Whether you are a business owner working with other businesses, or a contractor or employee, there are signs to look out for that may indicate a company is involved in illegal phoenix activity.
What is Phoenix Activity?
It’s when a new company is generated to renew the activity of an existing company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements.
You can avoid phoenix companies by knowing who you’re dealing with. Watch this.
To protect your business you could:
- confirm the business is registered and its ABN is valid
- obtain a credit check
- ask for references
- get a company report from ASIC
- search the company and its directors online for any adverse media reports
- ask for payment up front or in instalments
- include a clause in your contract requiring the business to have all their taxes paid up-to-date. This creates a contractual right that you can enforce in the event of illegal phoenix activity.
The fight against tax crime
There are steps you can take to protect your business. We advise doing your due diligence before entering into any business arrangement. Learn more here.[Source: Australian Taxation Office]
Not sure how to protect your business? Let’s talk.
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