Jones Partner
 

Government releases draft legislation to combat illegal phoenix activity

16/08/2018 by Bruce Gleeson

The Government announced via the media release http://kmo.ministers.treasury.gov.au/media-release/097-2018/ that it is intending to continue with previous commentary made by it to try and tackle the issue of illegal phoenix activity. As such draft legislation has been formulated and is currently available for review.

Among various reforms will be a new offence seeking to target pre-insolvency advisors and those complicit in facilitating illegal phoenix activity. Whilst I fully support this, ultimately the true test will be whether the legislation is drafted in such a manner that it can be effectively used and additionally will ASIC actually use to the anticipated legislation to prosecute! Let’s see – hopefully so.

Additionally as has been previously foreshadowed, there will be an extension of the Director Penalty Notice regime to capture unpaid GST thus further piercing the corporate veil that keeps getting thinner. However the reality is that certain business owners have effectively sought to get around the existing regime by paying currently personally liable taxes [or substantially all of them] whilst racking up a huge GST liability.

There is more to review and I will provide a more comprehensive analysis once I have done a thorough review of the draft legislation. But the message is clear, change is coming and hopefully it has the support from all sides of Government.