De-Registration & Members Voluntary Liquidation

Simplify your corporate structure

Many corporate groups include companies that no longer serve any useful purpose. These redundant companies complicate accounting, incur ASIC lodgment fees, and add unnecessary paperwork.

Careful use of members voluntary liquidation and de-registration in conjunction with Capital Gains tax and stamp duty rollover provisions can result in significant time and cost savings.

Benefits of corporate structure simplification

Termination of redundant companies saves time and money in a number of ways, by eliminating or simplifying the following:

• Tax return lodgment.
• Annual return lodgment.
• Preparation of statutory notices and minutes for annual meeting.
• Payment of ASC filing fees.
• Reconciliation of intercompany loan accounts.
• Preparation of consolidated accounts.

De-registration

De-registration is the simplest and most inexpensive way of terminating a company. It is appropriate for companies that meet all three of the following criteria:

• No capital gains tax issues;
• No need to access stamp duty roll-over relief; and
• No prospect of unforeseen future liabilities for example workers’ compensation or public liability claims, or issues arising from tax audits.

De-registration is only available to companies with up to date lodgements of ASIC returns.

Members voluntary liquidation

Members voluntary liquidation should be used to terminate companies if:

• There are capital gains tax issues;
• It is necessary to access stamp duty roll-over relief; or
• There may be future liabilities.

The first step in initiating a members voluntary liquidation is a directors’ meeting to requisition a special general meeting of members. Next, the company is wound up and a liquidator appointed, by resolutions of members.

Usually the first actions of the liquidator are in relation to numerous notifications and statutory lodgments.

Ordinarily the liquidator will wait for clearance from the Australian Taxation Office before distributing the assets of the company. Clearance can take a number of months, depending on the complexity of the company’s taxation affairs.

Once assets are distributed, the liquidator convenes a final meeting of members. There is no requirement for members to attend this meeting, and typically they choose not to. The lodgment of a final meeting return with the ASC triggers an automatic de-registration, at which time the company ceases to exist.

Prior to putting a company into members voluntary liquidation we would normally review the company’s financial and tax position to ensure it is appropriately structured for an easy liquidation. Due to this review, and statutory notice requirements it is not possible to place a company into members voluntary liquidation immediately.

So please remember that if you wish to have a company wound up prior to a specific date – e.g. before 30 June – it will be necessary to plan to initiate the winding up some weeks before that time.

Fee arrangements

The fees for members voluntary liquidation and de-registration will depend on the nature of assets to be distributed, and the complexity of the company’s taxation affairs.

Our experience is that working with the company’s normal accountants is the most cost-effective way of dealing with income tax issues.

A review of the company’s most recent balance sheet will usually allow us to provide a fixed price fee estimate.