Sydney man Benjamin Ensor, 56, was convicted of lodging false business activity statements (BAS) on behalf of nine separate companies of which he was the sole director, and also withheld declaring property sales in a bid to avoid paying GST.
That had the effect of denying the ATO some $3.4 million in tax revenue.
In a statement, the tax office said Mr Ensor had deliberately set up the companies to manipulate their GST liabilities, and then used the funds raised to help pay for the development of five luxury beachfront apartments in Manly, on Sydney’s northern beaches, as well as purchasing luxury items including his home, a catamaran and a marina at Lake Macquarie.
It said that Mr Ensor reported total expenditure of more than $24 million and claimed over $2.2 million in GST refunds, by falsifying invoices to show related companies had provided project management services and creating fake invoices for the purchase of machines and vehicles.
Meanwhile, the failure to report sales of the Manly apartments amounted to a further $1.5 million being withheld.
According to the ATO, Mr Ensor will spend six years behind bars, in addition to being ordered to make reparations to the tune of over $1.8 million.
“Illegal phoenix activity is a serious threat to the integrity of the tax and superannuation systems and costs the community billions of dollars every year,” ATO assistant commissioner Aislinn Walwyn said in response to the judgment.
“This case exhibits classic illegal phoenix behaviour. Companies were deliberately liquidated to avoid paying creditors and taxes. New companies continued operating the same or a similar business with the same ownership.”
She added: “Today’s result demonstrates the ATO’s commitment to detecting and prosecuting the most egregious tax crimes and should serve as a warning to those who think they can flout the law and get away with it.”
One My Business reader recently suggested that a means of reducing phoenix activity, that leaves creditors — including other businesses — out of pocket, would be the establishment of a national register of supply agreements for all business-to-business contracts.
Anyone with concerns or suspicions about potential phoenix activity can report this to the phoenix hotline on 1800 807 875 or via the ATO website.