Director of company with $30 million ATO debt banned for illegal phoenix activity.
ASIC has banned the director of SME Fleet Pty Ltd (SME Fleet) and New Cars Plus Pty Ltd (New Cars Plus) from managing companies for five years as a result of his conduct in managing the companies, including illegal phoenix activity. SME Fleet and New Cars Plus were place in liquidation owing creditors $30,745,680, of which $30,656,648 was owed to the ATO.
ASIC found that the director:
- Improperly used his position by engaging in illegal phoenix activity to transfer the business of New Cars Plus to a related entity;
- Had historically failed to lodge Business Activity Statements and income tax returns;
- Had failed to keep proper books and records; and
- Had failed to cooperate with or assist a liquidator.
Under the Corporations Act, ASIC has the power to disqualify people from operating companies for up to five years if they are an officer of two or more companies (within a seven-year period) that are wound up and unable to pay creditors. It also has the ability to prosecute directors for engaging in or facilitating illegal phoenix activity, which can result in fines or imprisonment.
ASIC is a member of the Phoenix Taskforce, which comprises federal, state and territory government agencies who work collectively to combat illegal phoenix activity. The Federal Government is spending millions of dollars each year funding this taskforce and is seeking to crack down on illegal phoenix activity and the pre-insolvency advisors who facilitate it.
What is illegal phoenix activity?
Illegal phoenix activity is generally when the following happens:
A director of company A, with assets and liabilities, creates company B. The assets of company A are transferred to company B for consideration of less than market value (or no consideration) and all the liabilities are left in company A.
The director may put company A into liquidation or they may let a creditor of company A engage a solicitor to wind it up.
What can you do if your company has a tax debt?
The best thing to do if your company has a tax debt is to obtain advice from a qualified professional. If advice from an unregistered pre-insolvency advisor seems to good to be true, it probably is.
The staff at TAX DEBT SOLVED are Chartered Accountants and Registered Liquidators. We have assisted numerous clients implement solutions to their tax problems, which comply with legal requirements. TAX DEBT SOLVED is therefore well placed to provide you with advice on the options available to you and your company with a free, no-obligation consultation, so contact us here.