Firms go under as tax man calls to collect old debt

Building and hospitality firms were among nearly 100 Queensland companies that hit the skids in the last month, a sharp rise from previous months. See the full list.

An increasing number of Queensland firms are going under as the taxman chases old tax and superannuation debts.

ASIC data shows 96 companies entered into administration or liquidation in November, a 66 per cent increase from the 58 that went to the wall in October. That also was a 45 per cent hike on the 66 firms that failed in November last year.

Pialba-based building firm Just Kits, New Farm-based Piranha Fish Caf, Safety Watch Australia and construction services business Scooter Group were among the companies that collapsed.

Revive Financial partner Jarvis Archer said that rather than focusing on current debt, the Australian Taxation Office (ATO) was looking at opportunities to issue “lockdown” director penalty notices for older debt.

A “lockdown” director penalty notice can be issued where a company didn’t lodge its BAS (Business Activity Statement) or superannuation guarantee statement within certain timeframes. “While some directors are receiving lockdown director penalty notices for current debts, we’ve also seen them issued to directors who wound up their companies years ago,” said Mr Archer.

There were an increasing number of notable builder collapses in November as the country headed into a tricky Christmas and January trading period for construction.

Queensland builders who have a QBCC licence for a turnover of $800,000 or more must lodge their financial statements by 31 December 2022.

Revive Financial Partner Jarvis Archer is a Queensland liquidator.

“No doubt it will be interesting for the QBCC to see how licence holders performed in the difficult conditions for the year to 30 June 2022,” said Mr Archer.

He said it was an uncertain time for businesses, with the tightening of funding in the tech and startup spaces, and the “wild west of crypto” showing that when the investor funds stop flowing, businesses need to have a viable underlying business model.

“On the other hand, retailers will be hoping the reports of lower consumer spending are proven wrong as we head to the shops for our Christmas shopping,” said Mr Archer. “The post-Christmas numbers will show how consumers are really feeling, and whether 2023 will present an even more challenging trading environment.”

Deloitte partner for turnaround and restructuring Richard Hughes said the number of Queensland insolvencies continued to increase, coming off historic lows caused by various government incentives and changes implemented during Covid-19.

“The overall level is not back to pre-Covid levels but is rising,” said Mr Hughes. “There has been significant ongoing stress in the construction sector.

“We’re also seeing an increasing level of inquiry in crypto and in addition to this, some mining companies are starting to show signs of stress.”

Mr Hughes said that next year there will be a multitude of factors that will impact the economy and markets, so any prediction of the number of insolvencies was difficult.

However, he believed insolvencies will return to pre-Covid levels, with some risk of increased insolvency as interest rises and inflation starts to impact consumer and business confidence. “Company directors seem to be seeking advice early, and this is helping manage through these difficulties,” he said.

Originally published as Firms go under as tax man calls to collect old debt