Feb 252017

Melb Uni
Researchers at Melbourne University have issued their third and final report on investigations into insolvency fraud committed through the use of phoenix companies.

The 162 page report, issued on 24 February 2017, is titled Phoenix Activity: Recommendations On Detection, Disruption And Enforcement.

In the Executive Summary the authors state:

Harmful phoenix activity, left unchecked, has the capacity to undermine Australia’s revenue base and the competitive ‘level playing field’. It is wrong that legitimate business operators, paying taxes, wages and other debts, might be driven out of business by those engaging in harmful phoenix activity. Minimising business distrust caused by harmful phoenix activity can lower the cost of finance and make it more widely available. If less tax revenue is fraudulently avoided, the economy and society as a whole benefit. If fewer employee entitlements are lost as a result of harmful phoenix activity, there is likely to be less reliance on the Fair Entitlements Guarantee, freeing up government resources for other purposes.

What was described in earlier reports as “fraudulent phoenix activity” is described in the final report as “harmful phoenix activity”.

CLICK HERE to read and/or download a copy of the report.

The authors are Professor Helen Anderson, Professor Ian Ramsay, Professor Michelle Welsh and research fellow Mr Jasper Hedges.

Their Phoenix Project (“Phoenix Activity: Regulating Fraudulent Use of the Corporate Form”) “seeks to enhance Australia’s economic stability by determining the best methods of addressing fraudulent use of the corporate form without unduly inhibiting its proper use”. The project was launched in 3 years ago.

Analysis and highlights of the report will be posted here in due course.

Parliament debates the proposed new liquidation and “phoenixing” laws

 ASIC, Insolvency Laws, Insolvency practices, Regulation  Comments Off on Parliament debates the proposed new liquidation and “phoenixing” laws
Mar 092012

Although it started out with a dream run, the Bill to allow ASIC to order the winding up of companies has been the subject of considerable debate in the House of Representatives.

The government had hoped to get the Corporations Amendment (Phoenixing and Other Measures) Bill 2012 through quickly.  It was introduced in the House on 15 February 2012.  A day later it was referred to the House Standing Committee on Economics.  The Committee met via a telephone conference – which lasted less than a minute – on 21 February 2012 and resolved to discharge the reference.  The Committee issued a statement of explanation on 27 February 2012, saying:

 “….the committee considers that the Bill comprises uncontroversial measures that will assist in curbing the amoral practice of phoenixing.”

The Committee quoted from a briefing issued by the law firm Minter Ellison, which expressed the view that the Bill “contains some reasonable measures for facilitating the protection of workers’ entitlements.  These measures are unlikely to affect the position of the majority of directors.”

But back in the House of Reps heated debate ensued.  A total of seventeen speeches for and against the Bill were made by MPs.  Naturally MPs took the view of their party, but nevertheless the debate did explore many of the issues involved.  Those who spoke were:

 Joe Hockey (LP) (Opposition); Julie Owens (ALP) (Government); Scott Buchholz (LP); Bernie Ripoll (ALP); Paul Fletcher (LP); Gai Brodtmann (ALP); Deb O’Neill (ALP); Steven Ciobo (LP); Sharon Grierson (ALP); Steve Irons (LP); Kelvin Thompson (ALP); Bruce Billson (LP); Mike Symon (ALP); Bert Van Manen (LP); Tony Zappia (ALP); Stuart Robert (LP); David Bradbury (ALP).

All the speeches may be seen at the following  link:


The main protagonists were David Bradbury (for) and Joe Hockey (against).   The speech on 1 March 2012 by David Bradbury will be found by following this link:


The speech on 1 March 2012 by Joe Hockey will be found by following this link:




None of the debate touches on the technical issues that I pondered in my post entitled Questions concerning new power for winding up by ASIC.

Parliament sees new tax laws to protect superannuation and deter phoenix companies

 Insolvency Laws, Regulation, Tax liabilities, Taxation Issues  Comments Off on Parliament sees new tax laws to protect superannuation and deter phoenix companies
Oct 182011

On 13 October 2011 the Australian Government presented a bill which the Minister says “amends the tax law to better protect workers’ entitlements to superannuation, strengthen the obligations of company directors and enhance deterrence of fraudulent phoenix activity”.

Schedule 3 of the Tax Laws Amendment (2011 Measures No.8) Bill 2011 is described in the Second Reading speech by the Minister, Mr Bill Shorten, as follows:

“These amendments will provide disincentives for directors to allow their companies to fail to meet their existing obligations, particularly obligations to employees. They do not introduce new obligations on the company but, rather, penalise company directors who are failing to ensure that their companies meet their obligations.

These outcomes are achieved by extending the director penalty regime to superannuation guarantee. This will make directors personally liable for their company’s failure to meet its obligations to pay employee superannuation.

Secondly, this will allow the commissioner to commence recovery against company directors under the director penalty regime without issuing a director penalty notice. This power is limited to situations where the company’s unpaid pay-as-you-go (or PAYG) withholding or superannuation liability remains unpaid and unreported, three months after becoming due.

Thirdly, it is making company directors and, in some limited cases, their associates liable to a tax which, in effect, reverses the economic benefit of a PAYG withholding credit. This tax only applies if directors or their associates are entitled to a credit for amounts that have been withheld from payments made to them by the company and the company has failed to meet its obligation to pay PAYG withholding amounts to the commissioner. Further criteria must be satisfied before associates are liable.

Together, this package of amendments will improve the likelihood that employees will receive the superannuation they are entitled to. It will reduce the ability of directors to avoid paying director penalties for their company’s superannuation guarantee and PAYG withholding debts. Further, it will increase the disincentives for directors to allow their company to fail to meet its existing obligations.”

Introduced with the Pay As You Go Withholding Non-compliance Tax Bill 2011, the bill amends, inter alia, the Taxation Administration Act 1953 to allow the Commissioner of Taxation to commence proceedings to recover director penalties in certain circumstances without issuing a director penalty notice; the Income Tax Assessment Act 1997, Taxation Administration Act 1953 and Taxation (Interest on Overpayments and Early Payments) Act 1983 to make directors and their associates liable to pay as you go withholding non-compliance tax in certain circumstances; and the Corporations Act 2001, Superannuation Guarantee (Administration) Act 1992 and Taxation Administration Act 1953 to make directors personally liable for their company’s unpaid superannuation guarantee amount.


 Minister’s Second Reading speech on 13/10/2011.

Text of Bill  (See Schedule 3)

Explanatory memoranda  (See Chapter 3)  For a concise comparison of key features of the new law and the current law, see the chart at pages 30 & 31 of the Explanatory Memorandum.


On 18 October 2011 the Treasury published the thirteen submissions it received in response to the consultation on an earlier exposure draft of this legislation. To view these click HERE.