Illegal phoenix activity is when a new company is created to continue the business of an existing company that has been liquidated to avoid paying taxes, creditors and employee entitlements.
Illegal phoenix activity includes:
- non-payment of wages, superannuation and other entitlements
- getting an unfair competitive advantage over other businesses
- non-payment of suppliers
- loss of government revenue and increased monitoring and enforcement costs
- avoidance of regulatory obligations.
Illegal phoenix activity impacts the entire community as revenue lost could have contributed to hospitals, roads, education and other essential services. The department is committed to reducing this activity and prosecuting offenders.
Phoenix Taskforce member agencies (the ATO, Australian Securities and Investments Commission (ASIC) and the Fair Work Ombudsman) commissioned PricewaterhouseCoopers to produce ‘The Economic Impacts of Potential Illegal Phoenix Activity Report’. The report considers the broader economic impact of illegal phoenix activity on business, the community, such as on unsecured trade creditors, employees and on other government agencies, for example Fair Entitlements Guarantee claims and unpaid State-based taxes.
The Phoenix Taskforce plans to commission further reports in the future to independently measure any changes to the economic impact of illegal phoenix activity.
How is the department addressing fraudulent phoenix behaviour?
The department administers the Fair Entitlements Guarantee (FEG). FEG is a safety net scheme to provide assistance for certain employee entitlements after employees lose their job due to bankruptcy or liquidation of their employer. The information collected through the claim assessment process can provide useful intelligence about the corporate activities of employing entities. This data is routinely provided to the Phoenix Taskforce to form part of the sophisticated cross agency data matching undertaken to identify, monitor and manager suspected illegal phoenix operators.
The Fair Entitlements Guarantee Act 2012 provides the department with statutory authority to share information collected in the claim assessment process with other Australian Government agencies. Where potential breaches of the law are identified during the FEG claim assessment process, the department also refers such conduct to regulatory agencies.
All reports and tip-offs about suspected phoenix activity are forwarded to the Phoenix Taskforce, a cross-government taskforce dedicated to stamping out illegal phoenix activity.
The taskforce takes all reports seriously. Due to privacy laws, it is unable to inform you of the outcome of the information you provide, or provide updates on progress.
Want to know more?
- If you suspect an illegal phoenix operator, you can report it online by completing a Tip-Off form available from the ATO website, or by calling 1800 060 062. For more information, visit Illegal phoenix activity
- Information on how to make a complaint to the Australian Securities and Investments Commission (ASIC) is available on the report misconduct section of the ASIC website.