The ATO has used new powers to recover eight million dollars in workers' superannuation entitlements from the operators of Australian-based companies that engaged in “phoenix” behaviour.
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.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 21 Aug 2016Risks flagged with real estate appraisal valuesBy Miranda Brownlee
- 21 Aug 2016Lawyer challenges ATO view on two fund strategiesBy Miranda Brownlee
- 18 Aug 2017ATO locks in details, addresses panic on real-time reportingBy Katarina Taurian
- 18 Aug 2017Data feeds unreliable for new reporting, says mid-tierBy Miranda Brownlee
- 18 Aug 2017Tax component confusion spurs potential tax liabilitiesBy Miranda Brownlee
- 18 Aug 2017Contributions triple in June quarter, survey showsBy Staff Reporter
- view all
- ATO locks in details, addresses panic on real-time reporting
The tax office has addressed several points of confusion with the new events-based reporting regime, locked in key deadlines, and outlined w...read more
- Data feeds unreliable for new reporting, says mid-tier
With an estimated 20 per cent of SMSFs still encountering errors from data feeds, one mid-tier firm believes the ATO should allow SMSF pract...read more
- view all