The draft legislation, released yesterday, proposes creating new offence to target those involved in phoenix transactions.
For example, the government proposes it will now be an offence for company directors to engage in creditor‑defeating transfers of company assets that prevent, hinder or significantly delay creditors’ access to those assets.
Further, the government also wants to target pre-insolvency advisers, with a separate offence for any person who procures, incites, induces or encourages a company to make creditor‑defeating transfers of company assets.
These proposals will be supported by an extension of the existing liquidator asset clawback avenues to cover illegal phoenix transactions.
The regulators will also have their powers upped if the new laws go ahead. ASIC will be granted a new regulatory tool to recover property that has been transferred under an illegal phoenix transaction.
“This tool will be particularly important where a liquidator is complicit in or turning a blind eye to illegal phoenix activity,” said a statement from the Office of Minister for Revenue and Financial Services, Kelly O’Dwyer.
Under the new rules, the ATO would also have its existing power extended to retain refunds where there are outstanding tax lodgments.
The federal government has been very public in compliance action involving phoenix activity, including a dramatic showdown against a group of tax agents in Melbourne earlier this month.
In mid-July, the government released a PwC report estimating phoenix activity puts a $5.13 billion hole in the federal budget annually.