Deputy commissioner Michael Cranston described the operation as a success, saying it provided the tax office the opportunity to copy and catalogue records of interest at each of the premises.
“This information will be invaluable in deciding whether to pursue further compliance action with the individual companies, as well as providing more intelligence about potential phoenix operators, phoenix facilitators and the methods they use to try to undermine the tax and superannuation systems.”
The raids took place across multiple business and residential sites in the Sydney metropolitan area. Mr Cranston said the decision not to give prior notice of the visits was not made lightly.
“We understand access visits disrupt people’s everyday lives, but as we saw today, sometimes the element of surprise is needed to get a result, particularly when dealing with companies we suspect are setting out to cheat the system and where records may be destroyed if we give notice.”
Fraudulent phoenix activity occurs where a company deliberately liquidates to avoid paying creditors, taxes and employee entitlements, according to the ATO. They transfer the assets to a new entity and continue operating the same or a similar business with the same ownership.
“Phoenix operators create an unfair market advantage for themselves by deliberately liquidating companies to avoid paying creditors and employees and then setting up new entities to carry on the same business. This allows them to undercut their competitors,” Mr Cranston said.
The tax office has said recent figures show that phoenix activity costs the Australian economy up to $3.2 billion each year, with honest businesses losing almost $2 billion in unpaid debts and the non-supply of purchased goods and services.
In March, AccountantsDaily reported the ATO had been appointed to lead a newly-prescribed taskforce set up to combat the threats from phoenix businesses.
These raids were conducted as part of this joint agency taskforce's work.