The ATO has released a new report on the economic impacts of potential illegal phoenix activity. It estimates that the annual direct impact of illegal phoenix activity on businesses, employees and the government was between $2.85 billion and $5.13 billion for the 2015–2016 financial year. 

In particular, the report notes that:

  • the cost to businesses from unpaid trade creditors was between $1.2 billion and $3.2 billion;
  • the cost to employees from unpaid entitlements was between $31 million and $298 million; and
  • the cost to the government in unpaid taxes and compliance costs was around $1.7 billion.
The report, which was commissioned by the Phoenix Taskforce and prepared by PricewaterhouseCoopers, uses data from a range of information sources from Phoenix Taskforce member agencies, including ASIC external administration reports, details of unsecured creditors and unpaid superannuation, information from the Fair Entitlement Guarantee (FEG) scheme and ATO debts. Additionally, the report draws on the ATO's more sophisticated taskforce data-driven Phoenix Risk Model (PRM) built from data from member agencies to identify the potential illegal phoenix population.

New Phoenix Hotline and website

The government has also established a new Phoenix Hotline to combat phoenixing activity and to protect compliant Australian workers and businesses. Revenue and Financial Services Minister Kelly O'Dwyer said, "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."

Employees, creditors, competing businesses and the general public can confidentially provide information about possible phoenix behaviour via the hotline on 1800 807 875 or the ATO website. Disclosures will be protected by privacy laws and the government's legislative action in protecting whistleblowers. "For those who try to beat the system, it's only a matter of time before the law catches up with them," Ms O'Dwyer said.

Sources: www.ato.gov.au/General/The-fight-against-tax-crime/Our-focus/Illegal-phoenix-activity/The-economic-impact-of-potential-illegal-phoenix-activity-report/
http://kmo.ministers.treasury.gov.au/media-release/084-2018/.