Newly published data collected by the Australian Bureau of Statistics (ABS) shows that there is an increase in the number of Australian businesses that are starting up, despite the tough restrictions, ongoing lockdowns and economic uncertainty that has been generated as a result of the covid-19 pandemic.
The recently published data from the ABS, which counts the number of Australian businesses, found that in 2020–21, illustrates that there was a 3.8 percent increase in the number of businesses. This included a 15.8 percent entry rate and 12 percent exit rate.
The number of new businesses which began operating in 2020–21 was 356,480. This number is surprisingly larger than it has been in the past three years. The increase in new businesses is up from a low of 336,499 new businesses in 2019–20. At the same time, there were 277,674 business exits in 2020–21, the lowest it has been in three years, since 2017–18 recorded 273,237 business closures.
MYOB general manager for SMEs Emma Fawcett commented that the ABS data shows Australian businesses have “responded positively in what has been a tumultuous 12 months” and that the lowest business exit rate in the last three financial years “is a sign of hope for Australia”.
Ms. Fawcett also commented that MYOB’s own anonymised data shows small businesses have been bolstered by faster payment times across the last 12 months.
“Payments for 9 per cent of businesses performed better in FY20–21 compared to FY19–20, with invoices receiving payment within an average of 28 days. This is great news for Australia’s small businesses and the economy,” said Ms Fawcett.
“Less businesses shutting their doors and more businesses starting, coupled with businesses getting paid faster, leads to more growth for businesses, more jobs creation and money flowing through the economy,” continued MYOB general manager for SMEs Emma Fawcett.
SMEs Encouraged To Seek Help If They Are Struggling To Pay Their Taxes
Small to medium enterprises (SMEs) across Australia are being encouraged to seek immediate help if they are struggling to pay their taxes due to the covid-19 pandemic-induced cash-flow issues.
It has been reported that small to medium businesses currently owe the Australia Tax Office (ATO) a record-high $21.4 billion in tax debt in the financial year of 2020. This illustrating the huge impact covid-19 has had in regards to it’s disruptions on the economy.
Inconsistent cash flow has a massive impact on when and how a business can meet its tax obligations. It is important for SMEs who are experiencing financial distress to get in contact with their advisors to help ease the burden that they’re currently experiencing so that they reduce the risk of falling behind on their tax repayments.
If you are a business owner who is falling behind on your tax payments, it is super important that you act quickly to get up to date with your lodgements. Although the ATO has been generally sympathetic about the problems associated with uncertain cash flows and has made changes to its normal practices during the pandemic such as; suspending its normal collection strategy in April 2020, this type of generosity won’t continue forever and probably not for much longer.
It is predicted that the ATO will be ramping up its enforcement activity over the next six months as the trend of rising tax debt continues to balloon.
Looking at last year’s data, a third of the SME ATO debt was housed in the construction industry, which has traditionally accounted for a disproportionately high level of insolvency appointments.
It is fearedthat these potentially terminal businesses may ‘infect’ their directors, owners, employees and stakeholders if action is not taken to address the financial imbalance.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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