Regulating Fraudulent Phoenix Activity
Type of Grant
Australian Research Council Discovery Grant
Fraudulent phoenix activity is of great concern to Australian policymakers. It occurs where there is the deliberate liquidation of a company to avoid paying debts but the business continues through another company, and in corporate groups through the liquidation of undercapitalised subsidiaries and transfer of business to other companies in the group. This behaviour causes huge losses in taxation revenue and large financial losses for employees and unsecured creditors. To strengthen Australia's economic fabric, this project aims to determine the optimal method of dealing with fraudulent phoenix activity through a thorough examination of all of its aspects in Australia and by a comparative analysis of international responses.
- Professor Helen Anderson
- Professor Ann O'Connell
- Professor Ian Ramsay
- Professor Michelle Welsh
Professor Helen Anderson is the point of contact for this project. She is contactable via email at email@example.com.
The Regulating Fraudulent Phoenix Activity project is currently in its third and final stage: making recommendations to deal with harmful phoenix activity and engaging with stakeholders to assist in implementing those recommendations. The report containing the project’s final recommendations was released in February 2017.
Since the launch of the Phoenix Project, the Phoenix Research Team has been collaborating with key stakeholders. At the request of the Australian Taxation Office (ATO), Professor Helen Anderson represented the team and presented findings at several Inter-Agency Phoenix Forum (IAPF) meetings in 2014 and 2015. This forum is hosted by the ATO, and its members include the Australian Securities and Investments Commission, the Fair Work Ombudsman and NSW and Victorian state revenue offices. Each has contributed to our work through the provision of data and information during interviews.
Professor Anderson was also invited to be a panel member in the ATO’s educational video on phoenix activity in 2015. In addition, in 2015 Associate Professor Michelle Welsh spoke at a Senate Economics References Committee (SERC) inquiry into insolvency in the Australian construction industry, and Professor Anderson appeared before the Productivity Commission Inquiry on Business Set-up, Transfer and Closure. Professor Anderson was also an invited speaker at the ARITA State Conference (Victoria/Tasmania).
Several of the Phoenix Research Team’s key recommendations made in submissions have been supported in whole or in part by the Productivity Commission and the SERC. These recommendations include the introduction of a Director Identity Number and the need for increased identity checks for directors at the time of incorporation.
The five categories of phoenix identified by the Phoenix Research Team in its first major report Defining and Profiling Phoenix Activity have been positively received. The ATO referred to the report in its submission to the SERC and it was the subject of questions by the committee to Associate Professor Welsh. The report has also been relied upon by the Australian Restructuring Insolvency and Turnaround Association (ARITA). The categories assist the understanding of legal and illegal phoenix activity and of the need to differentiate the treatment of phoenix activity depending on the circumstances of its occurrence. The team’s second report, Quantifying Phoenix Activity: Incidence, Cost, Enforcement has highlighted the current difficulties in obtaining accurate or meaningful statistics about phoenix activity. The team’s third and final report, Phoenix Activity: Recommendations on Detection, Disruption and Enforcement, puts forward 32 recommendations aimed at reducing the incidence of harmful phoenix activity. Following the release of this report, the federal opposition and the government have announced new policies on phoenix activity and both of these have included some of the suggestions made previously in the team’s final report.
Anderson, H, O'Connell, A, Ramsay, I, Welsh, M, Productivity Commission Business Set-Up, Transfer and Closure Inquiry - Response To Request For Information - Further submission to the Productivity Commission on the Director Identity Number (13 July 2015)
H. Anderson, 'Piercing the Corporate Veil to Reach the Money for Employees: Why, how and Where to Next?' (2019) 36 C&SLJ 536
H Anderson, ‘Combatting Illegal Phoenixing – Is The Government’s Package What We Need?’ (2018) 30(1) Australian Restructuring Insolvency and Turnaround Association Journal 28 - 29.
J Hedges, H Anderson, I Ramsay and M Welsh, ‘Harmful Phoenix Activity And Disqualification From Managing Corporations: An Unenforceable Regime?’ (2018) 36(2) Company and Securities Law Journal 169 – 174.
Anderson, H, ‘Sidestepping Labour Law Through the Corporate Form’ in John Howe, Anna Chapman and Ingrid Landau (eds), The Evolving Project of Labour Law: Foundations, Development and Future Research Directions (Federation Press, 2017) 178
Helen Anderson, ‘Corporate Law and the Phoenix Company’ in Roman Tomasic (ed), Routledge Handbook of Corporate Law (Routledge, 2017) 114
Heaton, A, 'New Laws to Target "Phoenixing" by Dodgy Company Directors', Sourceable (14 September 2017)
ABC Television, ‘Dodgy Directors’, The Business, 12 September 2017 (Elysse Morgan interviewing Andrew Leigh MP, Shadow Assistant Treasurer)
Koehn, E, ‘Tradies accused of using Bunnings’ ABN details, as calls for a system overhaul grow’, Smart Company (2 August 2017)
Butler, B, ‘Director ID could stop corporate fraud, tax panel told’, The Australian, 20 July 2017
Bullock, L, ‘ASIC funding model an “unnecessary burden” on liquidators’, Accountants Daily (30 June 2017)
Patty, A, ‘Tougher company director ID requirements under spotlight’, The Sydney Morning Herald (11 June 2017)
Andrew Leigh MP, Shadow Assistant Treasurer, Phoenixing Activity, Speech, 13 June 2017
Colquhoun, L, ‘New moves to stop illegal phoenix company activity’, InTheBlack, CPA Australia (6 June 2017)
Andrew Leigh MP, Shadow Assistant Treasurer, ASIC Supervisory Cost Recovery Levy Bill 2017, Speech, 30 May 2017
Andrew Leigh MP, Shadow Assistant Treasurer, ‘You can almost register your dog as a company director’, Media Release, 30 May 2017
Seccombe, M, ‘How subcontracting fuelled the alleged Plutus tax scam’, The Saturday Paper (27 May 2017)
Heaton, A, 'Labor Takes Aim at Phoenix Company Operators', Sourceable (26 May 2017)
Andrew Leigh MP, Shadow Assistant Treasurer, Tackling phoenix activity, Transcript – 5AA, 26 May 2017
Andrew Leigh MP, Shadow Assistant Treasurer, Exposing dodgy directors, Media Release, 24 May 2017
Andrew Leigh MP, Shadow Assistant Treasurer, There is nothing magical about phoenixing operations, Transcript – Doorstop, 24 May 2017
ABC, 'Labor unveils 'phoenixing' crackdown amid alleged $165m tax fraud scandal', RN Breakfast, 24 May 2017 (Hamish Macdonald interviewing Professor Helen Anderson)
Koehn, E, 'Labor spruiks company director ID plan: Is there bipartisan support to protect SMEs from phoenix companies?', Smart Company (24 May 2017)
Koehn, E, ‘A plan to introduce ID numbers for company directors could be in the works’, Smart Company (5 May 2017)
Epstein R, Interview with Professor Helen Anderson, ABC Drive, (27 February 2017)
Heaton, A, ‘Rein in Serial Phoenix Company Directors: Report’, Sourceable (27 February 2017)
Ferguson, A, ‘Scrutiny of phoenix trading intensifies’, Australian Financial Review (26 February 2017)
Andrew Leigh MP, Shadow Assistant Treasurer, Government must crack down on dodgy phoenix operators, Media Release, 24 February 2017
Oakes, D, and Clark, S, ‘Phoenixing companies too easy and lucrative in Australia, new report finds’, ABC News (24 February 2017)
ABC, ‘Report shows illegal phoenixing practice remains largely undetected by regulators’, PM, 24 February 2017 (Dan Oakes interviewing Professor Helen Anderson).
Trounson, A, ‘Time to put tracking numbers on directors’, Pursuit (24 February 2017)
Bullock, L, '’Phoenix' lawyers undeterred by ATO crackdown', Lawyers Weekly (21 October 2015)
Keating, E, 'Lack of rules and data about phoenix activity compounds the problem: Research', Smart Company (20 October 2015)
Barrett, J, 'Report outlines risk of phoenix schemes', Australian Financial Review (20 October 2015)
Hepworth, A, 'ASIC tackles phoenix firms, seeks reforms', The Australian (13 July 2015)
Heaton, A, 'How Can Phoenix Companies be Stopped?', Sourceable (6 July 2015)
Professor Ian Ramsay interviewed about Illegal Phoenix Activity on Australian Broadcasting Corporation program the 7.30 Report, 'Underworld figure at the heart of building union corruption claims takes Royal Commission stand' Broadcast: 24/06/2015 Reporter: Adam Harvey
Associate Professor Helen Anderson on panel in ATO Illegal Phoenix Activity video series (21 May 2015)
'Phoenix activity in the spotlight', The Age (Melbourne, Australia) (7 January 2015)
Murray, M, 'Significant phoenix activity report', ARITA (11 December 2014)
Relevant Prior Research
Anderson, H, 'The Protection of Employee Entitlements In Insolvency: an Australian Perspective', Melbourne University Press, 2014, 274 pages
Anderson, H and Haller, L, 'Phoenix Activity and the Liability of the Advisor' (2014) 36(3) Sydney Law Review 471- 500
Anderson, H, 'Pressing the Right Buttons: Case Studies In The Protection Of Employee Entitlements' (2014) 153(1) International Labour Review 117 – 142
Anderson, H, and Hardy, T, 'Who Should be the Super Police? Recovery of Unremitted Superannuation in Insolvency' (2014) 37(1) University of New South Wales Law Journal 162 – 194
Anderson, H, 'Thinking Outside The Square – Alternative Approaches To The Protection Of Employee Entitlements' (2014) 32(1) Company and Securities Law Journal 23 – 43
Anderson, H, 'Corporate Insolvency and the Protection of Lost Employee Entitlements: Issues in Enforcement' (2013) 26 Australian Journal of Labour Law 75 -101
Anderson, H, 'An Ounce of Prevention: Practical Ways to Hinder Phoenix Activity' (2013) 25(3) Australian Insolvency Journal 16 – 18
Anderson, H, 'The Proposed Deterrence Of Phoenix Activity – An Opportunity Lost?' (2012) 34(3) Sydney Law Review411
Anderson, H, Welsh, M, Ramsay, I and Gahan, P, 'The Evolution of Shareholder and Creditor Protection in Australia: an International Comparison' (2012) 61 International and Comparative Law Quarterly 171
Anderson, H and Howe, J, 'Making Sense of the Compensation Remedy in Cases of Accessorial Liability under the Fair Work Act' (2012) 36(2) Melbourne University Law Review 335 – 368
Anderson, H, 'Comment On Consultation Paper 180: ASIC's Power To Wind Up Abandoned Companies', (2012) 30(8) Company and Securities Law Journal 528 – 533
Anderson, H, 'Voluntary Administration and the Protection of Employee Entitlements' (2012) 30 Company and Securities Law Journal 170 – 187
Anderson, H, 'Phoenix Activity and the Recovery of Unpaid Employee Entitlements - Ten Years On' (2011) 24(2) Australian Journal of Labour Law 141 – 162