Many business owners are not aware that they still need to report to the ATO if they close the doors to their business, as well as keep the business records for a compulsory period of time.
The ATO advises taxpayers who have decided to close their business not to throw out all their records, as record keeping rules still apply after a business has been sold or closed down. Taxpayers need to keep their records for five years after the records are prepared or obtained, or after the transactions are completed, whichever is the latest.
Taxpayers also need to be mindful of which records they need to keep longer than five years. They can refer to ‘Records you need to keep longer than 5 years’ on the ATO’s website for further information in this regard.
When taxpayers are closing their business down, they will need to keep records to help finalise their:
- tax obligations — for example, preparing final accounts, lodging all outstanding business activity statements and income tax returns;
- super guarantee obligations — such as finalising super payments and quarterly lodgements; and
- Single Touch Payroll (‘STP’) data, or lodging a payment summary annual report (for payments they don’t report through STP).
Taxpayers who have “let their employees go” do not need to wait until the end of the financial year to finalise their STP data. Finalising is an important step, as it allows the employees to lodge their income tax return at the end of the financial year.
Taxpayers should remember that there may be GST and CGT implications when they dispose of capital assets related to their business. The cancellation of a taxpayer’s GST registration may affect some, but not all, of their other registrations, such as fuel tax credits, luxury car tax and wine equalisation tax.
Taxpayers who are closing their business and who are not still engaged in activities required to terminate it will need to cancel their:
- GST registration within 21 days of stopping their business activities; and
- ABN registration within 28 days of stopping their business activities.
If you are facing the prospect of closing down your business, please contact us as soon as possible on 55612643 so we can help you navigate your way through this stressful time.
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