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  • Changing, selling or closing your business

    There are tax implications if you:

    • register a business but don't start the business
    • change your business entity type because you restructured your business
    • pause your business (due to COVID-19)
    • stop operating and close your business permanently
    • sell the business
    • wind up your company.

    We know that many businesses are being heavily affected by the challenging economic conditions due to COVID-19. If you are experiencing difficulties with tax obligations due to the COVID-19 situation, or want more information on JobKeeper payments, cash flow boost or other support, visit our COVID-19 support page or talk to your tax professional.

    If prior to pausing or permanently closing your business you were on a payment plan or had arranged for the deferral of some or all of your tax liabilities while you were having difficulties, phone our Emergency Support Infoline on 1800 806 218 to discuss your changed circumstances.

    See also:

    Watch:

    Media: Selling or closing your business : tax basics for small business
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfiysjd External Link (Duration: 03:30)

    When changing, selling, pausing or closing a business:

    • check whether your state or territory government has any special requirements
    • check you have met all lodgment, reporting and payment obligations with any government agencies you have dealt with
    • work with your tax adviser to address the taxation issues of an exit strategy or succession plan well in advance to minimise risk
    • check whether you may have to pay goods and services (GST) or capital gains tax on some of the business assets you sell, including  
      • land
      • buildings
      • intangible assets – such as patents, licences or goodwill.
    • keep your business records for at least five years after the records are prepared or obtained, or the transactions are completed, whichever occurs later.

    There are also some requirements when selling or closing a business, which include cancelling:

    • your GST registration within 21 days of selling or closing your business
    • your Australian business number (ABN) within 28 days – if your business starts to trade again in the future, or you start a new business and your business structure remains the same, you can apply to have your ABN reactivated.

    See also:

    Pausing your business due to COVID-19

    The following information applies if you pause your business due to COVID-19. If you have had to permanently close your business due to COVID-19, go to Changing, selling or closing your business – things to consider

    Find out about:

    Registrations (ABN & GST)

    If you have paused trading activities in your business with the intent of restarting, you are not required to cancel your ABN and GST registration.

    This applies even if you have 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.

    Tax and superannuation obligations

    You must continue to meet your tax and super obligations. This includes:

    • fringe benefits tax
    • pay as you go withholding for employees
    • super guarantee for your employees
    • income tax (for example, for any capital gains tax (CGT) consequences)
    • GST.

    If you are having difficulty meeting your tax obligations, please contact us to discuss any relief options that may be available to you. You can phone our Emergency Support Infoline on 1800 806 218 or speak with your tax adviser.

    Superannuation

    You are still required to pay the minimum amount of superannuation guarantee (SG) for your employees to the correct fund by the due date to avoid becoming potentially liable for super guarantee charge (SGC). SG is based on ordinary time earnings (OTE) for the quarter. By law we can’t vary the contribution date or waive the super guarantee charge.

    If you cannot pay the full SG contributions pay as much as you can to their fund by the due date to reduce the SGC. You will need to lodge an SGC statement within 28 days after the end of the quarterly SG due date and pay the SG charge to us.

    If you are having trouble paying the SGC we can work with you to set up a payment arrangement.

    See also:

    Single Touch Payroll (STP)

    STP reporting includes important information we may use in these unprecedented times. Having the most up to date employment information will help 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

    For employees who are no longer employed by you, you don’t need to wait until the end of financial year to finalise your STP data. Finalising is an important step as it enables individuals to lodge their tax return at the end of the year.

    If you have no further reporting requirements, you or your registered tax or BAS agent can let us know through:

    • the Business Portal (employers) – select Manage employees then STP deferrals or exemptions
    • Online services for agents – select Business then STP deferrals and exemptions.

    See also:

    Record keeping

    You need to keep records of all transactions relating to:

    • sales and purchases
    • payments to employees
    • payments to other businesses.

    See also:

Last modified: 05 Jun 2020QC 31729