The government’s hard-line stance on illegal phoenixing activity has gone up a notch with culpable directors to face GST liabilities, while accountants facilitating such conduct will be further targeted.
As part of a further package of reforms to “deter and disrupt”
illegal phoenix activity, the director penalty regime will be extended
to GST, luxury car tax and wine equalisation tax, making directors
personally liable for company debts.
Speaking to Accountants Daily, Thomson Reuters tax consultant Ian Murray-Jones said the move was sensible, considering the ability for GST to be abused.
“The thing about GST is that taxpayers act as collectors for the government,” said Mr Murray-Jones.
“You charge GST, you collect it and then you’re meant to remit it to
the Tax Office and there’s a great cash flow thing because the money
comes in and if you piss off, the Tax Office is out of pocket and it’s
very hard to locate people so that’s not unexpected and very sensible,
certainly from a revenue point of view.”
Further, directors will be prevented in improperly backdating
resignations to avoid liability or prosecution, while the ability of
directors to resign in circumstances which would leave a company with no
directors will also be limited.
Pitcher Partners executive director Andrew Yeo said the increased
attention of measures to combat illegal phoenix activity was welcome.
“The director penalty notice regime preceded GST and no government
since 2000 has sought to extend the basket of taxes caught under the
regime to include GST,” said Mr Yeo.
“For most businesses, GST will be the most significant liability and
this represents a significant extension of the taxes covered by the
penalty notice regime that may be applied against directors of failed
Further, Mr Murray-Jones said the revenue projections from the black
economy crackdown meant the government was fully intent on weeding out
“The revenue projections are $3 billion over the next four years
which is no trifling sum when you’re talking about a deficit of $14.5
billion,” said Mr Murray-Jones.
“The deficit coming down is really dependent on the Tax Office getting in there and kicking some arse.”
While unclear, the budget papers have also revealed that the
government will introduce new phoenix offences to target those who
conduct or facilitate illegal phoenixing.
“We welcome the government’s recent efforts to specifically attack
illegal phoenix facilitators — advisers who intentionally seek out
businesses in financial difficulty to facilitate such transactions,”
said Mr Yeo.