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Edited version of private advice
Authorisation Number: 1051645173683
Date of advice: 12 March 2020
Ruling
Subject: Income tax - liquidation costs
Question
Are the costs of liquidating your company a deductable expense to you in your capacity as shareholder?
Answer
Yes. It is considered that the liquidation expenses incurred by you were directly related to bringing to an end the company through which the business was carried on. The liquidation expenses incurred by you are capital in nature and are deductible over a five year period.
This ruling applies for the following period:
Year ending 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You became the sole shareholder and director of the company in the 20xx income year.
The company carried on a business for a taxable purpose.
You derived assessable income from the company in the years previous to the liquidation.
The company appointed a liquidator in the 20xx income year.
You incurred professional fees for liquidating the company.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 40-880
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