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Phoenix operator sentenced following ATO investigation

Phoenix operator sentenced following ATO investigation

A small business owner has been sentenced to five years and four months’ jail after an ATO operation revealed he fraudulently obtained more than $890,000 through illegal phoenix activity.

  • AFlores
  • November 20, 2018
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The District Court of Western Australia convicted business owner Sung Jae Cho of 20 charges under the Criminal Code, including obtaining a financial advantage by deception between 2004 and 2007, the ATO said in a statement.

Between 1997 and 2009, Mr Cho operated a labour hire business through four different companies providing workers (mainly welders) to engineering construction companies in and around Perth.

The ATO said Mr Cho’s business displayed the hallmarks of illegal phoenix activity, where he:

- carried on a business through one corporate entity that intentionally accumulated but did not repay debts;

- liquidated the business to avoid paying the debt; and

- continued the business through a different corporate entity, which was still under his control.

Further, it found Mr Cho failed to report and remit GST and PAYG withholding while having sole and full control of the relevant entities.

ATO assistant commissioner Aislinn Walwyn said illegal phoenix activity deprives employees of their entitlements and disadvantages honest businesses by undercutting them on prices.

“This kind of behaviour has an incredibly damaging impact on the Australian community through unpaid wages to employees, debts to other businesses, and unpaid taxes,” Ms Walwyn said.

“Companies like these are obtaining financial advantages over their competitors and robbing the Australian economy of revenue that could be spent on essential services.

“While the majority of business operators and directors do the right thing, we pursue those who try to gain an unfair advantage by avoiding their tax obligations,” Ms Walwyn continued.

“This is a strong reminder to those involved in illegal phoenix activity that if you engage in this behaviour you will get caught. We will continue to follow up phoenix operators despite their efforts to conceal their activities.”

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