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Business owners should have their house in order before voluntarily deregistering to avoid incurring director penalties.
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Discharge debt before deregistering a company, directors warned
16 January 2023
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The ATO has warned those voluntarily deregistering a company to ensure all of its tax and super obligations are met before the process is complete or risk incurring director penalties.
The Tax Office said those obligations included tax returns, activity statements, fringe benefits tax returns, taxable payments annual reports, and paying all outstanding debts.
Also needing finalisation were the company’s super affairs, including paying super guarantee amounts and charges, as well as end-of-year reporting, lodgements and other obligations if the company was part of a goods and services group, an income tax group, or a partner in a partnership.
The Tax Office warned that a failure to meet obligations before deregistration could leave company directors liable for debts that it would recover under the director penalty regime, including amounts owed from PAYG withholding, net GST (including luxury car tax and wine equalisation tax), and the super guarantee charge.
The ATO said once a company was deregistered it ceased to exist, which meant the office would stop paying refunds, interacting with the company, processing forms lodged after deregistration, and enabling reporting such as through STP.
The Tax Office said it would also cancel any tax forms received after deregistration, cancel the business's ABN as well as all registrations such as PAYG withholding and GST, and any links the company had to registered intermediaries.
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If the company was deregistered by the Australian Securities Investments Commission (ASIC) those wanting to have the entity reinstated had to go back through the commission.
ASIC said this could involve requesting a firm’s reinstatement and meeting its criteria or applying to a court for an order that ASIC reinstate the company.
The ATO said once a company had been reinstated by ASIC it would be treated as if it had never been deregistered and lodgements made by the directors would be processed.
However, any lodgements made during the period of deregistration would need to be relodged by the company after reinstatement.
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