As part of a further package of reforms to “deter and disrupt” illegal phoenix activity, the director penalty regime will be extended to GST, luxury car tax and wine equalisation tax, making directors personally liable for company debts.
Speaking to Accountants Daily, Thomson Reuters tax consultant Ian Murray-Jones said the move was sensible, considering the ability for GST to be abused.
“The thing about GST is that taxpayers act as collectors for the government,” said Mr Murray-Jones.
“You charge GST, you collect it and then you're meant to remit it to the Tax Office and there's a great cash flow thing because the money comes in and if you piss off, the Tax Office is out of pocket and it's very hard to locate people so that's not unexpected and very sensible, certainly from a revenue point of view.”
Further, directors will be prevented in improperly backdating resignations to avoid liability or prosecution, while the ability of directors to resign in circumstances which would leave a company with no directors will also be limited.
Pitcher Partners executive director Andrew Yeo said the increased attention of measures to combat illegal phoenix activity was welcome.
“The director penalty notice regime preceded GST and no government since 2000 has sought to extend the basket of taxes caught under the regime to include GST,” said Mr Yeo.
“For most businesses, GST will be the most significant liability and this represents a significant extension of the taxes covered by the penalty notice regime that may be applied against directors of failed companies.”
Further, Mr Murray-Jones said the revenue projections from the black economy crackdown meant the government was fully intent on weeding out illegal behaviour.
“The revenue projections are $3 billion over the next four years which is no trifling sum when you're talking about a deficit of $14.5 billion,” said Mr Murray-Jones.
“The deficit coming down is really dependent on the Tax Office getting in there and kicking some arse.”
While unclear, the budget papers have also revealed that the government will introduce new phoenix offences to target those who conduct or facilitate illegal phoenixing.
“We welcome the government’s recent efforts to specifically attack illegal phoenix facilitators — advisers who intentionally seek out businesses in financial difficulty to facilitate such transactions,” said Mr Yeo.