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$890k ‘phoenix activity’ sees director jailed

$890k ‘phoenix activity’ sees director jailed

Jail

An “extensive investigation” by the ATO has led to a business owner being sentenced to five years and four months in jail over phoenix activity worth $890,000.

In a statement, the Tax Office said that Western Australian man Sung Jae Cho was convicted in the District Court of Western Australia of 20 charges, including obtaining financial advantage by deception over a period between 2004 and 2007.

He was also ordered to repay the $890,000.

It said that Mr Cho had operated a labour hire business through four separate companies from 1997 and 2009, placing workers – mainly welders – with engineering construction companies in and around Perth.

The ATO said that “Mr Cho’s business displayed the hallmarks of illegal phoenix activity, where he:

• carried on a business through one corporate entity that intentionally accumulated but did not repay debts

• liquidated the business to avoid paying the debt

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• continued the business through a different corporate entity, which was still under his control.”

It also said that Mr Cho did not report or remit GST or Pay-As-You-Go (PAYG) withholding.

ATO assistant commissioner Aislinn Walwyn said the Tax Office remains committed to investigating and prosecuting company directors engaged in phoenix activity because of its “damaging” effects on other businesses and the wider economy.

“This kind of behaviour has an incredibly damaging impact on the Australian community through unpaid wages to employees, debts to other businesses and unpaid taxes,” Ms Walwyn said.

“Companies like these are obtaining financial advantages over their competitors and robbing the Australian economy of revenue that could be spent on essential services.

“While the majority of business operators and directors do the right thing, we pursue those who try to gain an unfair advantage by avoiding their tax obligations.”

Ms Walwyn added: “This is a strong reminder to those involved in illegal phoenix activity that if you engage in this behaviour, you will get caught. We will continue to follow up phoenix operators despite their efforts to conceal their activities.”

In August 2018, the ATO revealed that some 45 individuals were being investigated as part of a sting against phoenix operators. Those facing the Federal Court as part of the investigation include service providers, clients, employees and alleged “dummy directors”.

Anyone with concerns about potential phoenix activity can contact the Phoenix Hotline on 1800 807 875 or lodge a complaint online.

$890k ‘phoenix activity’ sees director jailed
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