Amendments have been made to the Corporations Act 2001, Taxation Administration Act 1953 and A New Tax System (Goods and Services Tax) Act 1999, with the changes to apply prospectively from 1 April 2020. The amendments aim to respond to the serious problem of non-payment of corporate GST liabilities and put in place stricter measures to protect against illegal phoenixing.Major legislative reforms for companies and directors have been introduced with the passing of the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019. The amendment was passed by both houses of Parliament on 5 February 2020 in response to the problems arising from illegal phoenix activity (the transfer of assets from a failed or insolvent company to a new company to avoid paying debts).
Phoenix companies have consistently attracted attention given the risk of these companies escaping liability for illegal and unethical behaviour. The long-awaited legislation introduces several insolvency law reforms, expanding the obligations and personal liabilities of company directors in order to reduce the evasion of debts and to ensure greater protection for the interests of creditors.
The amendments are a positive step to deter illegal phoenix activity and ensure directors uphold their corporate responsibilities through stricter regulations. It is important for directors and responsible staff members to stay well-informed of their obligations, liabilities and entitlements in order to adequately protect their company’s assets.
Stipe Vuleta practises in Litigation—Insolvency & Reconstruction. He’s almost always the youngest person in the room but when Stipe speaks, even the oldest hands listen. Stipe has earned the gratitude and respect of many established company directors and individuals who he has helped through financial hardship, insolvency and business reconstruction. He speaks fluent accountancy and insolvency practitioners enjoy his repartee on topics ranging from extending convening periods or remuneration approval to recovering voidable transactions and public examinations. With a pedigree that boasts large British and Australian multinationals across the consumer goods, manufacturing and retail space, Stipe has worked on complex and high-profile cases. His professional mantra is that being a lawyer is easy, but being a good lawyer is hard. Contact Stipe at stipe.vuleta@chamberlains.com.au or LinkedIn
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