Labour-Hire Phoenix Activity Warning Signs
Phoenix activity is used to describe the deliberate liquidation of a business to avoid tax and other liabilities and continue the operation and profit taking of the business through another trading entity.
Whilst phoenixing occurs across various industries, the activity is particularly prevalent among labour-hire and payroll services.
Not only is this practice illegal, it also has a range of consequences for Australians and the economy. Employees lose their wages and entitlements; suppliers are not paid; government revenue is impacted by phoenix companies not paying tax debts; and it allows perpetrators to avoid their regulatory obligations. The estimated impact of phoenixing is said to cost somewhere between $1.78 and $3.19 billion per year.
We believe that RCSA has an obligation to educate our members, and their potential clients and candidates, as to the nature of this activity and the warning signs to look out for. We have therefore created a fact sheet that can be shared throughout our member’s organisations. In turn, we hope that the increased awareness will deter the criminal syndicates that seek to compromise the integrity of our sector.