Up to 120 Australian Tax Office and Australian Securities and Investment Commission investigators yesterday raided 13 Melbourne and Brisbane offices and homes as part of a major investigation into corrupt bankruptcy businesses.
The investigation centres on so-called Phoenix schemes where businesses go bankrupt to avoid paying debts, including tax and workers entitlements.
"These visits are part of an ongoing investigation into the activities of a firm of pre-insolvency advisors and their involvement in encouraging and facilitating illegal phoenix activity, evading GST and failing to pay tax on $22 million of unreported income," ATO Deputy Commissioner Michael Cranston said.
"By showing up unannounced we're able to access records that we might otherwise never have seen."
Mr Cranston said some of the unregistered bankruptcy firms under investigation contact businesses under financial pressure and offer a restructure package allowing them to go bankrupt, then secretly transfer assets to new companies with the intention of avoiding their legal obligations to pay existing debts.
"They are avoiding tax, failing to pay workers and failing to pay other companies for goods and services." he said.
It is estimated Phoenix schemes cost more than $3 billion a year and leave thousands of businesses with unpaid debts of close to $2 billion.
Mr Cranston said the investigation was triggered by complaints from the tax agents and legitimate insolvency practitioners as well as from intelligence gathered from the 20-member cross-agency Phoenix Taskforce.
The ATO conducted almost 1000 audits into phoenix schemes in 2015-16 finding a black hole of $250 million.