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The ATO has used new powers to recover eight million dollars in workers' entitlements from the operators of labour-hire companies in South Australia and Victoria.
ATO uses new power to recover $8m
09 January 2015
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6 minute read
The entitlements related to workers’ superannuation, with the tax office saying the companies engaged in "phoenix behaviour".
According to the ATO, phoenix behaviour involves the deliberate liquidation of companies to avoid their having to pay superannuation obligations and other tax liabilities and to avoid paying creditors and suppliers.
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Deputy Commissioner Michael Cranston said new powers, known as superannuation guarantee estimates (SGEs), allow the ATO to step in where it sees likely phoenix activity and to protect workers’ super entitlements before companies try to liquidate to avoid their responsibilities.
“The ATO can also issue director penalty notices which make directors personally liable for the company’s unpaid superannuation obligations," he said.
“Phoenix operators cheat their workers and undercut honest business.
"Tackling the behaviour is a key focus for the ATO. We expect to use these powers more frequently against phoenix operators,” said Mr Cranston.
The network of companies provided labour-hire services such as seasonal fruit picking and meat packing and had been failing to pay workers their superannuation entitlements.
SGE powers allow the ATO to raise liabilities against companies who fail to disclose details of their employees.
The new powers also allow the ATO to deal with this type of phoenix behaviour in real time, by making a reasonable estimate of a company’s superannuation obligations and raising a debt against the company or its directors before the company can be put into liquidation.
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