Don’t get burned by a phoenix

Most people know someone who’s been affected by a dodgy business that has shut down to avoid paying its debts. The business may seem to disappear, only to pop up under a different company name without any debt. This is called phoenixing and it’s illegal.

Through the Phoenix Taskforce, the ATO is working with other federal, state and territory agencies to detect, deter and disrupt illegal phoenix businesses.

Here are 5 red flags to look out for when working with a company:

• Unusually low quotes or tenders can suggest that the company isn’t taking superannuation or PAYG (pay as you go) instalments into account.
• The company directors have previously been involved with liquidated entities.
• The company’s name and directors have changed, but the manager and staff remain the same.
• The company is requesting payments to a new company.
• You’re being told that your last contract won’t be paid unless you sign a new contract, often with a different company name from the one you first dealt with.

Source: ATO