September 15, 2017
The Government will soon introduce a unique Director Identification Number (“DIN”) to combat illegal phoenix activity and to curb the activities of pre-insolvency advisors who will also be targeted and potentially held liable for their advice.
As part of the reforms, the Government is consulting on widening the scope of directors personal liability to include GST liabilities as part of the Director Penalty provisions.
It is likely that personal liability for unpaid GST will operate in a similar way to current Director Penalty Notices that currently affect only unpaid PAYG and Superannuation. That is;
The Government’s consulting on Personal liability for directors with unreported and unpaid Company GST debts is a significant development that all directors must be made aware of.
As we discover more, we will keep you informed.
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The Turnbull Government is taking action to crack down on illegal phoenixing activity that costs the economy up to $3.2 billion per year to ensure those involved face tougher penalties, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, announced today.
Phoenixing – the stripping and transfer of assets from one company to another by individuals or entities to avoid paying liabilities – has been a problem for successive governments over many decades. It hurts all Australians, including employees, creditors, competing businesses and taxpayers.
The Government’s comprehensive package of reforms will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity.
The DIN will identify directors with a unique number but will also interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people.
In addition to the DIN, the Government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers. These include:
The Government will also consult on how best to identify high risk individuals who will be subject to new preventative and early intervention tools, including:
Consultation on the non-DIN measures will commence in the coming weeks.
These reforms complement and build on other Government action to combat crime and fraud in the economy, including:
“The Government is committed to ensuring individuals who engage in illegal phoenixing activity are held to account and that the regulators are equipped to take stronger action to both deter and penalise phoenixing activity for the benefit of all Australians,” Minister O’Dwyer said.