Phoenix Rising – Top designer under investigation
In 2012 we reported on changes to the Tax Laws with a new law introduced on 29 June 2012 to counter Phoenix activity by Australian companies. Phoenix activity occurs when a company goes into liquidation leaving behind debts, including unpaid employee entitlements, but shifts assets to a new entity to begin trading once more, free from the liabilities of the old entity. The Commonwealth Government introduced the new law to “reduce the incentives for company directors to allow their companies to engage in fraudulent phoenix activity and reduce the impact of fraudulent phoenix activity on the community.” This includes potentially being held personally liable for their company’s unpaid superannuation guarantee payments and PAYG withholding tax where the company has failed to pay amounts withheld to the Commissioner of Taxation.
Further to the changes to the Law, the Government has also set up the Inter-Agency Phoenix Forum which it claims brings together “key government agencies to share intelligence and identify, design and implement cross-agency strategies to reduce and deter fraudulent phoenix activity”.
With this Government stance of non-tolerance in mind, the Sydney Morning Herald reports that one of Australia’s top designers, Lisa Ho is now caught up in a possible Phoenix issue with investigations underway into her business dealings and company structures (click here to view the article). The designer’s failed fashion company has gone into liquidation owing several million dollars in unpaid debts. $17 million in total is owed to creditors including $7 million to subsidiary companies Lisa Ho Retail and Lisa Ho Designs, which are also in administration.
The ATO is taking an aggressive stance on many aspects of company and director’s fiscal responsibility. Possible Phoenix activity or other activities related to non-lodgement of tax returns or under reporting of income and GST requirements will be investigated and the ATO advises it will report the most serious cases to ASIC or proceed to prosecution where deemed applicable.
If you believe you may require legal advice due to an issue with monies owed to the ATO, contact Dooley & Associates and one of our experienced team members will be happy to assist you.Back