The Treasury Law Amendment (Combating Illegal Phoenixing) Bill 2019 has finally passed through the Parliament on 5 February 2020, and received Royal Assent on 17 February 2020.
The new legislation:
- Prevents directors from improperly backdating resignations, or ceasing to be a director if this would leave the company with no directors;
- Introduces new phoenixing offences, and other rules relating to property transfers designed to defeat creditors, including allowing liquidators to apply for Court orders to set aside these transactions.
- Provides ASIC with the power to, itself make ‘orders’ in connection with illegal phoenix activity, including for the transfer of property, and intervening where a liquidator is not fulfilling its obligations to recover company property or is unable to do so if a company has insufficient funds to cover court proceedings.
- Allow the Commissioner of Taxation to collect estimates of anticipated GST liabilities, and make company directors personally liable for their company’s GST liabilities in certain circumstances; and
- Authorise the Commissioner to retain tax refunds where a taxpayer has failed to lodge a return or provide other information to the Commissioner that may affect the amount of a refund.
A July 2018 report by PwC, prepared for the Phoenix Taskforce, estimated the annual direct cost to businesses, employees and government as a result of potential illegal phoenix activity to be between $2.85 billion and $5.13 billion in 2015-16.