Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 has now been passed, extending the director penalty regime to goods and services tax (GST), luxury car tax (LCT) and wine equalisation tax (WET) liabilities.
The bill, enables the Commissioner of Taxation to collect estimates of anticipated GST liabilities where there are reasonable grounds to believe that the taxpayer, or related entities, are involved in phoenix behaviour, or have dissipated assets with the intention to defeat creditors.
According to the ATO’s draft Practical Compliance Guideline, an estimate will only be made when the taxpayer fails to engage with the ATO or refuse to co-operate in establishing the overdue and unpaid amount despite the multiple attempts the commissioner makes to contact the taxpayer.
The passing of the bill will place additional emphasis on the obligations of a director, with advisers urged to brief clients on the potential consequences of taking up directorship.
The bill will also allow the commissioner to retain a refund to a taxpayer that has other outstanding lodgements or information that needs to be provided to the commissioner.
That measure aims to combat illegal phoenix activity where taxpayers hold off on lodging returns that result in a tax liability before obtaining a refund they would otherwise not be entitled to, strip assets from the company or otherwise frustrate the collection of the liability.
The new law will also prevent the inappropriate backdating of director resignations or resigning to be a director of a company if doing so would leave the company without a director.