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ATO releases new draft guidance products impacting private trusts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
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 2 of, 2019 archive
spacer
ATO clears up FAQs about Single Touch Payroll
spacer
GST reporting: common errors and how to correct them
spacer
LRBAs, guarantees in need of review after property market falls
spacer
Victorian Property Valuation Cycle
spacer
Australia - toward EOFY 2019
spacer
Australian Taxation Office (ATO) expects 200,000 to miss out on refunds by failing to lodge
spacer
Biggest personal tax cuts in a decade a priority for Government
spacer
Government rules out GST changes following ATO report
spacer
ATO issues warning after ‘unprecedented’ spike in impersonation scams
spacer
Crypto transactions in ATO sights with new data-matching program
spacer
Government to establish $2 billion fund for small business lending
spacer
Small business corporate tax rates Bill is now law
spacer
ATO to double rental deduction audits to 4,500
spacer
ATO set to issue excess super contribution determinations
spacer
How's Australia going as we approach the election?
spacer
Single Touch Payroll (STP) is compulsory for all small businesses.
spacer
Federal Budget 2019 - Overview
spacer
How the 2019 Federal Budget affects you
spacer
FBT Reminder – Odometer Reading
spacer
‘Big awareness push’ underway as STP deadline approaches
spacer
GST collection on overseas goods at 300% of forecasts
spacer
The problem with getting to 53 years of age.
spacer
Lost Beneficiaries
spacer
New quarterly STP reporting method for closely held payees revealed
spacer
Some Australian figures to help on Budget night.
spacer
Employers hit with rolling SG audits as ATO toughens stance
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