ATO Raids “Phoenix” Schemes

August 12, 2016 Taxation in Australia

Tax Debts in USACANBERRA – More than a hundred tax investigators raided business across Australia to uncover evidence of fake bankruptcies being used to dodge taxes.

Over the course of August 11th the Australian Tax Office (ATO) conducted 13 raids to catch out bankrupt businesses employing so-called “phoenix schemes” to dodge debts and tax obligations.

The raids involved 130 separate advisers and investigators from the ATO.

The ATO’s investigations revolved around several pre-insolvency advisers who reputedly aided businesses to skip out on their tax obligations by entering into voluntary bankruptcy.

The schemes were called phoenix schemes as the bankrupt businesses would be recreated in a new form, following their voluntary bankruptcy.

It is believed that the bankrupt businesses collectively skipped out on paying taxes on approximately AUD 22 million of income, and a significant amount of GST.

The Deputy Commissioner of the ATO Michael Cranston explained that the raids took place so that investigators and authorities would receive access to files which “…we might otherwise never have seen.”

The current investigations are not the first time that the ATO has looked into phoenix schemes, as in 2015 nearly 1 000 audits were conducted on taxpayers suspected of abusing the schemes.

Photo By: Simon Cunningham