Minister for Revenue and Financial Services Kelly O’Dwyer said small businesses can confidentially provide information or report their concerns about possible phoenix behaviour either by calling the Phoenix Hotline or online through the Australian Taxation Office website.
She said disclosures will be protected by privacy laws and the government’s legislative action in protecting whistleblowers.
“The new phoenix hotline will make it easier to report suspected phoenix behaviour directly to the Australian Taxation Office so they can pursue those who are doing the wrong thing,” Ms O’Dwyer said.
“It will enable timely action to be taken against companies and their directors, safeguarding employee entitlements like wages and superannuation, and ensuring taxes are collected for government to provide the essential services Australians rely on.”
However, the Australian Small Business and Family Enterprise Ombudsman Kate Carnell said a phoenix hotline will not directly support small businesses and individuals.
“At the end of the day, a phoenix hotline will not protect unsecured creditors – small businesses – because they are at the bottom of the list of creditors when a company unscrupulously goes belly-up,” Ms Carnell said.
“By the time action can be taken against companies and their directors, what little money left will go directly to secured creditors, such as the ATO and the banks.
“And eligible employees will have their wages paid by Fair Entitlements Guarantee – a legislative safety net scheme to pay employees who lose their jobs due to the liquidation or bankruptcy of their employer.”
Ms Carnell said she supports a unique director identifier so crooked directors can’t be involved in multiple instances of phoenixing.
Further, she said another way of protecting some small businesses is to enact John Murray’s building and construction industry recommendations, including setting up a deemed statutory trust for projects over $1 million.
“Money would be quarantined in a separate legislated account and would not be available for use by the company. It would be used to pay the people who did the work – the subcontractors,” Ms Carnell said.
“As we know, the construction industry has a track record of poor payment practices, insolvency and phoenixing, so statutory trusts will go some way to alleviate subcontractors and other small businesses not being paid as the result of phoenix activity.”
In 2017-18, the government’s Phoenix Taskforce conducted around 240 review and audits, raising more than $270 million in tax liabilities and collecting more than $190 million in cash.
Established in 2014, the taskforce comprises more than 20 federal, state and territory government agencies.
The government has also introduced other measures, including addressing corporate misuse of the Fair Entitlements Guarantee scheme, new exposure legislation on GST measures for property transactions, and the extension of the director penalty regime.