Businesses that employ ‘phoenix’ activity, fail to declare all cash income and do not make super contributions should prepare to be targeted by ATO
Businesses that employ ‘phoenix’ activity, fail to declare all cash income and do not make super contributions should prepare to be targeted by the Australian Tax Office (ATO).
According to the Compliance Program 2009-10 released today, individuals and businesses can expect increased scrutiny of returns, loss, high-risk refunds, eligibility for tax offsets and employee share schemes.
CEO of accountantsRus, Adrian Raftery, applauds the ATO’s stance on cracking down on individuals who use serial liquidation as a means of avoiding financial obligations (‘phoenix’ operators).
“It is about time these operators get the book thrown at them,” Raftery says.
“It has always been particular frustrating for unsecured creditors and employees when they find out that the people who owe them money have simply closed down business yet re-open via another company just a few months later.
“These operators are so brazen that they think they can always get away with it … but they have picked the wrong fight this time.”
Raftery says the ATO has become one of the increasing number of unsecured creditors that have been burnt by ‘phoenix’ operators in recent times.
“During the global financial crisis, it has become too tempting for struggling businesses to avoid their PAYG and GST obligations by keeping the BAS money away from the ‘taxman’ instead,” he says.
He warns such operators need to mend their ways or risk a potential jail term.
“The ATO have tremendous powers … so if they believe that someone is acting fraudulently then criminal charges may be enforced,” Raftery says.
Other priorities for the ATO in the year ahead include highly paid directors and executives, wealthy Australians with a net wealth of between $5 million and $30 million, and cross-border tax avoidance schemes.
Meanwhile, Tax Commissioner Michael D’Ascenzo says the ATO will continue its strong program of help and assistance for businesses and individuals facing genuine hardship during the economic downturn.
“People can struggle with their tax and superannuation obligations in times of uncertainty,” he says.
“To help businesses through these tough times we are providing a range of practical support measures to keep them engaged with the tax system including help to pay existing tax debts without interest.”
As many businesses are doing it tough in the current financial climate, it is even more important for a fair and equitable system, according to D’Ascenzo.
“Our work to make sure people meet their obligations ensures there is no unfair advantage for those who don’t,” he says.