Recently, the Australian Taxation Office announced the conviction of a luxury property developer for large-scale goods and services (GST) tax fraud. The fraud was linked to illegal phoenix activity. The NSW District Court sentenced Benjamin Ensor to six years in jail. The court also ordered Mr Ensor to pay reparations of over $1.8 million.
According the report, the ATO had investigated Mr. Ensor’s various business activities and found that he had structured his companies in a way that allowed him to fraudulently obtain GST credits. He also failed to inform the ATO of his property sales so he could avoid paying GST. This resulted to a loss of over $3.4 million for the Commonwealth.
The ATO also discovered that between 2008 to 2011, Mr. Ensor had submitted inaccurate Business Activity Statements (BAS) on behalf of nine companies of which he was the sole director. It was later found that he used the money he acquired to purchase luxury items for personal use. These include his personal residence, a catamaran, and a marina at Lake Macquarine. He also used the funds to pay for expenses he incurred during the of five high-end beachfront apartments in Manly, NSW.
Detecting Illegal Phoenix Activity
ATO reportedly used data matching to identify Mr. Ensor’s fraud and they subsequently raised debts against his companies. But instead of paying his debts, Mr. Ensor liquidated those companies and used established new entities in their place. This was a clear red flag as it exhibited classic phoenix behaviour.
In a previous blog post, we talked about the practice of “phoenixing” and its negative effects on employee wages, commercial sales, and government revenue. Many businesses throughout Australia have fallen prey to phoenix companies over the years, so it is quite reassuring to know that the ATO is succeeding in their efforts to clamp down on this illegal activity.
If you feel that you are a victim of this illegal behaviour, report this immediately to the ATO’s Phoenix Hotline on 1800 807 875.
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently working in a Marketing/Head of Sales capacity at Slater Byrne Recoveries.