The ATO in conjunction with the Federal Police and NSW Police have commenced making visits across Sydney as part of its ongoing investigations into phoenix activity. The Deputy Commissioner, Mr Cranston, has advised that more than 100 officers are involved in these visits after identifying potentially $40m in tax revenue being at risk due to the rebirthing of insolvent companies.
One can only assume that similar “surprise visits” are planned for the other capital cities.
I have often commented privately that due to the lack of clear Corporations Act breaches associated with the provision of the advice associated with assisting directors to phoenix their business, ASIC appears to have had little traction in attempting to stamp out advisors who provide this advice. It is only if the ATO seeks to pursue these advisors for assisting in tax avoidance that the root of this activity can be stamped out (or at least curtailed). At last it seems that the ATO is bringing its might to bare on this issue through targeting of the facilitators.
The ATO has announced that it is looking at tax agents, lawyers and liquidators who are helping directors evade paying their creditors (of which the ATO is often the only one left behind after the rebirth). Media coverage indicates that 12 major law and accounting firms were raided by the Phoenix Taskforce. (information on this ATO’s fight against tax crime can be found ATO Phoenix Taskforce)
This Taskforce is working with the new Serious Financial Crime Taskforce to share intelligence and information between partner agencies and facilitate identification, management and monitoring of suspected criminal behaviour.
Mr Cranston correctly points out that phoenix operators create an unfair market advantage by undercutting their competitors (given their overheads are so much lower since they are not paying tax!)
As the amount of data that the ATO, ASIC and law enforcement agencies continues to grow, the ability of these organisations to identify tax avoidance is increasing. I suspect that the respective Office of State Revenue is also involved in this data-sharing.