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Taxman fires on phoenix

The taxman is to get sweeping powers to recover unpaid superannuation from business people who deliberately liquidate their companies to avoid their liabilities.

The taxman is to get sweeping powers to recover unpaid superannuation from business people who deliberately liquidate their companies to avoid their liabilities.

THE taxman is to get sweeping powers to recover unpaid superannuation from business people who deliberately liquidate their companies to avoid their liabilities.

Under laws proposed by Assistant Treasurer Bill Shorten, the Tax Office will also be able to claw back income-tax credits fraudulently claimed by directors of failed companies.

Mr Shorten said the changes, foreshadowed in the May budget, were designed to protect workers' superannuation from ''phoenixed'' companies.

Phoenixing involves deliberately liquidating a company to avoid tax, superannuation and other creditors. The business is transferred to another entity, controlled by the same people, which carries on free from the liquidated company's obligations.

The new legislation, released for public consultation yesterday, bolsters one of the ATO's most fearsome weapons, the director penalty notice.

At present, the ATO can issue a company director with a notice ordering payment within 14 days of outstanding tax collected from workers under the pay-as-you-go scheme.

Under the new rules, the ATO will also be able to issue director penalty notices covering superannuation-guarantee payments that are more than three months late.

The new rules are also designed to end a scam where company directors claim a personal credit for income tax that the company is supposed to have withheld from their pay cheque. However, the tax has not actually been withheld by the company, which is then put into liquidation, robbing the ATO of revenue.

Under the new rules, the ATO may disallow such credits for company directors, their spouses and children.

The Tax Institute, which represents tax accountants and lawyers, said it welcomed any crackdown on phoenix activity but would carefully examine the proposal to make sure it did not hurt people doing their best to comply with the law.


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