Treasury Law Amendments (Combating Illegal Phoenixing) Bill 2020

Treasury Law Amendments (Combating Illegal Phoenixing) Bill 2020

The Treasury Law Amendments (Combating Illegal Phoenixing) Bill 2020, was passed on 5 February and received Royal Assent on 17 February.

The Explanatory Memorandum released with the Bill, helps summarise the four measures introduced to combat illegal phoenix activity, detailed as follows:

Schedule 1 – New Phoenix Offences (commenced on 18 February 2020)

Introduces new phoenix offences to prohibit creditor-defeating dispositions of company property, penalise those who engage in or facilitate such dispositions, and allow Liquidators and ASIC to recover such property.

A creditor-defeating disposition, in very simple terms, is the transfer of a company’s asset/s for less than market value or otherwise the best price attainable at the time of disposition.

A transaction may be voidable if it is a creditor-defeating disposition and is made when the company is insolvent, or, because of the disposition becomes insolvent or enters external administration within the following 12 months.

Schedule 2 – Improving the Accountability of Resigning Directors (commenced 18 February 2020)

Ensures directors are held accountable for misconduct by preventing directors from improperly backdating resignations or ceasing to be a director when this would leave the company with no directors.

In the event a director reports to ASIC more than 28 days after the purported resignation, the resignation takes effect from the day it is reported to ASIC.

A company or a director may apply to ASIC or the Court to give effect to the resignation if they believe they have sufficient evidence to prove the resignation actually occurred in the earlier timeframe.

A director may not be removed from a company, if doing so would leave the company without a director (unless the company is being wound up).

Schedule 3 – Making Company Directors Personally Liable for the Company’s GST Liabilities (will commence on 1 April 2020)

The ATO is able to collect estimates of anticipated GST liabilities and make company directors personally liable for their company’s GST liabilities in certain circumstances; similar to the current director penalty regime that exists for PAYG and superannuation currently.

Schedule 4 – Allowing the ATO to Retain Tax Funds in Certain Circumstances (will commence on 1 April 2020)

The ATO is able to retain tax refunds where a taxpayer has failed to lodge a return or provide other information that may affect the amount the ATO refunds.

This ensures taxpayers satisfy their tax obligations and pay outstanding amounts of tax before being entitled to a tax refund.

 

Important Links:
Treasury Law Amendments (Combating Illegal Phoenixing) Bill 2020
The Explanatory Memorandum

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