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A look at how the Commissioner deals with phoenix companies

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Published on 01 Aug 16 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

Phoenix activity typically involves the liquidation of a company with accrued debts, often including tax debts and employee entitlements, and the transfer of assets to related parties, following which the directors incorporate a new company and carry on the business as before, but now, hopefully, released from the creditors of the former company. Phoenix activity has long been a problem for creditors, notably including the Commissioner of Taxation. In recent years, the struggle against such practices has intensified, with pushes to
reformulate the law, increased monitoring of culprits and harsher penalties.

This article examines the problems posed by phoenix activity, and discusses the various remedies available to the Commissioner for deterrence and recovery. These include winding up, freezing orders and Mareva injunctions, director penalty notices, “garnishee” notices, PAYG withholding non-compliance tax, and security deposits. The a rticle also briefly discusses ATO initiatives to mitigate against the prevalence of phoenix activities.

Author profile

Stephen Chen CTA
Stephen Chen, CTA, is a Partner in the MinterEllison tax practice, specialising in Tax Controversy. Stephen advises a significant number of the world’s largest organisations on managing their tax audits and disputes. Stephen also frequently instructs in high profile Australian tax litigation for taxpayers in all jurisdictions. - Current at 05 June 2025
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