As part of its campaign targeting illegal phoenix activity in Australia, the Federal Government has launched a new hotline to combat corporate phoenixing and maintain a level playing field for business.
Small Business Commissioner David Eaton supports the move, and said reporting of alleged illegal phoenixing was a step in the right direction in making sure that small businesses don’t get ripped off by other businesses who deliberately go bust to avoid paying their bills.
“Phoenixing robs small business owners of their incomes and gives the perpetrators an unfair competitive advantage over businesses that play by the rules.
According to the Australian Taxation Office (ATO), phoenix activity is particularly prevalent in the building and construction, labour hire, payroll services, security, cleaning, computer consulting, cafes and restaurants, and childcare industries. The ATO estimates that illegal phoenix activity costs the Australian economy more than $5 billion a year.
One aspect of illegal phoenix activity involves directors of a company allowing a business to collapse in order to avoid paying creditors and staff with the same directors then establishing a new company to operate within the same industry.
The 1800 807 875 hotline number will make it easier to report suspected phoenix behaviour directly to the ATO and enable timely action to be taken against companies and their directors whilst protecting employee entitlements such as wages and superannuation.
The Small Business Commissioner David Eaton said the Small Business Development Corporation had been advocating for greater focus on phoenixing activity for some time. “It is good to see that the ATO is taking action against companies and their directors who are undertaking this illegal activity,” Mr Eaton said.
Under the protection of national privacy laws, small businesses, creditors and the public are encouraged to report their concerns about phoenix behaviour by calling 1800 807 875 or online at ato.gov.au/tipoff.