Australia Cracks Down On Businesses Who Rip Off Workers
The Assistant Treasurer, Senator Nick Sherry, today issued an Australia-wide warning against fraudulent phoenix activity and released a package of tough new proposals to crackdown on businesses who rip-off of their workers and the general taxpaying community.
Fraudulent phoenix activity involves avoiding the payment of tax liabilities, wages, superannuation and leave entitlements and other responsibilities, such as supplier accounts, through the deliberate liquidation of a company.
The business in question then continues, free of liabilities, in the form of another corporate entity, controlled by the same person or group of individuals. Evidence now shows this is increasingly occurring in a systematic and sometimes cyclical manner.
“The days of using “phoenix” arrangements to dodge tax liabilities owed to the whole community and to swindle hard-working staff out of their pay, their super and their leave entitlements are about to end,” said the Assistant Treasurer.
“The latest estimates provided to me indicate that phoenix activity may be ripping up to $600 million from the national revenue base – that is simply unacceptable and it’s hurting the whole community and hitting the integrity of the system.”
“As far as I am concerned, the people who engage in this practice deserve the full force of the law brought to bear against them – that is why we’ve commissioned a package of tough reform options that will use the tax and corporate legal systems to close them off at the pass.”
The final package of measures will build on the Rudd Government’s $70.9 million funding boost provided to the Tax Office in the 2009-10 Budget to fight against fraudulent small business activities.
The package of reforms released today, which are now open for public consultation, include:
- ensuring that there are anti-avoidance provisions in the taxation law to cancel any benefits derived through fraudulent phoenix activity;
- reinstating the failure to remit offence that would make it an offence for an entity not to remit the required Pay-As-You-Go (Withholding) (PAYG(W)) amounts;
- making it an offence for directors to claim credits in relation to their own income for PAYG(W) amounts that have not been remitted by the company of which they are a director;
- extending the promoter penalty regime to provide a disincentive to those who promote fraudulent phoenix activity;
- expanding the Australian Securities and Investment Commission’s powers to disqualify directors;
- expanding the role of the director penalty notice to impose stricter liabilities on directors and to cover a broader range of taxes and superannuation guarantee payments;
“I have met too many hard working people across Australia that have been the victims of these fraudsters,” said the Assistant Treasurer.
“And the impact on revenue is hitting all fair, honest taxpayers in the community.”
“The Government is of course strongly committed to helping those businesses suffering from the global recession and will ensure that innocent directors and companies are not captured inadvertently by any features of new regime.”
“This initiative is a significant step towards helping honest business compete on a level playing field and will address dishonest and unfair behaviour that costs business significantly”.
“I ask interested parties to take this opportunity to comment on the options in the reform package and the implementation details of this proposal”.
Full details of the package of proposals can be obtained at www.treasury.gov.au.
Topics: Australia, Economy, entitlement, fraud, fraudulent activity, Governance, pheonix, Phoneix Activity, rip off, tax, tax liabilities, taxes, taxpaing community, taxpayers, workers
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