FROM AFTA’s chief executive, Jayson Westbury
In THE wake of the Reed Holidays collapse, and as more details are released in relation to the situation and amount of money owed by the directors, more and more questions will now be asked. It appears AFTA was only presented with part of the business operations and there does appear to be a complex web of company involvement and ownership upon which AFTA had no knowledge. This is not an excuse of this company having been an ATAS accredited business, but it does make us feel more confident that our criteria, procedures and systems are working, we can only rely on the information provided to us.
No doubt this will all come to the surface as the liquidators unravel the mess that has been left behind and work out what if anything can be done to support those who have lost their money. AFTA continues to maintain an interest in this matter as the circumstances unfold.
Curiously, this week the Federal Minister for Revenue and Financial Services, Kelly O’Dwyer, announced a new package to address what is known as “Phoenixing”. This illegal activity costs the economy up to $3.2 billion per year (not just travel, clearly) and persons found guilty of this in the future will be facing tougher penalties as a result of the new package. Phoenixing — the stripping and transfer of assets from one company to another by individuals or entities to avoid paying liabilities — has been a problem for successive governments over many decades. In fact, it would also appear to be something that in the past may have resulted in travel agents collapsing. I make no direct reference to this or suggest that this may be the case in the Reed Holidays matter, but it is an interesting consideration nevertheless. The new package will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity. The new DIN will operate in an interface within government agencies which will allow regulators to map the relationships between individuals and entities and individuals and other people. In addition to this new DIN, a range of other measures to deter and disrupt the core behaviours of phoenix operators will be implemented. These will include:
* Specific phoenixing offences to better enable regulators to take decisive action against those who engage in this illegal activity;
* The establishment of a dedicated phoenix hotline to provide the public with a single point of contact for reporting illegal phoenix activity;
* The extension of the penalties that apply to those who promote tax avoidance schemes to capture advisers who assist phoenix operators;
* Stronger powers for the ATO to recover a security deposit from suspected phoenix operators, which can be used to cover outstanding tax liabilities, should they arise;
* Preventing directors from backdating their resignations to avoid personal liability or from resigning and leaving a company with no directors;
* Prohibiting related entities to the phoenix operator from appointing a liquidator.
So, what this all means is for those people who might consider using a travel business to undertake Pheonixing activities, the Federal Government will now be in a better place to bring them to justice and hopefully the penalties will further deter anyone from thinking this sort of behaviour is ok.
History has shown that failed travel businesses in the past may have been involved in these sorts of activities. A further strengthening of the laws in Australia will deter – and let’s hope stop – anyone thinking of doing this within the travel industry in the future.
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Source: Travel Australia