A new ‘phoenix company’ law being drafted in the federal Treasury could make company directors liable for tax debts and unpaid superannuation.
‘Phoenix’ entities emerge after a company declares insolvency and goes on to use ‘unpaid for’ assets to carry on a similar business.
The Australian Tax Office has $5 billion of insolvency debt outstanding, according to Australian Financial Review.
Insolvency debt is the country’s fastest-growing outstanding debt, rising 36% in 2010-2011.
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The government released a draft of the new laws last week.
Australian Institute of Company Directors spokesman Steve Burrell says the consultation time of nine business days was inadequate, according to the AFR.
“We are concerned that the legislation largely imposes automatic liability on directors regardless of their culpability and gives the ATO wide-ranging powers in circumstances where directors are not suspected of dishonesty,” Burrell said.
A spokesperson for Assistant Treasurer David Bradbury said directors had an obligation to ensure the payment of workers’ superannuation and tax.
“Fraudulent directors who use phoenix companies to try and avoid their debts will be held personally liable for their PAYG withholding and superannuation obligations.”