Queensland company failures climb as taxman circles

Several well-known businesses are among more than 50 Queensland companies declared insolvent in the past month.

Corporate insolvencies are returning to pre-pandemic levels as key sectors such as construction and retail struggle with supply and price issues.

ASIC data recorded 58 insolvencies last month, up 16 per cent from October 2021 but down 20.5 per cent from September this year.

Lanskey Constructions Qld, Brazilian Beauty Stores and Enviro Sand were among the companies to appoint administrators or liquidators last month.

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Francesca Webster, owner of Brazilian Beauty. Picture: Peter Cronin

Revive Financial partner Jarvis Archer said the seasonal drop in insolvencies seemed to have continued through October, possibly due to the Australian Taxation Office’s apparent pause in issuing director penalty notices, a significant driver of company failures.

“However, the relief for business owners with ATO debts may be short-lived,” said Mr Archer. “The ATO is reportedly issuing a further wave of warning letters to directors in the coming months, as well as issuing 300 director penalty notices per day.”

Small businesses in Australia owe about two thirds of collectable tax debt, or $26 billion. “Naturally, the Federal Government will be looking for increased tax collection to fund its recent budget,” he said.

Mr Archer said the liquidation of Lanskey Constructions Qld, underscored the fact the building sector had not fully overcome the various supply and pricing issues it has been struggling with throughout the pandemic.

“Coming into the Christmas shutdown period is always difficult for the construction industry,” he said. “With construction companies continuing to represent one in every four Queensland insolvencies, this year is likely to be no different.”

WCT Advisory managing partner Andrew Weatherly said insolvency numbers continued to slowly rise with both personal and corporate appointment numbers increasing marginally.

“I expect this trend will continue for the next six months as interest rates and other costs continue to rise, and staffing remains a challenge for small businesses,” he said.“We have certainly noticed an increase in inquiry levels across several industries.”

“We expect, both the ASIC and AFSA statistics to show construction represents the largest number of bankruptcies and administrations followed by accommodation and food services.”