Company collapses and insolvencies surge by 39% as tax office targets Aussie businesses

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The economy is slaughtering Aussie businesses and there’s no sign of things letting up.

Company collapses surged in February and reached a level that hasn’t been seen for the past nine years, according to new data released on Monday by the corporate regulator, the Australian Securities and Investments Commission (ASIC).

“Insolvencies are increasing significantly,” Cliff Sanderson of insolvency firm Dissolve told

According to ASIC, 967 companies across Australia went under in February.

“This is the highest monthly figure since October 2015, which was 1000 insolvencies,” Mr Sanderson said.

Compared with the same month the year before, February’s insolvency figures are up by an eye-watering 39 per cent. Last February recorded a much smaller number of insolvency appointments, coming in at 692.

The most recent insolvency figures are 74 per cent higher than the previous month, although Mr Sanderson noted that January is always slow due to the holiday period, which would account for some of the stark difference.

Company collapses reached pre-Covid levels at the end of last year but that number has continued to climb well beyond.

Every month of the current financial calendar, there have been more corporate failures than any period in time in the last five years.

Mr Sanderson said that the tax office was a big factor bringing many Aussie businesses to their knees and responsible for the record levels.

“There is the usual things people talk about being a catch up on reduced numbers during Covid, hard economic conditions and increasing interest rates. But what is really driving the appointment numbers is a harder attitude by the ATO,” he said.

The ATO went soft on businesses during the pandemic but as of mid 2023, the organisation was back at “full service”, a term used to describe their aggressive debt collecting methods.

Indeed, Mr Sanderson said that “undisputed tax debts jumped dramatically during Covid from roughly $20 billion to over $50 billion”. also reported last month that the number of court-appointed company liquidations has spiked drastically as the ATO ramps up its debt recovery mission.

In the first six months of the current financial year, 1047 companies were forced to shutter their doors for good after the tax office or other creditors successfully lodged winding up applications against them.

That’s nearly equal to the total court wind-ups for the entire 2022-23 financial year, which came in at 1081.

Currently, companies owe a staggering $50 billion to the tax office.

Of that, the bulk is made up small businesses, which account for 67 per cent of the total debt.

According to the tax department, more than 46,000 small businesses, private and wealthy groups, and public and multinational companies, with a collective tax debt of $14.8 billion, are not actively engaged with the ATO.

Last year, 8471 businesses went bust.

Of that, a staggering 2349 construction firms collapsed in the past year — with fears more may fall soon.

Mass collapses of construction companies are usually the first signs of a struggling economy caught in the throes of inflation, as they run on tight margins and rely on supply chain prices staying the same.

Shamefully, in 96 per cent of cases where small and medium sized businesses go under, only between zero and 11 cents is recovered for every dollar owed to out-of-pocket creditors.

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