Like a phoenix from the ashes, the Treasury Laws Amendment (Combating Illegal Phoenixing Bill) 2019 (Cth) (Bill) rose and was finally passed through both Houses of Parliament last week over a year after it was first introduced and is now awaiting Royal Assent.
The legislation is designed to target and address illegal phoenix activities, which typically involve companies at risk of insolvency disposing of their assets to a new corporation for the purposes of allowing the continuation of their business while avoiding the repayment of debts owing to the old company’s creditors (including employees, service providers and the Australian Taxation Office). The practice is estimated to have cost between $2.85 billion to $5.13 billion in 2015-2016 alone. The reforms have been several years in the making, with a number of the changes first proposed in 2018.
The legislation will amend the Corporations Act 2001 (Cth) (and other statutes) to:
Tax refunds and GST liability
No notable amendments were made to the Bill by the Senate, other than to require a review of the changes be conducted five years after the Bill receives Royal Assent. The bulk of the amendments to the Corporations Act 2001 (Cth) will commence immediately after receiving Assent (with a 12 month delay on the director resignation provisions) while the changes to the relevant tax laws will come into effect from the first quarter following Assent.
Authors: Georgia Milne & Clare Giugni
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Published by Georgia Milne, Clare Giugni