Australian private company is wholly owned by an overseas company (only shareholder is the overseas company – 100% ordinary shares).
This Australian private company will be ceasing the operation in December. The business got a loss, so there is no need to pay company tax.
This company wants to lodge the company tax return in January / February and deregister the business in ASIC by February or earlier.
Australian Company Pty Ltd was established with one shareholder (overseas company). For example, ordinary shares of 10,000 @ $10 were accounted. This means that the overseas company paid $100,000 to the Australian company.
Accounting entry for the above was:
DR bank CR Issued capital $100,0000
A year later, the remaining balance was $50,000 in the business bank account when the business is ceased. The Australian company will transfer $50k to Shareholder (Overseas company).
My questions are:
(1) Tax software for FY2022 company tax return is only available in late June 2022. Would you please advise how to lodge the FY2022 company tax return earlier before the end of the financial period in the above circumstance?
(2) When can we deregister the business (Pty Ltd) in ASIC? Should we wait until the company tax return is lodged in our circumstance (no need to pay for company tax)?
(3) Is there anything the business needs to do when ceasing in Australia? Please note that GST & PAYG will be cancelled earlier.
(4) After the FY2022 financial accounts are finalised (before the company tax return is lodged), the remaining fund in the business bank account must be transferred back to the overseas company. The overseas company (only shareholder) provided the initial capital fund, and no income was ever incurred.
Would you please advise the accounting entry for this transfer? Example: Cr Bank Dr Capital Fund
Is there anything we need to be aware of about this transfer?
(1) You can lodge a paper tax return (using 2021 stationery) to establish there is no company tax debt. Companies operate under self-assessment, so do not expect an “assessment” to issue.
(2) To be able to fill out ASIC form 6010 to deregister the company, the following requirements must be fulfilled:
- All members of the company agree to deregister
- The company is not conducting business
- The company assets are worth less than $1,000
- The company has no outstanding liabilities (e.g., debts)
- The company is not involved in any legal proceedings
- The company has paid all fees and penalties payable to ASIC
The Director(s) signing form 6010 must clearly understand the above, as ASIC will take action against the Director if aggrieved creditors later emerge, and the document was signed on the basis of falsehoods.
If there are assets to deal with, then a members’ voluntary liquidation is recommended.
We recommend that the tax return be lodged to establish no tax liability.
(3) In addition, cancel the ABN.
Also, if the company holds an Australian Financial Services Licence (AFSL) or an Australian Credit Licence (ACL), they should be cancelled first.
(4) Assuming there was only nominal share capital issued, then the entry will be:
Dr Loan Holding Company xxxx Cr Cash at bank xxxx