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Illegal phoenix crackdown brings in $500m

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Illegal phoenix crackdown brings in $500m

Over $500 million has been raked in by the ATO as a result of audits of illegal phoenix operators since 2014, as the Australian National Audit Office recommends further refinement.

Tax&Compliance Reporter 01 April 2019
— 1 minute read

The ANAO’s audit of illegal phoenix activity, examined the effectiveness of the Phoenix Taskforce in combating illegal phoenix activity since its inception in 2014, focusing on governance, strategies, processes and performance measurement.

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The annual direct impact of illegal phoenix activity is estimated to cost the Australian community between $2.85 billion and $5.13 billion.

The ANAO’s report found that while the taskforce is making progress, its compliance and enforcement operations are at “relatively early stages and have not yet demonstrated major results”.

It has made three recommendations that focus on improving the evaluation of the taskforce’s performance, how it uses previous lessons for future operations, and better guidance regarding potential illegal phoenix cases.

ATO Deputy Commissioner Will Day said the agency agreed with all three of the ANAO’s recommendations and were already taking steps to implement the changes.

“We see illegal phoenix activity all over the country in many industries and locations. Illegal phoenix operators have a devastating impact on the community, including businesses, employees and contractors. It also means that state and federal governments can’t invest as much on initiatives that benefit all Australians,” said Mr Day.

“We have developed sophisticated data matching tools to identify, manage and monitor suspected illegal phoenix operators. We support businesses who want to do the right thing and will deal firmly with those who choose to engage in illegal phoenix behaviour.” 

According to Mr Day, businesses and their advisers can spot some warning signs which may indicate that a business they are working with may be involved in an illegal phoenix operation.

These include having a competitor offering significantly lower quotes below market value; the directors of a company you are working with have been involved with liquidated entities; a company you are working with requests payments to a new company; or recent changes of company directors and name, but the manager and staff remain the same.

If such signs are present, the ATO recommends verifying the entity’s ABN and performing a check on ASIC to see if it is a registered entity and if it is in liquidation or external administration.

Illegal phoenix crackdown brings in $500m
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