When your client first went into business, either buying an established enterprise or starting from scratch, probably the last thing on their mind was the day they would close the door for the last time.
But in a way it’s inevitable, whether through the outcomes from COVID-19, retirement, health reasons or, in a more ideal scenario, pursuing another career. But it’s important for them to know what’s involved when they come to the point when they close their business, as this can go a long way to smoothing the transition.
For starters, it’s important that all your clients’ tax issues are finalised before they cancel their Australian business number (ABN), which ceases that business. This allows the ATO to finalise their account and issue any refunds owing to them.
Step 1: Lodgment and payment
Make sure all lodgment and payment obligations are met, including:
- outstanding activity statements
- outstanding instalment notices
- final fringe benefits tax returns
- final income tax returns.
Step 2: Refunds
Request any refunds for accounts with a final tax position in credit.
Step 3: Cancel pay-as-you-go (PAYG) withholding registrations
You can do this using “cancel tax registrations” in Online services for agents.
Step 4: Cancel the ABN
This step must be completed after the first three steps – this will stop any problems with refunds being delayed and the need for the ATO to contact you or your client. The ABN needs to be cancelled within 28 days of the client ceasing business through the Australian Business Register.
Cancelling the ABN will:
- cancel registrations for goods and services tax (GST), luxury car tax, wine equalisation tax, fuel tax credits
- cancel AUSkeys linked to the ABN
- end all authorisations for the business in Relationship Authorisation Manager, preventing access to the online services using myGovID.
After cancelling the ABN, it may pay to warn your client that they may have a PAYG instalment obligation through to the date of ceasing business, and may still receive instalment activity statements. You are able to vary your client’s PAYG instalment amount if the amount or rate the ATO calculated doesn’t reflect their circumstances due to their ceasing business.
Step 5: Record keeping
Your clients need to keep business records for five years from when they prepared or obtained the records, or completed the transactions or acts those records relate to, whichever is later.