ATO protects workers and suppliers

The Australian Taxation Office has now successfully applied to the Federal Court for the appointment of a provisional liquidator for eight labour hire businesses providing services to the meat processing and abattoir industry.

Since 2016, news has been circulating in the past two years that many labour hiring companies are ripping off workers in the meat processing and abattoir industry, with the hiring of backpackers on the increase.

As of 2016, the meat processing sector has been recorded to employ over fifty thousand workers and 417 working holiday visas contribute to a major part of those that are employed. The attraction to working holiday visas and backpackers was that it was effectively tax free.

The major issue with the labour hiring businesses is essentially anyone can set up a third-party hiring business. Typically, all you would have to do is buy a mobile phone and you can set yourself up as a labour hire company. Most of these companies will pay workers cash in hand at a significantly reduced rate, get them to start their own businesses by registering Australian Business Numbers so they can pay them as contractors as opposed to direct employees. Unions are also concerned that this type of immoral practice will affect other industries as well.

This new appointment for a provisional liquidator by the Australian Taxation Office and Federal court will ensure that the business operations are managed transparently by a qualified professional that is accountable to the court. Broader enforcement actions are also currently in planning and underway.

This new provisional liquidator will hopefully provide a greater certainty to key stakeholders of the meat processing and abattoir industry, as well as providing greater certainty to staff, suppliers and customers. This is to ensure that the risk of disruption to business operations will be minimised.

The appointment of a new provisional liquidator will also allow for immediate preservation of the assets and records to ensure that these eight labour hire businesses are now monitored and controlled by an independent party.

The following eight business that provide services to the meat processing and abattoir industry has been appointed provisional liquidators by the Federal Court: Ausmart Services Pty Ltd, Ezyrol Trading Pty Ltd, Gamma One Pty Ltd, Mondex Group Pty Ltd, Newing Glacier Pty Ltd, Rocube Holding Pty Ltd and Spark Labour Solutions Pty Ltd.

Furthermore, separate to the appointment of the new provisional liquidator, the Australian Taxation Office is also being supported by the Australian Federal Police and the AUSTRAC in the execution of warrants in Sydney. This movement is being undertaken to obtain information relevant to a large range of tax mischief in an excess of over $100 million. The Australian Taxation Office will also bring these matters to the other Commonwealth agencies where appropriate.

The Australian Taxation Office has now also started working with the provisional liquidator – FTI Consulting – to put a range of help and support measures in place to protect workers and suppliers who do the right thing. If you are an employee, employer or business affected by the new liquidation appointment, contact FTI Consulting for advice or assistance regarding your individual circumstances.

If you are a member of the community who has any knowledge or concerns about an employer or business that is doing the wrong thing, you can report it to the Australian Taxation Office either by telephone or on their website at ato.gov.au/reportaconcern.

 

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