The Australian Taxation Office is ramping up its response to rogue phoenix operators who exploit seasonal workers, and pocket their superannuation entitlements.

The ATO has so far managed to recover around $8 million in worker’s superannuation entitlements from the operators of labour-hire companies in South Australia and Victoria who have engaged in phoenix behaviour. The schemes have predominately involved a network of companies providing labour-hire services such as fruit picking and meat packing.
So-called ‘phoenix’ behaviour involves the deliberate liquidation of companies so as to avoid paying creditors and suppliers, tax obligations, and superannuation to workers.

In the latest cases seized upon by the ATO, Deputy Commissioner Michael Cranston said the tax office is using its new powers, known as Superannuation Guarantee Estimates (SGE), to allow the government agency to intervene earlier, namely before companies try to liquidate and avoid paying their responsibilities.

“The ATO can also issue director penalty notices which make directors personally liable for the company’s unpaid superannuation obligations,” Mr Cranston said, adding that the ATO anticipates using their powers more often against phoenix operators.

“Phoenix operators cheat their workers and undercut honest business. Tackling the behaviour is key focus for the ATO,” he said.

The SGE powers work by allowing the ATO to raise liabilities against companies who fail to disclose details about their employees. In turn, the ATO can detect with this type of Phoenix behaviour in real-time, by making a reasonable estimate of a company’s superannuation obligations, and raising a debt on the company or its directors before the company can be put into liquidation.