The Creditor Directors Never See Coming: Workers Comp Wound Up More NSW Companies Than the ATO

The Creditor Directors Never See Coming: Workers Comp Wound Up More NSW Companies Than the ATO

In July 2026, the NSW Workers Compensation Nominal Insurer brought 65 court applications to wind up companies. The Australian Taxation Office brought 53 in the same State. In New South Wales, unpaid workers compensation premiums put more companies in front of a winding-up judge than unpaid tax did — 40.4% of all NSW applications against the ATO's 32.9%. Nationally, workers compensation schemes and their insurers brought 77 of 472 applications — more than one in six, and the NSW Nominal Insurer on its own brought more than every energy and fuel supplier in the country combined. Almost no director I speak to ranks the workers comp premium anywhere near the BAS. On the numbers, that ranking is backwards.

Here is what the data shows, why this creditor behaves differently to the ATO, and the personal exposure most directors do not know exists.

In New South Wales, workers compensation insurance is compulsory under section 155 of the Workers Compensation Act 1987 (NSW), and an unpaid premium is recoverable as a debt in court under section 172 of that Act — which is what makes a winding-up application available.

What the July 2026 data shows

The New South Wales concentration is the striking part. Sixty-five of the 77 were brought by one applicant in one State. Put against the other creditors operating in New South Wales that month:

Two creditors accounted for nearly three quarters of every winding-up application filed in New South Wales in the month. One of them gets all the attention. The other one filed more.

Why this creditor behaves differently to the ATO

The ATO has a well-worn public process — reminder letters, payment arrangements, director penalty notices, garnishee notices, and a policy of engaging with businesses that engage back. Whatever else you think of it, there is a negotiating counterparty there.

Premium recovery is not built that way. It is a debt-recovery function, run to a schedule, largely outsourced to law firms on a panel. In the July data, three firms ran 64 of the 77 applications between them — 83%. That is not litigation being weighed matter by matter. That is a pipeline.

Which produces the pattern I keep seeing: a director who has been in genuine dialogue with the ATO for months, who is being reasonable and getting somewhere, gets blindsided by a winding-up application from a creditor they had mentally filed under "insurance, deal with it later". Being in a payment arrangement with the ATO does nothing about the premium. Different creditor, different debt, different process, and no cross-referencing between them.

Where the real risk sits: not the premium, the claim

An unpaid premium is a company debt. Uncomfortable, but ordinary. The exposure that actually hurts sits one step further along, and it is specific to this creditor.

If a company is not insured when a worker is injured, the Nominal Insurer still pays the worker. It then recovers the full cost of that claim from the employer under section 145 of the Workers Compensation Act 1987 (NSW). Not the premium you avoided — the whole claim. A serious injury claim is not measured in the thousands.

And under section 145A, where the employer is a company, the Nominal Insurer can recover that amount from a culpable director personally. This is a company debt that reaches through to you without any need for a guarantee, and it does not disappear because the company is wound up.

Three consequences directors routinely miss:

• Letting a policy lapse converts a cash-flow problem into a personal liability. The premium was the cheap version. Once someone is hurt while you are uninsured, the number is set by the injury, not by your payroll.
• Liquidating the company does not extinguish a section 145A liability. Directors sometimes wind up a company assuming everything ends there. This one follows you out.
• In construction, a principal contractor can be liable for a subcontractor's unpaid premiums under section 175B. If you engage subbies, their compliance is partly your problem — and construction is heavily represented across this dataset.

Workers comp is not covered by a director penalty notice — and that cuts both ways

The director penalty notice regime in Division 269 of Schedule 1 to the Taxation Administration Act 1953 covers PAYG withholding, GST and superannuation guarantee. It does not cover workers compensation premiums.

Directors sometimes read that as reassurance. It is the opposite. It means the premium sits outside the framework you have been trained to watch, gets no DPN warning letter, and reaches you through an entirely separate statute with its own personal-liability provision in section 145A. There is no 21-day notice period to alert you. The first formal document many directors see is the statutory demand.

What to do if a premium is behind

• Confirm the policy is live before you deal with the arrears. Cover and debt are two different problems, and cover is the one that can turn into personal liability overnight. Check the policy status first, today.
• Check whether wage declarations are current. A large share of premium disputes are not refusals to pay — they are estimated or adjusted premiums based on declarations that were never lodged. Sometimes the debt is arguable and nobody has argued it.
• Deal with it separately from the ATO. An ATO payment arrangement gives you nothing here. Two debts, two creditors, two conversations.
• If a statutory demand has arrived, the clock is 21 days. Section 459E of the Corporations Act 2001 gives 21 days to comply. Fail to comply as defined by section 459F and a presumption of insolvency arises under section 459C(2)(a) that the creditor can rely on for three months when applying to wind the company up under section 459P. That 21-day window is where the real options — payment, Small Business Restructuring, a deed of company arrangement — still exist.
• If subcontractors are involved, check their cover too. Section 175B can make their arrears yours.

Method

Source: ASIC's Published Notices register, all winding-up application notices published between 1 and 31 July 2026. 479 notices were published in the month; 472 were retrievable in enough detail to analyse, and those 472 are the denominator for every figure above. Applications were categorised as workers compensation where the applicant was a workers compensation nominal insurer, a WorkCover authority, a private underwriter of a State workers compensation scheme, or a portable long service benefits authority. State is the State in which the application was published. Percentages are rounded to one decimal place. The dataset counts applications made, not winding-up orders granted; some of these companies will have paid, settled or been adjourned before hearing.

Common questions

Can workers compensation insurers wind up a company over unpaid premiums?

Yes, and they do so frequently. In July 2026 workers compensation schemes and their insurers brought 77 of 472 winding-up applications in Australia — 16.3% of the total. In New South Wales, unpaid premiums are recoverable as a debt under section 172 of the Workers Compensation Act 1987 (NSW), which supports a winding-up application under section 459P of the Corporations Act 2001.

Who files more winding-up applications in NSW — the ATO or workers compensation?

Workers compensation. In July 2026 the NSW Workers Compensation Nominal Insurer brought 65 applications against companies in New South Wales, compared with 53 by the Australian Taxation Office. That is 40.4% of all NSW winding-up applications against the ATO's 32.9%.

Am I personally liable for unpaid workers compensation premiums?

Not for the premium itself, which is a company debt. But if the company was uninsured when a worker was injured, section 145 of the Workers Compensation Act 1987 (NSW) makes the employer liable to reimburse the Insurance Fund for the compensation paid, and section 145A allows that amount to be recovered from a culpable director personally. That liability is not extinguished by winding the company up.

Does a director penalty notice cover workers compensation?

No. The DPN regime in Division 269 of Schedule 1 to the Taxation Administration Act 1953 covers PAYG withholding, GST and superannuation guarantee only. Workers compensation premiums sit outside it, under separate State legislation with its own personal-liability provisions. There is no DPN-style 21-day warning letter for premiums.

Does an ATO payment arrangement protect me from a workers compensation winding-up application?

No. They are separate creditors pursuing separate debts under separate legislation, with no coordination between them. A company can be fully compliant with an ATO payment plan and still be wound up over an unpaid premium.

Can I be liable for my subcontractor's unpaid workers compensation premiums?

In New South Wales, potentially yes. Section 175B of the Workers Compensation Act 1987 (NSW) can make a principal contractor liable for unpaid premiums payable by a subcontractor. If you engage subcontractors, their insurance compliance is partly your risk.

What should I do if I get a statutory demand for unpaid premiums?

Act inside 21 days. Section 459E of the Corporations Act 2001 gives 21 days to comply; failure to comply creates a presumption of insolvency under section 459C(2)(a) that the creditor can rely on for three months. Before that window closes you can pay, negotiate, apply to set the demand aside if the debt is genuinely disputed, or restructure. After it closes, the options narrow sharply.

Where I fit

I'm not a liquidator, trustee or administrator, and I don't act for creditors. Where a premium debt is in play I look at the whole picture rather than the one letter in front of you: whether the policy is actually live, whether the assessed premium is right, what personal exposure exists under section 145A, how it interacts with any ATO position, and whether Small Business Restructuring or a controlled wind-up is the better answer. Then I coordinate the right practitioner. In 38 years I've never once heard someone say they acted too early.

If a premium is behind, or a statutory demand has landed, book a phone or video time at resolvency.com.au/book or call 0457 099 099.

General information only — not financial, legal or tax advice. Everyone's position is different, so get advice specific to yours before you act.

Related service: Liquidation & Wind-Up Coordination — see how I can help.