ATO collects more than $500 million from illegal phoenix operators

The ATO has announced it has collected more than $500million in revenue as a result of audits of illegal phoenix operators since the Phoenix Taskforce started in November 2014.

The Phoenix Taskforce comprises 34 Federal, State and Territory government agencies, including the ATO, Australian Securities and Investments Commission, Department of Jobs and Small Business the Fair Work Ombudsman and Australian Border Force.

Illegal phoenix activity is particularly prevalent in major centres in building and construction, labour hire, payroll services and security services.

It is also particularly prevalent in regional Australia in mining, agriculture, horticulture and transport.

The Phoenix Taskforce is focusing on intermediaries who promote or facilitate illegal phoenix behaviour.

The Australian National Audit Office (‘ANAO’) also released its report ‘Addressing Illegal Phoenix Activity’, examining the effectiveness of the Phoenix Taskforce in combating illegal phoenix activity, focusing on governance, strategies, processes and performance measurement.

ATO Deputy Commissioner Will Day welcomed the ANAO’s report, stating:

“The ATO agrees with all three of the ANAO’s recommendations and we’re already taking steps to implement the necessary changes in line with the ANAO’s recommendations”.

The ANAO noted that taskforce strategies and enforcement activities as well as increased exchange of information exchange and law reforms have strengthened the compliance powers of taskforce agencies.

“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.” Mr Days aid.

Example

Mr Benjamin Ensor was a Manly- based luxury property developer who was sentenced to six years’ jail in the NSW District Court for GST fraud relating to illegal phoenix activity in the property and construction industry. He was also ordered to pay reparations of more than $1.8million.

Phoenix activity warning signs for employees

Employees should look out for these warning signs which may indicate that their employer is involved in an illegal phoenix operation:

    •  They don’t receive a payslip.
    •  The company ABN and name changes, but the phone number or address stays the same.
    •  Their superannuation or other employment entitlements are not being paid —

      superannuation entitlements can be looked up on MyGov or, if the employer has implemented Single Touch Payroll, the superannuation payments should be listed with other taxation details.

    •  Their pay is late, less than what it should be or they are being paid under the minimum wage.

Their payslip records a different employer name to the one whom they believe they work for.

If employees notice these signs, they should:

    •  call their super fund and make sure their superannuation is being paid;
    •  if their employer changes their name or information on the employee’s payslip, or they are being paid irregularly — ask why (and maybe call the Fair Work Ombudsman for advice); or
    •  do an online search to check for any adverse coverage.

      Phoenix activity warning signs for business owners

      Business owners should look out for these warning signs which may indicate that a business they are working with may be involved in an illegal phoenix operation:

    •  A competitor is offering significantly lower quotes, or they are given a quote that is lower than market value.
    •  The directors of a company they are working with have been involved with liquidated entities.
    •  A company they are working with requests payments to a new company.
    •  Recent changes of company directors and name, but the manager and staff remain the same.

      If a business notices these signs, they should:

    •  confirm the entity is registered and its Australian Business Number (‘ABN’) is valid at abr.business.gov.au;
    •  visit asic.gov.au and search the ASIC Connect registers to ensure the company they are working with is a registered entity and if it is in liquidation or external administration;
    •  ask for references;
    •  do a credit check on the entity; and
    •  complete an online search on the company and its directors for any adverse media reports.

      There is more information about illegal phoenix activity, including warning signs to look out for, where to go for help, and results of the Phoenix Taskforce at ato.gov.au/Phoenix.