According to the ATO, phoenix behaviour involves the deliberate liquidation of companies to avoid their having to pay superannuation obligations and other tax liabilities and to avoid paying creditors and suppliers.
In this particular case, a network of companies provided labour-hire services such as seasonal fruit picking and meat packing and had been failing to pay workers their superannuation entitlements.
Deputy Commissioner Michael Cranston said the new powers, known as superannuation guarantee estimates (SGEs), allow the ATO to step in where it sees likely phoenix activity and to protect workers’ super entitlements before companies try to liquidate to avoid their responsibilities.
Speaking to SMSF Adviser, an ATO spokesperson said the law regarding SGEs is applied to employers to ensure they meet their obligations regarding their employees’ superannuation entitlements.
"To that end, the new power enables the ATO to extract money from a company or its directors so that it can be paid into an employee’s super account, including a self-managed superannuation fund where applicable," the spokesperson said.
Mr Cranston also explained the ATO can also issue director penalty notices which make directors personally liable for the company’s unpaid superannuation obligations.
“Phoenix operators cheat their workers and undercut honest business," he said. "Tackling the behaviour is a key focus for the ATO. We expect to use these powers more frequently against phoenix operators.”
According to the ATO, SGE powers allow the ATO to raise liabilities against companies who fail to disclose details of their employees.
The new powers also allow the ATO to deal with this type of phoenix behaviour in real time, by making a reasonable estimate of a company’s superannuation obligations and raising a debt against the company or its directors before the company can be put into liquidation.