Insolvencies surge 55 per cent in Queensland led by construction as the ATO increases pressure

Led by the collapse of Oracle Homes, Queensland company collapses surged in August, and insolvency experts expect numbers to grow as the ATO gets tough. SEE THE FULL LIST HERE

The number of Queensland insolvencies surged 55 per cent in August with the building and construction sector buckling under the pressure led by the collapse of Oracle Homes.

According to the Australian Securities and Investments Commission, 87 Queensland companies either had liquidators or administrators appointed last month, compared to 69 in July, a 26 per cent increase. Compared to August last year, Queensland insolvencies were up 55 per cent as the Australian Taxation Office increased pressure on faltering businesses.

The largest collapse last month was Underwood-based Oracle Homes which owed $14m and left 300 homes unfinished across Queensland and NSW, while Besse Constructionis being wound up after owing $1.7m.

Away from construction, medicinal cannabis firm Tikun Oceania racked up losses of more than $7m before administrators were called in.

WCT Advisory partner Andrew Weatherley said he expected insolvency numbers and inquiries to continue to rise until the end of the year.

“The main industries making up the figures are construction, accommodation and food services, and other services,” he said.

“I think that is expected given the continuing issues facing the construction industry and the similar challenges facing the hospitality sector.”

Dale Liston who was left with an unfinished home when Oracle Platinum Homes collapsed in August. Picture: Richard Walker

RSM’s new Brisbane managing partner Steve Healey said recent ATO activity has shown company directors were in the direct firing line as corporate insolvencies return to pre-pandemic levels.

He said as debt becomes more expensive Australia will enter a “rough economic patch” with the ATO pursuing companies for noncompliance related to PAYG withholding tax, superannuation contributions and GST.

Revive Financial head of business restructuring and insolvency Jarvis Archer said company directors he spoke to at the beginning of the pandemic were now returning to proceed with insolvency appointments.

“While a large amount of these are liquidation inquiries, the demand for small business restructuring engagements to reduce ATO debts, among others, is steadily increasing,” he said.

“Debt recovery action by landlords, and the ATO’s significant campaign of director penalty notices, is creating serious urgency. Business owners are being given short deadlines to make hard decisions about the future of their business.

“The additional complexity for businesses in this predicament is the economic conditions which are expected to remain challenging for the foreseeable future.”