The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 was introduced last year to bring into force new legislative measures to thwart phoenix activity and improve director accountability.
A number of reforms to the Corporations Act 2001 and the Taxation Administration Act 1953 have already been enacted and include –
- Corporations Act
- New powers of the court to pass orders to void a creditor-defeating disposition of property
- A statutory duty on company officers to prevent creditor-defeating dispositions
- A statutory inhibition on others from engaging in conduct that encourages a company to make a creditor-defeating disposition
- Criminal offences for engaging in creditor defeating dispositions
- Taxation Administration Act
- Expanding the scope and power of the CoT to collect estimates of anticipated GST liabilities
- The ability to hold company directors personally liable for a company’s GST liabilities from 1 April 2020 under the Director Penalty regime
- The ability for the CoT to retain tax refunds in certain circumstances
- Corporations Act
On 18 February 2021 some final amendments were enacted, which regulate director resignations and removals. Moving forward, a director’s resignation will take effect on –
- The actual date that the person ceased as a director, if notification is received by ASIC within 28 days of the resignation occurring;
- The date the notice is received by ASIC, if ASIC receives notice of the resignation more than 28 days after it occurred; or
- If the resignation of that director will leave the company without at least one director in office – will not normally take effect.
- Comparable restrictions applies where a director is removed by resolution of members
- Additionally, exceptions may apply where the company is being wound up.
These reforms are targeting illegal phoenixing activity; however they apply to honest, everyday directors too, so be wary of these requirements when speaking with clients on the topic of resigning as a director.
About the author
Greg Quin is a Partner and Registered Liquidator at HLB Mann Judd Insolvency WA and has been with the team for 12 years. Greg oversees the daily operations of the many insolvency appointments managed by the HLB Insolvency team and looks after the operations of the practice.
If you have any queries about insolvency matters, please feel free to contact Greg on 08 9215 7900, 0402 943 091 or via email to firstname.lastname@example.org.