Latest News

Hot Issues
spacer
Be alert for phoenix activity, businesses told
spacer
Equifax signs data agreement with ATO
spacer
E-invoicing will reduce emissions, says PwC
spacer
State and Federal Disaster support --- May 2022
spacer
Largest cities in the world 1500 to 2100
spacer
Last chance to claim the loss carry-back
spacer
Changes to recovery loan scheme for small and medium enterprises
spacer
About the cash flow forecasting template
spacer
Federal budget 2022: Winners and Losers
spacer
ATO puts 50,000 directors on notice.
spacer
FBT Reminder – Odometer Reading
spacer
Data matching program: government payments
spacer
Budget: Big wins for SMEs
spacer
Small businesses show sign of omicron rebound
spacer
Federal Budget 2022 - Overview
spacer
Federal Budget 2022 and YOU - Part 1
spacer
Federal Budget 2022 and YOU - Part 2
spacer
Budget at a Glance - Video
spacer
Superannuation Guarantee (SG) increases
spacer
Undisclosed income risks hefty asset betterment assessments
spacer
How stress and burnout are different, and why the difference is important
spacer
Accountants ‘have important role to play’ in digital transformation
spacer
ATO launches campaign to target tax withholding on overseas royalties
spacer
ATO releases new draft guidance products impacting private trusts
spacer
GDP by country since 1800
spacer
ATO releases new guidelines to combat identity theft.
spacer
Extension in minimum drawdown rates
spacer
6 tips for small business success in 2022
Article archive
spacer
Quarter 1 January - March 2022
spacer
Quarter 4 October - December 2021
spacer
Quarter 3 July - September 2021
spacer
Quarter 2 April - June 2021
spacer
Quarter 1 January - March 2021
spacer
Quarter 4 October - December 2020
spacer
Quarter 3 July - September 2020
spacer
Quarter 2 April - June 2020
spacer
Quarter 1 January - March 2020
spacer
Quarter 4 October - December 2019
spacer
Quarter 3 July - September 2019
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Quarter 4 of, 2018 archive
spacer
Tax Office sounds alarm on popular property strategy
spacer
Our Advent calendar for 2018
spacer
‘Please do not panic’: ATO boss addresses STP concerns
spacer
Stop!! Don't do a paper Budget, use our online budgeting tools instead.
spacer
Employee Christmas Parties and Gifts – Any FBT?
spacer
Behavioural Coaching and your financial plans
spacer
FBT – Christmas Parties and Taxi Fares
spacer
Information needed to be the BBQ expert.
spacer
Tax consequences of trust vesting
spacer
Fringe Benefits Tax (FBT): employees’ private use of vehicles
spacer
ATO to contact clients over bank details
spacer
ATO claws back $850m in unpaid SG in FY 17-18
spacer
Appetite for property in SMSFs shows signs of life despite tough market
spacer
Superannuation gender gap narrowing, research shows
spacer
Identification numbers for directors
spacer
How financial advice helps create wealth.
spacer
Australia's vital statistics
spacer
Unlocking equity crowdfunding in Australia
spacer
$20m boost for SME clients looking to exporting
spacer
Work-Related Expenses
spacer
ATO updates crypto guidance
spacer
ATO zones in on hundreds of newly created reserves
spacer
Senate passes $20,000 instant asset write-off extension
spacer
Victorian Vacant Property Tax
spacer
Director Penalty Notices
spacer
ATO set to pounce on undisclosed income streams
Be alert for phoenix activity, businesses told

The ATO says the best protection is “knowledge defence”. 

Business needs to be increasingly alert for signs of illegal phoenix activity, the ATO said, as it is widespread and can be hard to detect.

The assistant commissioner for the Phoenix and Evasion Program, George Montanez warned that phoenixing could occur in any industry or location, and put other businesses at a disadvantage.

Illegal phoenix activity occurs when a new company, for little or no value, continues the business of an existing company that has been liquidated or otherwise abandoned to avoid paying debt.

Mr Montanez said the best protection against illegal phoenix activity was “knowledge defence”. 

“Warning signs may include not receiving pay slips or super payments and being given suspiciously low tenders or quotes for jobs,” he said in a recent ATO Tax Invoice podcast.

“You should also keep an eye out for suspicious behaviour and make sure you do thorough background checks on who you’re going into business with.”

Mr Montanez said some of the common indicators included serial liquidations.

“They do it yearly and across a number of months. They can simply just walk away from the company and then start up a new company, and they walk away from that company leaving creditors behind,” he said.

“Sometimes they inappropriately transfer company assets so that they can’t be sold to pay for creditors or to use in a new business.” 

Mr Montanez said it was hard for businesses to detect when phoenix operators are doing the wrong thing.

They would use strategies such as fake directors otherwise known as straw directors, to hide who is really in control and try to protect the main perpetrator.

“Sometimes these straw directors are quite vulnerable people that don’t know what they’re getting themselves into,” Mr Montanez said.

“And of course, there’s the non-payment or mistreatment of workers. Not paying workers compensation, unpaid wages, super and the non-payment of taxes.

“However, sometimes employees, subcontractors and suppliers find it hard to identify this while it’s happening in front of them.”

Mr Montanez said to better protect against phoenixing for employees, businesses should closely examine their payslips.

“Does it have a different company name to the one that they thought they were working for? Are they receiving a payslip? If they’re not getting a payslip, then why aren’t they getting a payslip?” he said.

”Do they frequently change the company’s ABN or directors but nothing else changes? A subcontractor or supplier might see that the company name is changing frequently. 

”That means they may even continue to operate from the same premises using the same number.”

Mr Montanez said these were all those little warning signs that indicated there was an illegal phoenix operator behind those companies.

“Another indicator is really, really suspiciously low tender or quotes that sort of go lower than everybody else,” he said.

“You may get a cheaper job there, but who is getting hurt in the process? And could it be you?”

Mr Montanez said it was really important to always do extensive research on who you are doing business with or who you’re working for if you’re an employee.

Businesses could do searches on the company and its directors to see if there’s any information or news online.

“You can see if any of the directors or persons in control, because it may not be a director of a company that has been bankrupted or been associated with liquidated companies,” he said.

“Not all bankruptcies as I’ve discussed, or liquidations are necessarily illegal phoenix activity. But you’re looking for that serial or cyclical pattern.

“You can also do credit checks. And you can even ask for proof that the company has registered for tax and paid its tax obligations such as GST, PAYG, etc. If you’re an employee, make sure you’re getting payslips.”

Mr Montanez said businesses should also proactively report suspicious behaviour to the ATO. 

“This intelligence can be the missing piece that helps us in an investigation,” he said.

“We get a lot of intelligence from the community. It is looked at. And I can say that we’re dealing with cases where it’s been from community referrals.”

 

 

 

 

Tony Zhang 
02 May 2022

accountantsdaily.com.au

© O'Brien and Partners 2011 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922