• Phoenix Taskforce

    The Phoenix Taskforce comprises over 20 Federal, State and Territory government agencies, including the ATO, Australian Securities & Investments Commission (ASIC), Department of Employment, and the Fair Work Ombudsman. The Phoenix Taskforce provides a whole-of-government approach to combatting illegal phoenix activity.

    We have developed sophisticated data matching tools to identify, manage and monitor suspected illegal phoenix operators. We support businesses who want to do the right thing and will deal firmly with those who choose to engage in illegal phoenix behaviour.

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    Our work

    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.

    Illegal phoenix activity poses substantial risks to revenue, employee entitlements and the integrity of the corporate system. It imposes an unfair burden on honest Australians and businesses and it will not go untreated.

    The Phoenix Taskforce works collectively to identify those who are undertaking this illegal activity. Our strategies are tailored to differentiate between those who pose a high, medium and low risk:

    • Higher risk groups can expect strong scrutiny and if found to be engaging in illegal phoenix activity they will experience the full force of the law.
    • Medium risk operators can expect a range of engagement activities that strongly encourage compliance with the law.
    • We acknowledge that many who fall within our low risk category are undertaking legitimate business-rescue activities. We work with those in this category to provide education and advice on how not to fall foul of the law.

    Illegal phoenix activity is not new. For many years government agencies have applied their respective tools to combat breaches of the law. There have been many solid outcomes, in both civil and criminal penalty terms. But some operators have not been sufficiently deterred. To them we say 'be warned'. The regulatory landscape has changed with the creation of the Phoenix Taskforce and we are working closely together to catch those responsible.

    We operate under a coordinated and strategic approach to dealing with illegal phoenix activity. We will make examples of the worst offenders and attack critical parts of any phoenix business model. Our strategies include early intervention work, targeting specific industries, and working with key supply chain entities to close off opportunities and temptation. We also have a 'Top 50' program which focusses on the worst at fault and their facilitators to remove their profits and prosecute them to the full extent of the law.

    Our strategies will make illegal phoenix activity unviable in a financial sense. We will bring justice to those who persist in ripping off the community. At the same time, our strategies will protect honest Australians and provide a level playing field to support Australia's valued business community.

    Where to go for help

    By working together we can stamp out illegal phoenix activity. There are a number of ways you can get involved:

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    News and results

    Our approach in tackling illegal phoenix activity continues to pay off. We have a number of successful prosecutions that deal with and deter criminal behaviour and enable us to collect the taxes owed to the Australian community.

    Results

    In 2015–16 we conducted almost 1,000 audit and review cases involving phoenix behaviour, raising $250 million in liabilities.

    The Phoenix Taskforce forms part of the fight against tax crime.

    Tax crime poses a risk to the community. This is not only through loss of revenue but also through its association with organised crime, identity theft and money laundering.

    The Phoenix Taskforce also works in collaboration with the Serious Financial Crime TaskforceExternal Link to identify and treat serious financial crime. It works with Taskforce CadenaExternal Link to combat visa fraud, illegal work and the exploitation of foreign workers.

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    Case studies

    Case study 1: Jail time for phoenix operators

    A Perth-based earthmoving, garden supplies and property development business created bogus payment summaries, moved employees between related companies, and failed to remit amounts withheld from employees' wages to us. The business owner then deregistered the (non-compliant) companies to reduce the risk of detection by authorities.

    The principal company director was sentenced to five years and three months jail for defrauding the Commonwealth of $6.7 million in unremitted taxes. He was also bankrupted following an investigation into his personal tax affairs and precluded from being a company office holder.

    A number of other people associated with this fraud have also been prosecuted and jailed, including a former tax agent.

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    Case study 2: $10 million in phoenix debts and penalties recovered – the story of Mr X

    We recently investigated Mr X, a wealthy property developer involved in multiple projects across Sydney. Mr X had a history of deliberately liquidating companies and leaving substantial debts for unpaid tax and super obligations. The debts of the liquidated companies totalled more than $10 million.

    This behaviour attracted our attention and as a result we initiated an in-depth examination of the tax affairs of the group. In the course of auditing the liquidated entities we were able to track the funds from the sale of properties. It became apparent that through a series of related party transactions and false loans, associates/relatives of the property developer were the ultimate recipients of the proceeds from the sale.

    As a result of being able to trace the true flow of the funds, we were able to issue assessments to recover the outstanding tax debts and ensure that they were paid. In addition the taxpayer was subject to increased penalties and interest.

    Phoenix Taskforce members

    The Phoenix Taskforce is made up of key Federal, State and Territory government agencies. The current membership is (in alphabetical order):

    • ACT State Revenue Office
    • Australian Border Force
    • Australian Building & Construction Commission
    • Australian Competition & Consumer Commission
    • Australian Criminal Intelligence Commission
    • Australian Financial Security Authority
    • Australian Securities & Investments Commission
    • Australian Taxation Office
    • Australian Transaction Reports and Analysis Centre
    • Clean Energy Regulator
    • Commissioner of State Revenue VIC
    • Department of Employment
    • Department of the Environment
    • Department of Treasury and Finance RevenueSA
    • Fair Work Ombudsman
    • NSW Fair Trading
    • NSW Police Force
    • NSW State Insurance Regulatory Authority
    • Office of State Revenue NSW
    • Office of State Revenue QLD
    • Office of State Revenue WA
    • Queensland Building & Construction Commission
    • Return to Work SA
    • State Revenue Office TAS
    • Territory Revenue Office NT
    • Western Australia Building Commission
    Last modified: 17 Aug 2017QC 51054