- Explanatory Memorandum - DOCX 179KB
- Explanatory Memorandum - PDF 954KB
- Explanatory Statement - DOC 64KB
- Explanatory Statement - PDF 192KB
- Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2018 - DOC 296KB
- Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2018 - PDF 574KB
- Insolvency Practice Rules (Corporations) Amendment (Restricting Related Creditor Voting Rights) Rules 2018 - DOC 275KB
- Insolvency Practice Rules (Corporations) Amendment (Restricting Related Creditor Voting Rights) Rules 2018 - PDF 341KB
In the 2018-19 Budget, the Government announced a package of reforms to the corporations and tax laws to combat illegal phoenix activity.
The proposed reforms include a range of measures to both deter and disrupt illegal phoenixing and more harshly punish those who engage in and facilitate this illegal activity.
The exposure draft legislation includes reforms to:
- introduce new phoenix offences that target those who conduct and those who facilitate illegal phoenix transactions;
- It will now be an offence for company directors to engage in creditor‑defeating transfers of company assets that prevent, hinder or significantly delay creditors’ access to those assets.
- Pre-insolvency advisers and other facilitators of illegal phoenix activities will also be liable, as there will be a separate offence for any person who procures, incites, induces or encourages a company to make creditor‑defeating transfers of company assets.
- These will be both criminal and civil offences, attaching the highest penalties available under the law.
- The offences will be supported by an extension of the existing liquidator asset clawback avenues to cover illegal phoenix transactions. ASIC will also receive a new regulatory tool to recover property that has been transferred under an illegal phoenix transaction.
- prevent directors from backdating their resignations to avoid personal liability;
- prevent a sole director from resigning and leaving a company as an empty corporate shell with no director;
- extend the director penalty provisions to make directors personally liable for their company’s GST and related liabilities;
- expand the Australian Taxation Office’s existing power to retain refunds where there are tax lodgments outstanding;
- restrict the voting rights of related creditors of the phoenix operator at meetings regarding the appointment or removal and replacement of an external administrator.
The legislation is tightly targeted at those who misuse the corporate form, while minimising any unintended impacts on legitimate businesses and restructuring.
The proposed reforms follow extensive public consultation undertaken in 2017 and have been informed by the work of the Government’s Phoenix Taskforce.
You can submit responses to this consultation up until 27 September 2018.
Interested parties are invited to comment on this consultation.
While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.
All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.
Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.
How to respond
Address written submissions to:
Corporations Policy Unit
Consumer and Corporations Division
Level 5, 100 Market Street
EnquiriesPhoenixing@treasury.gov.auNathania Nero (Corporations Measures)
Michael Buscema (Tax Measures)
+61 2 6263 2318 (Corporations Measures)
+61 2 6263 2801 (Tax Measures)