Court actions against insolvent businesses and individuals have jumped 54 per cent in the past year, as the Australian Taxation Office tightens itsThis increase puts court activity for debt collection back to pre-COVID-19 levels, according to CreditorWatch, at the same time as external administrations rise a “massive” 46 per cent in the year to July 31.after offering businesses breathing space during the pandemic, as well as garnishees and director penalty notices.
“At the end of the day, you can’t have some businesses that aren’t paying debts and some that are ... so the ATO is slowly getting back to normal but not shocking people into reality.”The uptick in activity reflected “quite a backlog” in debts that the ATO did not pursue during that relief period, she said, as well as businesses themselves chasing down those who had defaulted on payments they were owed.
“This time last year when it was easier to get credit and cheaper they probably wouldn’t have been defaulting.” “So in the next year or so when there will be tough conditions, they’re obviously going to be the ones that feel it.”The jump in court activity prompted calls for more support from both the government and banks for small businesses trying to stay afloat amid “accumulating debt” from inflation, supply chain woes, labour shortages and a COVID-19 hangover.