Boost in ATO and Liquidator powers passed by Federal Government

The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 has now been passed and awaits Royal Assent.  The legislation increases the powers of government agencies and Liquidators to combat illegal phoenix activity.

Many of the new powers target those who conduct and/or facilitate illegal phoenix activity whereby the assets of an insolvent Company are transferred to a new entity (often without market value consideration being paid) whilst leaving the insolvent Company’s debts behind.

Company directors and advisors should familiarise themselves with the legislation, which includes the following :

  • Company Directors will be liable for GST, luxury car tax (“LCT”) and wine equalisation tax (“WET”) debts (in addition to superannuation and PAYG) where the debt remains unpaid and unreported within 3 months of the lodgement due date.

  • Increasing the ATO’s ability to withhold refunds from Companies with “high-risk” Directors and/or where lodgements are outstanding.

  • New civil and criminal offences for conducting and/or facilitating illegal phoenix activity.

  • ASIC powers to recover property that has been transferred under an illegal phoenix transaction.

  • Directors will not be able to back date their resignation as a Director of a Company, or resign as a Director, leaving the Company without a Director.

In addition to the above changes, the Federal Government has also committed to delivering the “Director Identification Number” regime, which will provide ASIC with a greater ability to track Directors and identify potential phoenix activity.

The above changes will have far-reaching consequences for Directors and advisors who engage in phoenix activity.

If you have any questions regarding the above please do not hesitate to contact the writers, Shane Cremin and Brodie Hilet on (03) 9670 8700.

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