On 18 February 2020, the federal government introduced Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020. The laws are aimed at countering illegal phoenix activity.
What is illegal phoenix activity?
Illegal phoenix activity, as described by ASIC, is where a new company is created to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding debts, including taxes, creditors and employee entitlements. The illegal practice occurs when company directors transfer the assets of an existing company to a new company without paying true or market value, leaving debts with the old company. Once the assets have been transferred, the old company is placed in liquidation.