ATO brings in over $500m from illegal phoenix operators

The annual direct impact of illegal phoenix activity is estimated to cost the Australian community between $2.85 billion and $5.13 billion, the ATO said, referencing the latest report from the Australian National Audit Office (ANAO), which assessed the effectiveness of the Phoenix Taskforce focusing on governance, strategies, processes and performance measurement.

Although the ANAO commended the Phoenix Taskforce on making progress, it made three recommendations that focus on improving its performance. ANAO made comments regarding inconsistencies in the management of information disclosures to taskforce members and taking steps to automate and improve the processes. 

"The ATO agrees with all three of the ANAO’s recommendations and we’re already taking steps to implement the necessary changes in line with the ANAO’s recommendations," ATO deputy commissioner Will Day said. 

The Phoenix Taskforce comprises 34 federal, state and territory government agencies, including the ATO, Australian Securities and Investments Commission, Department of Jobs and Small Business, the Fair Work Ombudsman and Australian Border Force. The taskforce takes a whole-of-government approach to combating illegal phoenix activity.

"We see illegal phoenix activity all over the country in many industries and locations," Mr Day said.

"Illegal phoenix operators have a devastating impact on the community, including businesses, employees and contractors. It also means that state and federal governments can’t invest as much on initiatives that benefit all Australians."

According to the ATO, illegal phoenix activity is particularly prevalent in major centres in building and construction, labour hire, payroll services and security services. It is also particularly prevalent in regional Australia in mining, agriculture, horticulture and transport.

"We note the comment from the ANAO that the Phoenix Taskforce is making progress against its purposes and goals in combating illegal phoenix activity. We put this down to our collaborative, whole-of-government approach," Mr Day explained. 

The ANAO noted that taskforce strategies and enforcement activities as well as increased exchange of information and law reforms have strengthened the compliance powers of taskforce agencies.

"We have developed sophisticated data matching tools to identify, manage and monitor suspected illegal phoenix operators. We support businesses who want to do the right thing and will deal firmly with those who choose to engage in illegal phoenix behaviour," Mr Day said.

He explained that businesses can spot warning signs that can indicate that a business they are working with may be involved in an illegal phoenix operation.

These include if a competitor is offering significantly lower quotes, or the directors of the company you are working with have been involved with liquidated entities. Recent changes of company directors and name may also be indicators that illegal phoenix operations are taking place, the ATO warned. 

If such signs have been spotted, the ATO recommends confirming the entity’s ABN and performing a check on ASIC to see if it is a registered entity and if it is in liquidation or external administration.