Insolvency statistics suggest ATO may be backing off small business
Businesses should take heart – new insolvency statistics suggest the tax office is backing off from its crackdown on small businesses.
New figures from the Australian Securities and Investments Commission show that while insolvencies increased in the September quarter by 10%, on a yearly basis they actually declined by 5.2%.
But more importantly, the figures show the number of court ordered liquidations fell by 28.8% from last year to 913 in the September quarter.
Dissolve liquidator Cliff Sanderson told SmartCompany this morning that while the evidence isn't concrete, anecdotal evidence backs up the idea the ATO is beginning to take it easy on SMEs.
"That's certainly my impression," he says.
"I don't know if you could say they're backing off, but they've had a lot of stuff to work through and it's always hard to get a handle on how far through their pile they are."
"But certainly we're seeing fewer directors who are being aggressively pushed by the ATO."
Other anecdotal evidence suggests the tax office has been giving businesses some breathing room, especially after a harsh few years. While the tax office lent a helping hand during the financial crisis, it warned it would start chasing down insolvent businesses for tax debts.
However, the figures show businesses are doing a little better.
New South Wales again claimed the largest number of external administrations, up from the June quarter but down by 10.3% over the year.
The biggest increases were in Northern Territory and the ACT, although they were coming off extremely low bases. Victorian administrations increased by 3.1% over the previous year.
Court ordered liquidations dropped by 28.8% over the year, although increased by 9.2% from the previous quarter.
And on a quarterly basis, creditors' voluntary liquidations increased by 7.9%, while receiverships and voluntary administrations increased by 13% and 17.2% respectively.
Sanderson says it's too early to tell whether the ATO is backing off, but it's certainly a good sign.
"It's hard to figure out, but the ATO tends to move in phases. We'll have to wait and see."