ATO Interpretative Decision
ATO ID 2005/257
Income TaxIncome tax: who is responsible for lodgement of a company return when a liquidator has been appointed?
FOI status: may be released
Status of this decision: Decision Current
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Is the liquidator appointed to wind up a company responsible for lodgement of the company's income tax return when they have control of the financial records of the company?
Yes. Where the liquidator has control of the financial records relating to the income tax affairs of the company, the liquidator is required to lodge the return for the full income year.
A liquidator is appointed to wind up Insolvent Company on 1 December in a particular income year.
The financial records of Insolvent Company are handed to the liquidator as required under the Corporations Act 2001, on 1 February of the same income year. As part of the winding up process, several transactions occurring in the beginning of the income year are reversed by the liquidator.
The public officer of Insolvent Company no longer has access to, or control of, the financial records.
Reasons for Decision
Section 254 of the Income Tax Assessment Act 1936 (ITAA 1936) makes a liquidator personally responsible for the income tax requirements and liabilities arising under the ITAA 1936 from the time of their appointment. Thus, it is clear that the liquidator of Insolvent Company has responsibility for lodging an income tax return in respect of the period commencing from their appointment on 1 December of the income year. This responsibility overrides the responsibility of the public officer to lodge the return, which arises as a result of section 252 of the ITAA 1936.
Taxation Determination TD 94/68 Income Tax: who is responsible for lodgement of a company income tax return if both a receiver/manager and a liquidator have been appointed?, provides guidance in the situation where conflicting duties to lodge arise, as may occur when a liquidator is appointed to a company.
In the above situation, both the public officer and liquidator have legal obligations to lodge a return. However, in TD 94/68, the Commissioner accepts that in some cases not all persons who are obligated to lodge returns have control of the financial records necessary to do so. Accordingly, the Commissioner will look to the person or persons who have control of the financial records to lodge a return for the whole of the income year.
In this case, the public officer of Insolvent Company has no control over the records they need to compile and lodge an accurate income tax return for Insolvent Company. The liquidator has the records and also has information relating to transactions that occurred prior to their appointment. Accordingly, the Commissioner will look to the liquidator of Insolvent Company for lodgement of the return for the full year.Date of decision: 6 September 2005
Related Public Rulings (including Determinations)
Taxation Determination TD 94/68
ATO ID 2003/507
Lodgment of tax returns
Ownership, interests, control & rights