Businesses are reporting their highest levels of failure since the COVID pandemic.
New data released by CreditorWatch showed that businesses across Australia were at a four-year high for closures in the month of October.
The insolvency rate reached 5.04%, following just behind the previous peak of 5.08% in October 2020.
Broadened to an annual basis, failure rates were found to be approximately 25% higher than they were pre-pandemic.
CreditorWatch identified three main commonalities for these failed businesses: the rise in cost of living, higher costs of doing business, and the Australian Taxation Office's ongoing campaign to recover $35 billion owed in tax debts.
Chief economist for the agency, Ivan Colhoun, expects business failure rates to remain higher as these price pressures continue to persist in the economy.
“Together with some greater caution in discretionary spending and softness in interest-rate-sensitive sectors of the economy, this unsurprisingly has led to higher voluntary business closures and some rise in insolvencies." said Colhoun.
Hospitality was the industry reporting the highest insolvencies, with construction coming in second, with both industries reporting the most businesses with tax debts.
Hospitality was predicted to reach an even higher failure rate of 9.1% in the next 12 months.