ASIC and ATO engage with directors on illegal phoenix activity

Between 1 July 2020 and 30 June 2021, 21 directors were engaged with illegal phoenix activity – which occurs when a new company is created to continue the business of a company that has been deliberately liquidated, wound up or abandoned to avoid paying its debts – as it’s estimated that its economic impact is over $5 billion annually.

Following the consultations as part of ASIC’s phoenix surveillance campaign, it was revealed that 80 per cent of all outstanding ATO returns were lodged and that the regulator is satisfied the campaign had a positive impact on directors’ behaviours.

ASIC originally launched the phoenix surveillance campaign in the 2013-14 financial year before ATO joined the project in 2019.

It comes after ASIC released guidance on records of advice (ROAs) on Friday (5 November) to provide clarity to advisers and licensees on their obligations.

“This is the first of ASIC’s initiatives developed in response to the financial advice industry’s recent feedback on our consultation to improve consumers’ access to affordable advice,” ASIC commissioner Danielle Press said.

“We expect this practical guidance and information will provide clarity and certainty to financial advisers about when and how they can use ROAs.”

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.