Hotline to dob in dodgy directors who skip on bills

DODGY company directors who skip on their bills are costing small businesses, workers and taxpayers more than $5 billion a year, according to figures from the tax office, prompting a crackdown on the practice of so-called corporate phoenixing.

The Federal Government is set to step up its campaign against dodgy company directors, launching a new hotline today to help catch corporate thieves.

The Australian Taxation Office will release figures today, showing corporate phoenixing — where directors send a company under to avoid paying the bills, only to resume trading under another name — costs the economy far more than previously believed.

The report, from the ATO’s Phoenix Taskforce, suggests that the dodgy corporate practice costs the economy up to $5.2 billion a year, causing untold misery as subcontractors go bust when their bills are not paid and workers lose out on accrued leave and unpaid superannuation.

Subcontractors and other small businesses wear the bulk of the costs, according to the review, conducted by accounting firm PwC.

It estimates the direct cost to business, mostly in unpaid bills, at up to $3.2 billion a year.

Employees lose up to $300 million in unpaid entitlements, and dodgy directors skip on $1.7 billion worth of payments to State and Federal governments.

Minister for Revenue and Financial Services Kelly O’Dwyer will launch the ATO hotline for workers and subcontractors to dob in companies and directors they believe are skipping on their obligations by sending companies under rather than paying the bills.

“Phoenixing hurts hardworking Australians, including the company’s employees, suppliers, customers and competing businesses,” she said.

“It causes a significant drain on the Australian economy.

“Last financial year the ATO sent out tax bills totalling more than $270 million from more than 340 reviews and audits of businesses involved in phoenix activity.”

Since 2014, when the Federal Government established the Phoenix Taskforce — which brings together 30 Federal and State government agencies to identify and deal with suspected illegal phoenix operators — it has conducted more than 3000 audits and reviews, Ms O’Dwyer said, raising more than $1 billion in liabilities.

Only $450 million of that has been collected, she said.

Employees, creditors, competing businesses and the public should report their concerns about phoenix behaviour by calling 1800 807 875 or at ato.gov.au/reportphoenixactivity