RSM Australia

The rise of the 'walking dead': companies in distress and avoiding the pitfalls

After last year’s announcement that the ATO is getting tougher on tax collection, many Australian businesses that were barely surviving before are apparently edging ever closer to insolvency.

In the past, the outstanding tax debt was generally around $300,000 before the ATO pursued recovery actions or wind-up notices; that appears to have reduced substantially, with debts now as low as $60,000 having been the subject of recovery action by the ATO. A rising number of companies continue to survive, but with a lack of capital are unable to grow. They are more vulnerable than ever to market changes, which can inevitably lead to closure. These businesses are poignantly referred to as the ‘walking dead’.

To understand more about this phenomenon, and to consider ways to alleviate the problem, we surveyed over 1,500 Australian business owners, consultants, and directors from a cross section of business sectors.