Black Economy Task Force

Running head: BLACK ECONOMY TASK FORCE
BLACK ECONOMY TASK FORCE
Name of the Student
Name of the University
Author Note

BLACK ECONOMY TASK FORCE1
Answer 1
Black Economy as a term is defined as the economy that is used by people who try to
avoid paying tax to the government. The government or any other significant authority knows
the people but these people do not report to any kind of tax related obligations. Therefore, the
term already makes it clear that it is something illegal and should not be done but black economy
is considered to be used for people or any individuals who try to avoid paying any kind of tax to
the government. This involves certain kind of practices, which includes payment of certain kinds
of wages that would be paid in cash that would not be recorded in any kind of books, or in other
words payment of those wages in cash would not be recorded thus, it would not be shown in the
records and the money would be unaccounted for1. It can also include any kind of savings and
payment to the contractors which would not be considered to be the income and therefore, it
would also go unaccounted for and any kind of welfare fraud. Events of money laundering
should also be considered as a practice where the money that has been acquired through illegal
activities would be made clean through a process where the money can be used for legal
purposes. These are some of the practices in order to avoid paying any kind of tax to the
government. The black economy tries to hamper the integrity of the individuals in Australia who
pays the taxes and it demoralizes the integrity of those individuals who pay tax and the other
business owners or entrepreneurs who try to pay tax and stabilize the economy of the country.
Therefore, Black Economy is considered to be harmful as it hampers the economy2.
Phoenixing is the process in which the company takes a rebirth where a company or an
organization ransacks the company’s assets or any kind of enterprise and tries to transfers those
1 Treasury.gov.au. (2019). Black Economy Taskforce | Treasury.gov.au. Retrieved 12 September 2019,
from https://treasury.gov.au/review/black-economy-taskforce.
2 Bajada, Christopher. Australia's Cash Economy: A Troubling Issue for Policymakers: A Troubling Issue
for Policymakers. Routledge, 2017.

BLACK ECONOMY TASK FORCE2
assets to another company or any enterprise which is considered to have a similar business. This
process has been considered to be illegal but there are a few instances where this process is
considered to be legal. There are various rules regulations and guidelines that have been laid
down for such an illegal activity but the enforcing power or the authority of the government is
considered to be feeble. Phoenixing of a company or an enterprise has harmful effects on the
economy as well as the individuals who invest in that company or the enterprise. Various
directors of the company are carrying out this process or an enterprise and the creditors interests
are at risk therefore, it needs to be prohibited3. Five categories have been identified for
phoenixing of a company which have been given by the Phoenix Research Team. The first is
considered to be the legal phoenix where the aim of phoenixing of the company is not considered
to be defrauding the rights and interests of the creditors. The second is considered to be the
problematic phoenixing of company which is considered to be legal in a technical manner and
the directors of the company do not intend to violate the rights and interests of the investors but
the net value of the company after phoenixing impacts the creditors. Thirdly, there is an illegal
phoenixing of a company where the best interests of the company is taken into consideration and
when the business faces some kind of financial difficulties the intention to defraud the creditors
are thus formed. Fourthly, there is another illegal type of phoenixing identified which states that
a company is formed with the intention of carrying out of profitable interests and for some kind
of phoenix activity. Lastly, the category of complex illegal has been identified which states that
the business involves phoenixing activities along with other crimes and offences related to
3 Coggins, Jeremy, Bianca Teng, and Raufdeen Rameezdeen. "Construction insolvency in Australia:
reining in the beast." Construction Economics and Building 16.3 (2016): 38-56.

BLACK ECONOMY TASK FORCE3
fraud4. Therefore, the process of phoenixing is considered to be illegal in several occasions as it
violates the interests of the creditors who invest in a company or an organization.
Answer 2
There are various economic impacts which Australia is currently facing are due to illegal
phoenixing of a company that is taking place. It has been estimated that between 2.8 billion
dollars to 5.1 billion dollars are being smeared due to illegal phoenixing of the companies. This
has been estimated on the basis of the 2015-16 and the activities caused due to such activity.
There has been a high estimate which has been five billion dollars which have been impacted due
to the illegal activities of phoenixing of a company or any kind of dissolution of the companies
or enterprises where the companies are being dissolved and after the dissolution they are being
rebuilt from the ashes of those companies or business enterprises. Therefore, phoenixing of a
company or any kind of business enterprises directly effects the economy of the country5.
Answer 3
Phoenixing of a company or a business enterprise means that a company or a business
enterprise that might be facing some kind of financial difficulties would be liquidated
deliberately and those companies or enterprises would be dissolved and rebuilt from the ashes of
the dissolved companies or enterprises. These are illegal as it is considered to cause an impact on
the creditors interest in the company as they are the ones who invest in the company or the
organization. It is harmful as it dissolves the company and rebuilds it which helps the company
in avoiding paying the creditors of that particular enterprise. The industry where phoenixing is
4Law.unimelb.edu.au. (2019). Retrieved 12 September 2019, from
https://law.unimelb.edu.au/__data/assets/pdf_file/0003/1730703/Defining-and-Profiling-Phoenix-
Activity_Melbourne-Law-School.pdf
5 Petschler, Louise. "Advocacy: Phoenixing in the spotlight." Company Director 33.3 (2017): 45.