Combatting Illegal Phoenix Consultation Paper
The submission have been prepared by the Insolvency & Reconstruction Law Committee (IRL Committee) and the Taxation Law Committee (the Tax Committee) of the Business Law Section of the Law Council of Australia.
The Committees are two of the fifteen specialist committees and one working party established within the Business Law Section to offer technical advice on different areas of law affecting business. Each of these Committees approach issues of law reform and practice from a different perspective, which reflects their respective primary focus.
In this instance, whilst the two Committees agree on some issues, the IRL Committee’s submission has sought to respond to all the questions raised in the Consultation Paper whereas the Tax Committee has focussed only on the tax proposals in the Consultation Paper. There are some differences between the views expressed. For example:
- regarding promoter penalties the IRL Committee concludes that there is insufficient information contained in the proposal, whereas the Tax Committee is of the view that it is not an appropriate measure.
- regarding expanding director penalty notices (DPNs) to GST, the IRL Committee considers that this is a worthy idea whereas the Tax Committee had mixed views about this proposal.
- on the issues of security deposits the IRL Committee support this if only applied to high-risk phoenix operators (HPROs) whereas the Tax Committee considered it is inappropriate to extend the garnishee power to security deposits.
- the IRL Committee were generally not supportive of removing the 21 day period for DPNs, however the Tax Committee considered such a change, while appropriate for directors already designated as HRPOs, should not apply to directors more generally.
You can read the full submission below.