The sly, underhanded activities Australia’s illegal phoenix and tax avoidance schemes are being exposed and systematically shut down by a new alliance that involves the Australian Taxation Office (ATO) and Australian Securities and Investments Commission (ASIC).
Illegal phoenix activity is described as:
“the intentional transfer of assets from an indebted
company to a new company to avoid paying creditors,
ax or employee entitlements.”
This means that Company Directors can leave debt with a company, then place that company into administration or liquidation, leaving it with no assets to pay creditors.
In the meantime, a new company, often operating in the same industry and by the same Directors as the old company, continues the business under a new structure. By engaging in this illegal practice, the directors avoid paying debts that are owed to creditors, employees and statutory bodies (e.g. the ATO).
Illegal phoenix activity is a serious crime and may result in company officers (directors and secretaries) being imprisoned.
According to Worrells Solvency and Forensic Consultants, The Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC) with the assistance of the Australian Federal Police, executed six search warrants in August as part of an investigation into alleged illegal phoenix activity on the Gold Coast in Queensland.
Worrells article goes on to say that sources estimate that phoenix schemes cost more than $3 billion a year and leave thousands of businesses with unpaid debts of close to $2 billion.
Read Worrells article in full here
ASIC is urging people to report such activity at its website. More information is also available here on the ASIC website