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  • Illegal phoenix activity

    Illegal phoenix activity is when a company is liquidated, wound up or abandoned to avoid paying its debts. A new company is then started to continue the same business activities without the debt. When this happens:

    • employees miss out on wages, superannuation and entitlements
    • other businesses are put at a competitive disadvantage
    • suppliers or sub-contractors are left unpaid
    • the community misses out on revenue that could have contributed to community services.

    We're working with other government agencies through the Phoenix Taskforce to stamp out illegal phoenix activity.

    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:

    See also:

    What to look for and how to protect yourself

    There are signs that a business could be involved in illegal phoenix activity.

    We have tips on how to:

    • avoid untrustworthy advisers who suggest phoenix activities
    • protect your business from phoenix companies
    • check if the business you work for could phoenix.

    Watch:

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

    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.

    While most advisers do the right thing, watch out for advisers who recommend actions that could be illegal.

    Find out more:

    What to look for when running a business

    When running your own business you can take steps to protect yourself from other businesses that may be wound up or closed. Look out for any of the following behaviours from a company you may be working with:

    • quotes that are lower than market value
    • company directors who have been involved with liquidated entities before
    • requests for payments to a new company
    • changes to a company's directors and name, while the manager and staff remain the same.

    Before you work with another business

    Before you work with someone else’s business, check them out thoroughly by:

    • confirming they are registered and their Australian business number (ABN) is valid at ABN LookupExternal Link
    • searching the ASIC Connect registersExternal Link to check they are
      • a registered entity
      • not in liquidation or external administration
       
    • asking for references
    • doing a credit check on them
    • searching online to see if the company and its directors have any negative media reports
    • reviewing your terms of trade, such as
      • asking for upfront payments, cash on delivery or payments in instalments
      • ensuring you’re taking a large enough deposit.
       

    What to look for if you're an employee or contractor

    If you're working for a company, look out for these warning signs that your employer is involved in phoenix activities:

    • 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.

    You can protect yourself by:

    • calling your super fund to check your superannuation is being paid. If your employer reports through Single Touch Payroll, you can check your super in real time by logging in to myGov and accessing ATO online services.
    • checking your payslip for changes to your employers name or information
    • if you are being paid irregularly, asking why. You can also call the Fair Work OmbudsmanExternal Link for advice
    • searching online to check for any negative coverage.

    Next step:

    Visa holders

    If you're working in Australia on a subclass 457 or subclass 482 Temporary Skill Shortage (TSS) visa, you must be working for your sponsor business. If you are working for a different business, you may be missing out on employee entitlements or being paid less than the award rate.

    There are resources available to help you check your rights and entitlements.

    Next steps:

    Reporting phoenix activity

    You can help us stop illegal phoenix activity by reporting it. If you know or suspect illegal phoenix activity, report it to us by:

    We take all reports seriously.

    Due to privacy laws, we can’t give you any updates or tell you the outcome of the information you provide.

    You can also:

    Authorised by the Australian Government, Canberra.

    Last modified: 06 Nov 2020QC 33609