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  • Changing, pausing, closing or selling your business

    Many businesses are being impacted by COVID-19. If you are experiencing difficulties meeting your tax or super obligations due to COVID-19, visit our COVID-19 support page or talk to your tax professional.

    This page will let you know what you may need to consider if you:

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

    Watch:

    Media: Selling or closing your business: tax basics for small business
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfiysjdExternal Link (Duration: 03:30)

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    Registered a business but haven’t started the business

    If you have registered a business ̶ for example, you have registered for an Australian business number (ABN) ̶ but haven't carried on a business, you don't need to lodge a tax return for the business.

    In the future, when you have carried on a business, you will need to lodge a tax return even if your business hasn't made a profit. There’s no threshold for business income, so you need to lodge an income tax return even if you only earn $1.

    If you have registered a business but don't start the business and have decided that you will no longer operate, you will need to cancel your ABN.

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    Other circumstances

    If you are changing, pausing, closing, selling or winding up 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 or an insolvency practitioner early on to minimise risk for your exit strategy or succession plan, and see what you need to do from a tax and super perspective   
      • make sure you’re seeking advice from a registered professional, particularly if you may need to wind up your company
      • be wary of advisers who encourage you to engage in inappropriate or even illegal activity, such as illegal phoenix activity – where a business is deliberately shut down to avoid paying its debts or where assets are transferred or concealed before winding up
       
    • check and update authorisations for your business in Relationship Authorisation ManagerExternal Link and permissions for your staff in Access Manager
    • check whether you have to pay goods and services tax (GST) or capital gains tax (CGT) on some of the business assets you sell, including        
      • land
      • buildings
      • intangible assets such as patents, licences or goodwill
       
    • work out final pay and entitlements to your workers, including  
    • finalise and lodge your fringe benefits tax (FBT) return if you're registered for FBT
    • remember to correctly report transactions related to any shareholder loans and remaining assets – not correctly reporting and keeping appropriate records for transactions can result in an unfranked deemed dividend being included in your assessable income
    • keep records of all transactions (including records related to selling or closing your business) for at least five years, such as
      • sales and purchases
      • payments to employees
      • payments to other businesses.
       

    On this page:

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    Changing a business

    There are other things that you may need to consider if you change your business.

    For example, if you change:

    • the composition of your business partnership because your previous partner retired or passed away or a new partner is admitted
    • your entity type because you have restructured your business.

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    Pausing or closing a business

    If you're pausing or permanently closing your business (for example due to COVID-19), there are a few things you need to know and do.

    See Pausing or permanently closing your business.

    For a summary of this content in poster format, see Pausing or permanently closing your business (PDF, 775KB)This link will download a file.

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    Selling or winding up a company

    If you're selling your business, there are several things you need to know and do. No GST is payable on the sale of a going concern (that is, a business that is operating and making a profit) if certain conditions are met. However, as the seller, you may be able to claim input tax credits for GST you paid on expenses relating to the sale.

    If you're winding up your company, the tax consequences can be at the company level or the shareholder level (or both). Make sure to seek professional advice.

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Last modified: 20 Sep 2021QC 31729