Are you working with a ‘Phoenix’?

Have you known a business that shut down to avoid paying debts, only to “rise from the ashes” and pop up again under a different company name without any debt?

The practice is known as phoenixing and it’s illegal, costing the Australian economy somewhere between $1.78 and $3.19 billion annually.

A phoenix company generally keeps the same directors, assets and employees and leaves the old company with little to no assets for creditors.

While the ATO has set up a Phoenix Taskforce, working with other federal, state and territory agencies to uncover these unethical companies, the ATO is reminding businesses to keep an eye out for these red flags when working with any new company.

Red flags include:

  • Unusually low quotes or tenders. This can mean the company isn’t taking superannuation or PAYG (pay as you go) instalments into account.
  • The company directors have previously been involved with liquidated entities.
  • The company’s name and directors have changed, but the manager and staff remain the same.
  • The company is requesting payments to a new company.
  • You’re being told that your last contract won’t be paid unless you sign a new contract, often with a different company name from the one you first dealt with.


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