(DOC) Business Law: Estimation of Phonetizing in Australian Economy

CORPORATE
LAW
AUSTRALIA
Running Head: BUSINESS LAW 0

BUSINESS LAW 1
Table of Contents
Question 1.......................................................................................................................................1
Black Economy...........................................................................................................................1
Phoenix........................................................................................................................................2
Question 2.......................................................................................................................................3
Estimation of phoenixing in Australian Economy..................................................................3
Question 3.......................................................................................................................................4
Widespread of phoenixing in Australia...................................................................................4
Question 4.......................................................................................................................................5
Difficulties faced by the regulators in pursuing phoenix activity..........................................5
Question 5.......................................................................................................................................7
Sources of early warning signs which may assist in identification of phoenix activity.......7
Question 6.......................................................................................................................................8
Proposals and recommendations..............................................................................................8

BUSINESS LAW 2
Question 1
Black Economy
It is that part or activity of the economy of nation which is attained from those sources
which is found against the laws and rules of that country in relation with the commerce. The
legality and illegality of these activities depend upon the services involved in it. Mostly people
gets into these types of activities just for avoiding and controlling the taxes and other
regulations1. Black markets arises basically when the restrictions are imposed by the Government
upon certain goods or services or by declaring those transactions illegal or prohibiting them.
One of its best example is, the under the table payment done to a construction worker will
not make him liable for paying any taxes of his earnings. Here also the work of construction is
legal and it is that under the table payment or nonpayment of taxes which becomes the
unfortunate part of black economy2.
Generally black economy can be classified into four types and those are
 The illegal economy is consisted of that income which is generated by the activities
which breaches the legislation of the state in relation to the commerce.
 The unreported economy, here the rules established by the institution are escaped for
example rules mentioned in the tax code.
 The unrecorded economy are those activities which are not at all mentioned in any
statistical agencies.
1 Kimberly Amadeo, The Black Economy and Its Impact (2019) <https://www.thebalance.com/black-economy-
4173517>.
2 Joseph Ayoub, Targeting the black economy (2018-19)
<https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/
BudgetReview201819/TargetingBlackEconomy>.

BUSINESS LAW 3
 The casual economy is comprised of those acts which can be differentiated from those
which provides benefits and rights in the administration in relation to the commercial
activities.
According to the report of the black economy taskforce 2017 the black economy was defined
as the very complex and divergent way in which the social and economic problems are
growing3.
Phoenix
Phoenix is the term which is named after a very unique bird who lived for five to six
centuries in the desert of Arab and also generated a new youth from the ashes to continue with
the cycle even after burning itself on the funeral pyre4. So the use of this term in the corporation
may be in a way that, Phoenixing is considered that activity which is illegal in nature and at this
time the newly framed companies tend to work for those companies which are intentionally not
paying off taxes and other debts of the creditors and employees5. The illegal Phoenixing throws
negative impact on the communities of business, contractors and the government through
 Nonpayment of wages and other entitlements to the employees and also the suppliers:
 Attaining unfair advantages from the competitors:
 Avoiding the regulatory duties etc.
In the recent years the Phoenixing has become a burning phenomenon basically in Australia
due to 2 reasons namely,
 Growth in the number of insolvent advisors who can recommend it:
 Due to cheapness of the advisors.
3 Attribution #.0 Australia, Black Economy Taskforce: Final Report, 2017,
https://static.treasury.gov.au/uploads/sites/1/2018/05/Black-Economy-Taskforce_Final-Report.pdf
4 Roman Tomasic, Routledge Handbook of Corporate Law (Taylor & Francis, 2016) 285.
5 Frederick Wehr and Adrian Cook, ‘The Phoenix South Discovery: A New Hydrocarbon Province on the
Northwestern Shelf of Australia’, (2015) International Conference and Exhibition, Melbourne, Australia 564.