv/media?v=bd1bdiubc71mb9External Link (Duration: 01:22)

    Running a business

    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 ABN LookupExternal Link
    • search the ASIC Connect registersExternal Link 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.

    Advisers

    A business or personal adviser may contact you with an offer to fix any financial problems, you or your business may have. These warning signs may indicate that an adviser is not reputable and putting you at risk of engaging in illegal phoenix activity:

    • cold calling with advice
    • unsolicited correspondence after court action by a creditor
    • advice to transfer assets to a third party without payment
    • refusal to provide advice in writing
    • suggesting they have a sympathetic liquidator who will protect your personal interests/assets
    • advising that certain records be withheld from the bankruptcy trustee or liquidator
    • suggesting they deal with the liquidator or trustee on your behalf.

    Ensure any adviser you engage with, is an accredited professional.

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    Working as an employee or contractor

    If you're 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 super 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 payslip 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 reports through Single Touch Payroll, you can also check your super in real time by logging in to myGov and accessing ATO online services.
    • 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.

    Next step:

    Visa holders

    If you are working in Australia on a subclass 457 or subclass 482 Temporary Skill Shortage (TSS) visa, you must be working for the business that has 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.

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    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

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

    Find out more:

    Attorney-General's Department

    The Attorney-General's Department 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 Ombudsman

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

    Find out more:

    Australian Securities & Investment Commission

    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.

    Authorised by the Australian Government, Canberra.

    Last modified: 22 Apr 2020QC 33609