Cash-strapped businesses across Australia are buckling under pressure from the Australian Taxation Office (ATO) and other creditors, with the number of corporate insolvencies surging 57% in the latest quarter compared to the same period in 2021/22, according to comparison site Insolvency Australia.
New South Wales recorded the highest number of business failures, with nearly 1,170 corporate insolvencies in the quarter. Tasmania saw the largest year-on-year increase at 133%, followed by the Australian Capital Territory (64%), NSW and Queensland (both 59%), Victoria (54%), South Australia (52%), and Western Australia (50%).
Insolvency Australia director Gareth Gammon described the trend as a 'surge', noting that the ATO's debt collection activities combined with economic pressures have created a 'perfect storm'. He warned that court wind-ups by major banks are increasing, suggesting the coming months will remain challenging.
Chris Baskerville, a partner at insolvency firm Jirsch Sutherland, attributed the rise to the ATO ramping up enforcement actions to pre-pandemic levels, with less willingness to accept payment arrangements extending beyond two years. BCR Advisory founder John Morgan added that interest rate hikes are compounding the pressure.
