Dodgy 'phoenix' companies facing crackdown

Companies rising out of the ashes to avoid paying tax, wages and other debts will face a crackdown when regulators get increased powers.

Phoenix activity is when executives strip down their businesses and transfer assets to another company to avoid paying outstanding liabilities.

Under a bill which passed the Senate on Wednesday, regulators will get beefed-up powers to detect and address phoenix activity through prosecuting company directors.

Unscrupulous pre-insolvency advisers could also face penalties.

The government will give the Australian Securities and Investments Commission $8.7 million to help fund liquidators to investigate and report the shonky practice.

Labor's push to have the laws reviewed after five years was agreed to by the government, meaning the bill will now return for final approval in the lower house.

Government minister Jane Hume said phoenix activity had been a problem for decades.

"The Morrison government is committed to tackling illegal phoenix activity to protect honest and hardworking Australian small businesses and taxpayers," she told parliament on Wednesday.