One national accounting network and SMSF service provider has urged companies to be on the lookout for illegal phoenix activity to “avoid being owed money that will never be paid".
With the firm claiming that phoenix activity is on the rise, RSM partner Andrew Beck said it is no surprise the ATO is launching a crackdown on the behaviour.
“A phoenix company is one that rises from the ashes of another company,” said Mr Beck.
“Fraudulent phoenix activity is when the company deliberately goes into liquidation to avoid paying debts – such as employee entitlements, taxes, and supplier invoices – then transfers the assets to a new company and continues to trade.”
According to Mr Beck, phoenix companies leave creditors, employees and suppliers out of pocket, with no means of recourse.
In June this year, the ATO warned it is targeting phoenix businesses, which cost employees up to $655 million a year in the form of unpaid wages and entitlements such as superannuation.
Recent figures show that phoenix activity costs the Australian economy up to $3.2 billion each year, according to the ATO.
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