The Gillard Government today introduced tax legislation designed to protect workers' superannuation and deter fraudulent 'phoenix company' activity.
Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, said "Fraudulent phoenix activity hurts all sectors of the economy, including workers, creditors, customers, competing businesses and Government. It creates competitive disadvantages for businesses who do the right thing and means payments of workers' entitlements are often neglected."
This legislation will:
- Extend the director penalty regime to make directors personally liable for their company's failure to pay employees' superannuation guarantee amounts
- Allow the Australian Taxation Office to pursue directors under the director penalty regime without issuing a director penalty notice where the company's unpaid Pay As You Go (PAYG) withholding or superannuation guarantee liability remains unpaid and unreported three months after the due day
- Deny directors (and their associates) entitlement to PAYG withholding credits (through the imposition of tax) where the company of which they are a director has failed to remit PAYG withholding amounts.
"This package stands in contrast to the Coalition, who will cut workers' entitlements. Australian employees work hard and deserve to know their wages, superannuation and other entitlements are safe. The biggest risk to these entitlements is Tony Abbott," Mr Shorten said.
"The amendments balance the importance of ensuring employees receive their entitlements and deterring phoenix activity, against the need to ensure entrepreneurialism and commercial risk taking is not discouraged," Mr Shorten said.
The ATO estimates that there are approximately 6,000 phoenix companies in Australia. This equates to approximately 7,500-9,000 company directors who will have personal liabilities under this legislation.
These measures complement the Gillard Labor Government's Protecting Workers' Entitlements package, which provides the strongest protection of employee entitlements Australian workers have ever had.
The package protects employees' entitlements through three strong measures: The Fair Entitlements Guarantee; Securing Super; and Strengthening Corporate and Taxation Law.
"The Gillard Government is committed to protecting workers entitlements and ensuring every Australian business plays by the rules," Mr Shorten said.