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ATO opens consultations on proposed measures to counter illegal phoenix behaviour

The ATO has opened consultations on proposed expansion of the estimates regime to counter illegal phoenix behaviour.

  • Maja Garaca Djurdjevic
  • September 20, 2019
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The Australian Tax Office (ATO) has published a draft Practical Compliance Guideline (PCG 2019/D4) for consultation, explaining how the Commissioner intends to administer changes proposed in the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019, currently before parliament.

The PCG 2019/D4 sets out a package of reforms to address illegal phoenix behaviour, which includes bringing the goods and services tax (GST), luxury car tax (LCT) and wine equalisation tax (WET) within the existing law.

The expansion is intended to allow the Commissioner to make an estimate of certain unpaid and overdue tax-related liabilities and recover the amount of the estimate.

According to the draft, the GST, LCT and WET estimate provisions will only be applied where there are reasonable grounds to believe that the taxpayer, or related entities, are involved in phoenix behaviour, or assets are being dissipated with the intention to defeat creditors.

Further, an estimate of an unpaid net amount will generally not be made unless the taxpayer fails to engage with the ATO or refuses to cooperate in establishing the overdue and unpaid amount.

“The ability to make an estimate reduces the scope of phoenix operators and other non-compliant entities to escape their obligations,” the ATO said.  

According to the regulator, some indicators of phoenix behaviour include cyclically establishing, abandoning or deregistering companies to avoid paying taxes, creditors or employee entitlements; stripping or transferring assets from the company, ahead of its abandonment, winding up or deregistration; and the concealment or destruction of company records.

The draft PCG 2019/D4 is open for consultation until Friday, 4 October 2019.   

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