{{propApi.title}}
{{propApi.text}} {{region}} Change location{{propApi.title}}
{{propApi.successMessage}} {{region}} Change location {{propApi.title}}
{{propApi.text}} {{region}} Change location{{propApi.title}}
{{propApi.successMessage}} {{region}} Change locationMember and guest login
Enter your email and password to access secured content, members only resources and discount prices.
Did you become a member online? If not, you will need to activate your account to login.
If you are having problems logging in, please call HIA helpdesk on 1300 650 620 during business hours.
Forgotten password
Need some help?
If you are having problems logging in, please call HIA helpdesk on 1300 650 620 during business hours.
If the email address you have entered is registered, you will receive an email with further instructions.
Become part of the HIA community
Enables quick and easy registration for future events or learning and grants access to expert advice and valuable resources.
Create a guest account
Enter your details below and create a login
Send me exclusive tips, early access to new launches, and special offers. I can change my mind at any time.
By clicking Get started now you agree to the terms and conditions and privacy policy.
Corporate phoenixing
HIA’s Position statement
Illegal phoenixing activity creates an uneven playing field and represents an inefficiency in the construction industry which leads to a misallocation of resources, additional costs and lower productivity.
- The Australian government should make it an offence to deliberately liquidate a corporate trading entity with the fraudulent or illegal intention to:
- avoid tax and other liabilities, such as employee entitlements; and
- continue the operation and profit taking of the business through another trading entity.
- The offence should be extended to advisors and those facilitating phoenixing activity with fraudulent or illegal intent.
- Incorporation is a legitimate business arrangement and must be preserved:
- It is a fundamental principle of company law in Australia (and elsewhere) that a company is a separate legal person, independent of its directors and shareholders.
- Adopting a corporate structure should continue to be regarded as an appropriate risk management strategy to respond to project and business risk.
- The offence of illegal phoenixing should not extend to a company and/or if the behaviour was directed at legitimate business rescue.
- Existing regulatory powers to manage corporations should be enforced including measures that would improve directorships transparency and visibility over an individual’s history of involvement with corporate entities.
- Educating the industry on activities associated with illegal phoenixing activity should be a priority.
- Regulators should target those that engage in certain phoenixing behaviours to assist education, compliance and enforcement activities.
Background
- Illegal corporate phoenixing is a persistent public policy problem that has widespread negative impacts on the economy.
- Phoenixing will be illegal when there is deliberate and systematic liquidation of a company with the fraudulent or illegal intention to avoid tax and other liabilities. The business then continues to operate and take profit through another entity, disclaiming any responsibility for the debt of the previous company.
- While the majority of business failures and insolvencies in the residential building industry are not caused by deliberate intent or design, according to ASIC data, the ‘construction’ industry is largely represented in the overall number of insolvencies across the economy, with almost a quarter of all business failures coming from the sector.
- In light of this and increasing pressure on the Commonwealth to take action on illegal phoenixing and the potential impact future policies or legislation may have on residential building companies, HIA developed a position statement in relation to Corporate Phoenixing.
- The challenge for governments looking to regulate in this space is that it is impossible to distinguish between legitimate business rescue and intentional activities to avoid legal liabilities. It is important to balance the potential risks of legislation inappropriately applying to those engaged in appropriate business practices. Not all company failures will involve illegal phoenix activity and genuine company failures do occur.
- A difficulty in responding to government measures and proposals is that there is no legal or statutory definition of ‘phoenix activity’. The problem with developing a definition resides partly in the fact that phoenixing, of itself, is not inherently unlawful unless it is undertaken with malevolent intent in which case a range of broader generic criminal law sanctions may be applicable.
- Harmful phoenixing activity, left unchecked, has the capacity to undermine Australia’s revenue base and the competitive ‘level playing field’. It is foreseeable that legitimate business operators, paying taxes, wages and other debts, might be driven out of business by those engaging in illegal phoenix activity.
- While it is difficult to quantify its impact, according to the Fair Work Ombudsman and PwC, the cost of illegal phoenix activity is estimated to be in the range of $2.85 to $5.13 billion, with the estimated direct cost on business being between $1,162 – $3,171 million per year.
- Illegal phoenix activity represents an inefficiency in the construction industry which leads to misallocation of resources, additional costs and lower productivity.
- HIA does not support individuals who engage in illegal corporate phoenixing.
Find the latest expert advice, guides and much more!
Was this page helpful?
State-wide Flood Hazard Code Amendment
HIA commented on the proposed State-wide Flood Hazard Code Amendment and welcomes the significant reduction in the application of the Hazards (Flooding – Evidence Required) Overlay through improved flood studies and more detailed mapping.
Minimum tax on discretionary trusts discussion paper
HIA took the following broad position on the Australian Government’s minimum tax on discretionary trusts consultation paper: if Treasury's own analysis concludes these tax measures increase the cost of doing business and require separate policies to offset their effects and offer restructuring relief, it is difficult to justify the objective of implementing this high minimum tax rate on discretionary trusts.
EIE – Standard and model conditions of consent
HIA commented on the Explanation of Intended Effect for Standard and model conditions of consent (the EIE). It is understood the EIE explains the proposed amendments to State Environmental Planning Policy 2021 that will give effect to consistent conditions of consent for residential development across the state.
Improving development assessment – Discussion paper
HIA supports the measures proposed in the discussion paper to enable consent authorities to assess development applications (DAs) more efficiently and consistently, and to reduce the escalating requests for further information from applicants.
Statutory Review of Industrial Manslaughter Offence
HIA provided feedback in response to the statutory review of the industrial manslaughter provisions that were introduced to the Work Health and Safety Act (2011) (WHS Act) in 2024.
QLD Building & Construction Code – Counsel Assisting's further submissions and draft implementation guidelines
HIA has provided a further response in relation to the Commission of Inquiry into the CFMEU and Misconduct in the Construction Industry and the proposed draft Qld Building Code of Practice and introduction of an Independent Regulator.