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  • Pausing or permanently closing your business

    This information will help you understand what you need to do for tax purposes if you are a small business owner and you have had to pause or permanently close your business (for example due to COVID-19).

    Key points

    There are different things you need to know and do depending on whether you are pausing or permanently closing your business.

    This includes registrations (ABN and GST), tax and super obligations, disposing of capital assets, Single Touch Payroll (STP) and record keeping.

    Registrations (ABN and GST)

    Pausing your business

    You don’t need to cancel your ABN and GST registration if you have:

    • paused trading activities in your business, with the intent of restarting
    • paused your business for a lengthy or uncertain time period.

    You will only need to cancel your ABN and GST registration if you permanently close your business.

    Example: Jodie pausing her café

    Jodie runs a café and needs to pause her business. She doesn’t provide takeaway services and she is uncertain when she will reopen her business.

    Jodie keeps the café’s assets and continues to pay reduced rent on the premises. The business has not permanently closed so she doesn’t need to cancel her ABN. Jodie will continue to lodge her business activity statement (BAS) to claim GST credits for the GST on expenses related to her business.

    End of example
    Permanently closing your business

    A business closes when the activities related to that business stop – this occurs when all assets are disposed of or converted to another purpose or use, and all tax and super obligations have been met. Disposal of assets may include sale, scrapping or abandoning.

    When permanently closing your business, there are several obligations that need to be finalised.

    These may include:

    • preparing final accounts, activity statements and income tax returns
    • finalising super payments and quarterly lodgments (including superannuation guarantee charge statements if obligations have not been met)
    • finalising your STP data or lodging a payment summary annual report (if you don’t report through STP).

    Note:

    Remember to complete your lodgment and payment obligations before you cancel your ABN or GST registrations.

    ABN

    If you permanently close your business, it is important that your tax and super affairs are finalised before you cancel your ABN.

    You must lodge your final BAS before permanently closing your business. This allows the ATO to finalise your account and issue any refunds that might be owed to you.

    You must also cancel your ABN registration within 28 days of stopping your business activities.

    For more information, see Cancel your ABNExternal Link.

    GST

    If you permanently close your business, you must apply to cancel your GST registration within 21 days of stopping your business activities.

    Cancelling your GST registration may affect some, but not all, of your other registrations, including:

    • fuel tax credits
    • luxury car tax
    • wine equalisation tax.

    For more information, see If your business changes or ceases.

    Example: Joel closing his shop

    Joel runs a craft shop selling craft supplies and decides to close his shop. All assets are sold except for some stationery items. Joel expects to sell the stationery items in the future and pays to have them stored in a commercial warehouse.

    The business has not permanently closed until the stationery is sold or is determined to be of no or little value.

    End of example

    Tax and super obligations

    If you are pausing or permanently closing your business, you must still meet your tax and super obligations. This may include:

    • fringe benefits tax
    • pay as you go (PAYG) withholding for employees
    • Super guarantee (SG) for your employees
    • income tax – including any capital gains tax (CGT) events
    • GST.

    Before pausing or permanently closing your business you need to contact us to discuss your changed circumstances, if you:

    • were on a payment plan for amounts you owe
    • had arranged for the deferral of some or all of the amounts you owe.

    By contacting us, we will be able to provide more personalised support based on your individual circumstances.

    You still need to pay the minimum amount of super for your employees (based on their ordinary time earnings for the quarter) into the correct fund by the due date to avoid becoming potentially liable to pay the SG charge.

    The SG charge is different to the regular super contributions you pay and includes:

    • SG shortfall amounts
    • interest on those amounts
    • an administration fee of $20 per employee, per quarter.

    If you cannot pay the full SG contributions, pay as much as you can to their fund by the due date, as this will reduce the SG charge. You will need to lodge an SG charge statement within a month of the SG due date and pay the charge to us to avoid additional penalties.

    If you are having trouble paying the SG charge to us, we can work with you to set up a payment arrangement.

    For more information, see Help with paying.

    Disposing of capital assets

    There may be GST and CGT implications when you dispose of your capital assets. See GST and the disposal of capital assets.

    Single Touch Payroll (STP)

    STP reporting provides important information to the ATO. Having the most up-to-date employment information helps us support the community.

    If an employee’s employment has ended, make sure you report their cessation (end) date in your STP report. If you have already paid them their final pay, you can still tell us this information by submitting an update event.

    If you have let employees go, you don’t need to wait until the end of financial year to finalise your STP data. Finalising is an important step as it allows individuals to lodge their income tax return at the end of the year.

    For more information, see Single Touch Payroll, Single Touch Payroll Phase 1 – finalising your STP data and Single Touch Payroll Phase 2 – finalising your STP data

    Pausing your business

    You or your registered tax or BAS agent can let us know that you no longer need to report to us through:

    • Online services for business – select Employees, then STP deferrals and exemptions, and select the most appropriate option
    • Online services for agents – select Business then STP deferrals and exemptions.

    Record keeping

    Whether you are pausing or permanently closing your business, you will need to keep records of all transactions relating to:

    • sales (including the sale of your business and assets if applicable) and purchases
    • payments to employees
    • payments to other businesses.

    For more information, see Selling or closing your business – records.

    More information

    If you're affected by a recent event or disaster such as a bushfire, COVID-19, cyclone, drought, flood or storm and you need assistance with your tax affairs, we can help you.

    For more information, see Dealing with disasters or talk to your tax professional for help tailored to your circumstances.

    This is a general summary only. For more information, speak with your registered tax agent, or visit Changing, selling or closing your business.

      Last modified: 20 Sep 2021QC 59613