As the tax office cracks down on unpaid debts, an increasing number of Canberra businesses are collapsing.
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There has been a 64 per cent increase in Canberra businesses going insolvent in the last year compared to the one before, a report from Insolvency Australia, using ASIC data, reveals.
This is the second highest of any jurisdiction, following Tasmania.
Nationwide, insolvencies have increased by 57 per cent.
External administrators were appointed to Canberra businesses 210 times in the last financial year, an increase on 126 the year before.
Of those, 126 were voluntary wind-ups from creditors, meaning a majority of the company's shareholders agreed to liquidate the company.
![Australian Taxation Office Commissioner Chris Jordan. The ATO is cracking down on businesses not paying tax. Pictures by Karleen Minney, Sitthixay Ditthavong Australian Taxation Office Commissioner Chris Jordan. The ATO is cracking down on businesses not paying tax. Pictures by Karleen Minney, Sitthixay Ditthavong](/images/transform/v1/crop/frm/135763310/3d901e43-2874-4b3f-b35f-e986b8d6ef7e.png/r0_0_1600_900_w1200_h678_fmax.jpg)
This list includes high-profile Canberra-businesses like PBS Building, Pialligo Estate and Courgette.
The increase in insolvencies is largely due to the tax office and other creditors seeking unpaid funds, Insolvency Australia Director Gareth Gammon said.
"Over the past year there's been plenty of discussion in the sector about the incoming insolvency wave," he said.
"Economic pressures and the ATO's debt collection activities combine to create the perfect storm.
"Beyond this last quarter, we're now seeing an increase in Court wind-ups by the big four banks, which means the next few months could well be equally challenging."
Insolvency 'red flags'
- Unable to pay wages or bills
- Can't pay tax debt
- Poor cash flow
- No working capital
- Receipt of a DPN
- Ongoing losses
- No business plan
- Problems obtaining finance or credit
- Liabilities greater than assets
- Supplier cash on delivery only terms
- Inability to raise funds
- Loss of key personnel
- Director disputes or resignations
- Source: Insolvency Australia
The tax office said in May it expected "a number of insolvencies to occur over the coming months as the economy normalises".
ATO Deputy Commissioner Vivek Chaudhary warned the office would take aggressive action against companies that did not respond to communications - especially those who had not paid employee superannuation.
"Our initial focus will be on taxpayers with higher debts," he said.
"Taxpayers with Superannuation Guarantee debts may be prioritised irrespective of their debt value."
Businesses are also feeling the pressure of economic conditions.
With high interest rates and costs due to inflation, fewer Canberrans are going out to eat or spending on retail.
High interest rates and ongoing work-from-home arrangements are placing pressure on Canberra businesses, CEO of Canberra Business Chamber, Greg Harford, said.
"Retail and hospitality businesses are particularly impacted by the present economic environment," he said.
Several high-profile Canberra businesses have gone under in the last year.
![Businesses like retail are struggling in the current economy. Picture by Sitthixay Ditthavong Businesses like retail are struggling in the current economy. Picture by Sitthixay Ditthavong](/images/transform/v1/crop/frm/135763310/df8aa910-4c9b-47f8-92a0-0708755f2bf6.jpg/r0_618_4032_2885_w1200_h678_fmax.jpg)
Administrators were appointed to five companies under building behemoth PBS in March, The companies owed a million dollars owed in tax.
Soon after, hospitality venue Pialligo Estate collapsed, with a report revealing nearly 600 creditors are owed more than $10 million. Of that, $4 million was to the ATO.
POP Canberra owner Gabe Trew said he needed help managing debts when it was revealed the popular Braddon shop had gone into voluntary administration in April, owing employees superannuation.
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Administrators were appointed to James Mussillon's Courgette Restaurant in June 2023. The administrator said the restaurant owed money in tax.
There is no suggestion any directors of these companies have deliberately avoided paying tax or acted illegally.
Nationwide, construction businesses are much more likely to go under than any other industry, followed by accommodation and food services.
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