Corporate Law: Black Economy and Phoenixing Activities in Australia

Running Head: CORPORATE LAW 0
BLACK ECONOMY TASKFORCE REPORT
AUSTRALIA
[DATE]
[COMPANY NAME]
[Company address]

CORPORATE LAW 1
Question 1
Black economy
According to the final report made by the Black economy taskforce, the term black
economy refers to those people who does their duties completely outside the domains of taxing
and regulatory systems. It is comprised up of a huge number of practices such as not reporting or
under reporting of incomes, fraud in the welfare, underpayment of wages, deliberately not paying
the salaries to the employees and the creditors, fraud in GST, phoenixing, fraud in ABN i.e.
Australian Business Number, committing illegal activities etc. (treasury, 2017)
Basically the term black economy can be defined as those acts which is against the
economy, laws and legislations of the nation. Mostly people gets indulged or involved in these
activities just to avoid and have control over the payment of taxes (gov, The whole-of-
government black economy action plan, 2016). There are a number of activities which are not
examined by the taskforce report under this head and they are productions which are done for
one’s own use, something done only for the satisfying the hobbies etc. Thus to sum up it can be
said that black economy is a very complex and divergent process which increases the social and
economic problems (Ayoub, 2018-19).
Phoenixing
Phoenix is a very exclusive tern which is basically used for the commercial entities and
emerges when the earlier insolvent one collapses. In short it can be very well described as that
successor which takes birth in the middle or from the ashes and demises of the predecessor or the
failed companies. Australian Securities and Investment Commission in one of its study has
highlighted three types of phoenix operators and those are first the innocent phoenix operators.

CORPORATE LAW 2
In this case the directors of the company tries to overcome or resolve the insolvency before it
gets collapsed (Sewell & Kettle, 2018). Second is hazard occurred in the occupational area, here
the directors may be at option to start up with the new business or the same industry from the
older one. Last is the careerist offenders here the operators engage in the phoenix activities just
to avoid detection. Phoenixing may be legal as well as illegal. Illegal phoenix activity are those
where the company is just created to continue with the business of a company who is just trying
to avoid the paying of tax, debts to the creditors or the employees (Bradstock, 2018).
Question 2
The estimated cost of phoenixing in Australia
Phoenix is determined as the act where an entity knowingly shuts down the company for
avoiding the costs i.e. wage payments to the employees, taxes and other debts to the concerned
government. So the main aim of its taskforce is to reduce those impacts which are caused due to
illegal phoenixing acts. These illegal acts has a very significant impact throughout the Australian
community (Anderson, Ramsay, & Welsh, Illegal phoenix activity: Quantifying its incidence and
cost, 2016).
The taskforce of the federal government working against the illegal phoenixing activities
has revealed that in Australia today the cost of these illegal activities has exceeded roughly over
55 billion annually. According to a report made by PwC the taxation officer of Australia these
activities are wiping up the entire economy of Australia. Further this report also determined that
illegal phoenix acts leads to losing of the victims entitlements (Anderson, Hedges, Ramsay, &
Welsh, 2017).