AS part of a campaign targeting illegal phoenix activity in Australia, the federal government has launched a new hotline to combat corporate phoenixing and maintain a level playing field for business.
Small Business commissioner David Eaton said reporting of alleged illegal phoenixing was a step in the right direction in making sure small businesses did not get ripped off by other businesses who deliberately went bust to avoid paying their bills.
“Phoenixing robs small business owners of their incomes and gives the perpetrators an unfair competitive advantage over businesses that play by the rules,’’ he said.
One aspect of illegal phoenix activity involves directors of a company allowing a business to collapse in order to avoid paying creditors and staff with the same directors then establishing a new company to operate within the same industry.
According to the Australian Taxation Office (ATO), phoenix activity was particularly prevalent in the building and construction, labour hire, payroll services, security, cleaning, computer consulting, cafes and restaurants, and child care industries.
The ATO estimated illegal phoenix activity costs the Australian economy more than $5 billion a year.
The hotline number will make it easier to report suspected phoenix behaviour directly to the ATO and enable timely action to be taken against companies and their directors while protecting employee entitlements such as wages and superannuation.
Mr Eaton said the Small Business Development Corporation had been advocating for greater focus on phoenixing activity for some time.
Call the phoenix hotline on 1800 807 875 or email firstname.lastname@example.org