MYEFO: Extra funding to help ATO tackle illegal phoenixing, payday super
The federal government is boosting funding for the Australian Taxation Office to support its crackdown on illegal phoenixing and businesses operating in the shadow economy.
The federal government is boosting funding for the Australian Taxation Office (ATO) to support its crackdown on illegal phoenixing and businesses operating in the shadow economy.
The Mid-Year Economic and Fiscal Outlook (MYEFO), published Wednesday, also prepares for the launch of payday superannuation — a revolutionary change to how employers fund their workers’ retirement.
Some $68 million will go towards the ATO and the Australian Securities and Investments Commission (ASIC) to support the Phoenix Compliance Program from July 1, 2025, helping the tax office and corporate regulators crack down on dodgy company directors.
Illegal phoenixing — the wind-up or liquidation of one company, and the resumption of those business activities under a new company without the original debts — “exploits workers, disrupts supply chains, impacts on the viability of the businesses that are not paid and creates unfair competition”, according to the budget update.
The program will result in $278 million in extra tax receipts over five years from 2023-2024, and roughly $151 million in actual payments, including $81 million in GST payments to the states and territories.
The extra funding will go towards the Shadow Economy Compliance Program, a $187 million ATO initiative revealed in the 2024-25 federal budget, the MYEFO says.
This funding will help the ATO “intensify its focus on high‑risk shadow economy behaviour such as worker exploitation, under-reporting of taxable income, illicit tobacco, and illegal shadow economy activity that creates an unlevel playing field for law-abiding businesses,” it said.
As a bonus, the federal government plans to enforce penalties against businesses that participate in tax minimisation schemes when those businesses still end up in a loss position.
That measure, which is yet to be legislated, will kick in from July 1, 2026.
Additionally, the Shortfall Interest Charge, applied to self-assessed repayment amounts that fall below what is actually owed to the ATO, will expand.
According to the MYEFO, it will apply to overclaimed refundable assets, discouraging businesses and taxpayers from claiming exorbitant tax deductions.
That measure will become law after the passage of the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024, which is still before Parliament.
Separately, the Shortfall Interest Charge and the related General Interest Charge will lose tax-deductible status next year, a further hit to businesses falling behind on their repayments.
Payday super funding, extra paperwork fees
Payday superannuation, which will require employers to pay the required superannuation at the same time as their wages, begins on July 1, 2026.
To prepare and implement that system, the MYEFO confirms $404.1 million in funding over four years from 2024-25.
The MYEFO expands on the federal government’s plan to charge daily interest on overdue superannuation payments, too.
The government is “incentivising employers to promptly rectify missed payments, with more severe
consequences for deliberate and repeated failures”.
Legislation to enact those reforms is on the way.
Businesses hoping to take over certain Australian entities will also cop higher ASIC paperwork fees.
Fees of $10,000 will apply for transactions worth $10 million to less than $35 million, stretching all the way up to $195,000 for deals worth over $500 million.
This will “ensure that the fees charged in connection with takeovers better reflect the cost to the Government for providing, and the value to the proponents of, the overall infrastructure for takeovers relative to the value of the transactions involved,” according to the document.
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