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(Australian Associated Press)
Dodgy directors who deliberately bring down companies in order to avoid paying their workers entitlements could be named and shamed by the tax commissioner under a federal Labor government.
The opposition is proposing giving the commissioner the power to make such call-outs, to discourage the behaviour known as phoenix activity – believed to cost the country $5 billion a year.
The practice involves executives stripping down their businesses and transferring assets to another company to avoid paying outstanding liabilities.
It sees companies collapse under debts only to rise “like a phoenix from the ashes” under a new name.
Labor also wants the commissioner to be able to apply to the Australian Securities and Investments Commission to seek formal disqualification orders for the worst offenders.
The measures will help protect Australia jobs and the economy, opposition spokesman Andrew Leigh said on Wednesday.
The plan comes after legislation involving harsher penalties for illegal phoenix activity passed the first hurdle of federal parliament last month.
The draft laws, introduced by the coalition, will give ASIC greater power to disqualify company directors when they have a track record of misusing the Fair Entitlements Guarantee scheme, putting the burden on taxpayers.
A report earlier this year estimated illegal phoenix activity cost the Australian economy up to $5.1 billion in 2015-16.