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  • Phoenix advice and your business

    We've all heard of cases where a director liquidates, winds up or abandons a company to avoid paying its debts. Then they create a new company to continue on without the debts. This is illegal phoenix activity and can result in serious penalties.

    We have tips on how to avoid untrustworthy advisers who suggest phoenix activities, and how to report phoenix activity.

    How to avoid phoenix advice

    Some untrustworthy advisers help people to illegally phoenix. If you follow their advice, you put yourself at risk. You could receive a fine, criminal conviction or even a jail term.

    If you’re a director and your businesses is having difficulties, an adviser may contact you to suggest advice. While most advisers do the right thing, watch out for advisers who recommend actions that could be illegal.

    Be cautious of:

    • advisers who aren't registered with a relevant statutory body or a member of a professional association
    • advisers who claim to give pre-insolvency advice and encourage you to engage in inappropriate or even illegal activity.

    Watch out if an adviser

    • contacts you with advice, especially after your creditor has taken court action
    • suggests you transfer your assets to a third party without payment
    • offers advice on restructuring your business to avoid paying debts or other obligations
    • offers you a fee based on a percentage of your debt or obligations
    • tells you they know a liquidator who will protect your personal interests or assets
    • tells you about a valuer who can under-value any assets
    • asks you to provide incorrect information to authorities
    • suggest you can withhold or destroy relevant records to prevent access by the liquidator or bankruptcy trustee
    • suggests they deal with the liquidator or trustee on your behalf.

    What to do

    If your business is experiencing difficulties, it's important to take action and get advice straight away. Make sure you're getting advice from a registered professional.

    If you need to wind up your company or re-structure your business, a registered liquidator or registered trustee will be able to help you.

    See also:

    Report phoenix activity

    The Phoenix Taskforce is working to stop people promoting or engaging in illegal phoenix activity.

    If you know of or suspect illegal phoenix activity, report it to us:

    • Complete a tip-off form at ato.gov.au/tipoff or in the Contact us section of the ATO app.
    • Phone us on 1800 060 062.
    • Email phoenixreferrals@ato.gov.au

    We take all reports seriously. We forward all reports and tip-offs about suspected phoenix activity to the Phoenix Taskforce. Due to privacy laws, we can’t give you any updates or tell you the outcome.

    Last modified: 06 Nov 2020QC 64127