Business

Qld company collapses soar 25 per cent as holiday season looms

source : www.couriermail.com.au

Business failures in Queensland have risen 25 per cent in the past month, with tax authorities becoming increasingly aggressive as interest rates rise. SEE THE FULL LIST

Sky News presenter Chris Kenny says the Labor Party in government has done nothing to ease the cost of living in Australia. “The country continues to spend wildly, fueling inflation, and its policies are driving up electricity prices, driving everything up,” Kenny said. “But Anthony Albanese seems to be in denial.” Mr Kenny said Labor spending money on subsidizing energy prices for those worst affected “will not solve the problem”, and that the Albanian government is simply “throwing more taxpayers’ money at a Band-Aid measure”. “The main aim should be to make electricity cheaper for everyone, but instead we heard from the Treasurer today – how Labour, with its sustainable fanaticism, will only make matters worse,” he said. Mr Kenny advised the coalition to give Australia a “viable alternative” by creating a practical plan – without virtue signaling – to strengthen the economy’s living standards.

Revive Financial Head of Business, Reorganization and Insolvency Jarvis Archer said that with the fall in Business Activity Statements (BAS) from July to September in October, many companies have seen their ATO debt increase.

“For many, this has put the prospect of paying their ATO debt out of reach. Especially for companies that are quiet during the Christmas period, such as the construction sector, this time of year can stretch cash reserves,” he says.

There were 85 liquidation or administration appointments in Queensland in October, according to preliminary Australian Securities and Investments Commission data collected by The Courier-Mail.

That was 42 percent more than the 60 in October 2022 and an increase of 25 percent compared to the 68 bankruptcies in September this year.

Some of the companies that went bankrupt in October included Electric Bikes Australia, which went bankrupt, while Freedom Group Hostels and Schaumkell Access & Scaffolding went into administration.

Mr Archer said the number of bankruptcies in Queensland in 2022-23 was 34 per cent higher than last year. “Construction, hospitality and retail have seen the biggest increases in failures and our business had a record number of appointments in October,” he said.

“Companies report that it is very difficult to find staff, especially after three quiet years of bankruptcy, limiting new recruits and their development.”

Mr Archer said they are now seeing ATO debts on repayment plans that they can no longer afford.

“The ATO has been very vocal about its ‘gloves off’ approach to collecting tax debts from small businesses. They are seeking full payment, tightening payment plans and more likely to reject interest waivers,” he said.

“These higher requirements could cause companies to reduce their cash reserves to dangerous levels. Trying to keep up with payments of $2,000 to $3,000 per week is unrealistic for many small businesses.

“Unless there is strong profit trading to supplement these payments, it is a ticking time bomb until a business can no longer pay rent, wages or suppliers.”

Revitalize financial partner Jarvis Archer.

WCT Advisory managing partner Andrew Weatherley said construction, followed by foodservice, remained the sectors with the highest number of appointments, which was still expected given the challenges these industries continue to face.

“A further rise in interest rates will continue to impact consumer confidence and spending levels and increase pressure on sectors such as retail and foodservice,” he said.

“I would also expect that higher rates will make it more difficult for borrowers to purchase real estate, including land, and obtain financing for construction, putting further pressure on the already challenging construction sector.”

Mr Weatherley said the last two assignments for WCT Advisory were in the food industry and both companies ceased operations due to the reduced position they found themselves in.

“We are seeing the ATO applying pressure in terms of issuing DPNs (Director Penalty Notices), with the last few orders being a direct result of that move,” he said.

“Although I have heard talk of it, I am not aware at this stage of any liabilities arising from the listing of an ATO obligation with credit agencies.

“Unless a company is looking for funding or opening new trading accounts, I don’t see this being a major driver of insolvency rates at this stage.

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source : www.couriermail.com.au

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