Among the measures announced in the Federal Budget 2018-2019, the government said that it proposes to reform the corporations and tax laws to provide regulators with additional tools to assist them to deter and disrupt illegal phoenix activity. 'In this budget, we are making sure small businesses don't get ripped off by other businesses who deliberately go bust to avoid paying their bills, with tough new anti-phoenixing measures' Treasurer Scott Morrison said.

More particularly, the government said it plans to:

  • 'introduce new phoenix offences to target those who conduct or facilitate illegal phoenixing;

  • prevent directors improperly backdating resignations to avoid liability or prosecution;

  • limit the ability of directors to resign when this would leave the company with no directors;

  • restrict the ability of related creditors to vote on the appointment, removal or replacement of an external administrator;

  • extend the Director Penalty Regime to GST, luxury car tax and wine equalisation tax, making directors personally liable for the company's debts; and

  • expand the ATO's power to retain refunds where there are outstanding tax lodgements. From a tax perspective, the Government proposes to extend the Director Penalty Regime to GST, luxury car tax and wine equalisation tax, and make directors personally liable for the company's debts'.

The government comments that the proposed measures build on the reforms to 'combat illegal phoenixing complement and build on the work of the Government's Phoenix, Serious Financial Crime and Black Economy taskforces, and other announced reforms such as a Director Identification Number, a combined black economy and illegal phoenixing hotline, and reforms to address corporate misuse of the Fair Entitlements Guarantee and to tackle non-payment of the Superannuation Guarantee Charge'.

The Australian Institute of Company Directors (AICD) released a statement reiterating its support for the budget reforms aimed at combatting illegal phoenixing activity and adding that it looks forward to seeing the details of the proposals to ensure they are appropriately targeted.