The ATO has new powers, called Superannuation Guarantee Estimates (SGE), designed to protect the retirement savings entitlements of workers where a company is on the verge of liquidation.
“A Superannuation Guarantee Estimate allows the ATO to raise liabilities against companies who fail to disclose details about their employees and the ATO can deal with this phoenix behaviour in real time before the company can be put into liquidation,” DBA Lawyers director Bryce Figot said.
Under the SGE arrangement, the ATO will make a reasonable estimate of the company’s superannuation obligations and raise a debt pertaining to these obligations on the company or its directors personally.
“The ATO has stated it will use these powers more and more frequently,” Figot said.
The new powers have been introduced to prevent companies abrogating their superannuation obligations to their employees via phoenix activities.
The ATO defined phoenix activities as fraudulent actions whereby a company “goes into liquidation, leaving its debts behind, while the assets are shifted into a new entity that begins trading again, often under a similar name”.
Figot said the SMSF regulator had warned it would be extremely vigilant in the use of its new powers.
“The ATO is quite open to employees dobbing in employers in these situations, so watch out recalcitrant employers,” he said.
