Most professional advisers will know of clients who have companies that are no longer trading or have outlived their purpose. From one year to the next these companies sit dormant, but still incur costs in compliance activities.
If the company has no assets and has ceased to trade, it may be possible to apply to ASIC to have the company deregistered. This involves completing and lodging a form with ASIC together with a filing fee.
However if the company has assets, and provided it is solvent, it may be wound up voluntarily and its assets distributed to its member shareholders.
A Members Voluntary Liquidation (MVL) is often an effective way to distribute shareholders loans in specie, thereby repaying a liability, in the process of winding up the company. The shareholders will of course be subject to the taxation consequences of such a dividend. If the dividend from retained earnings represents a distribution from a Pre CGT capital profits reserve, then as long as the dividend is paid within three years of the winding up, the dividend will retain its capital status in the hands of the shareholders when paid as a dividend.
Our quote for a MVL is $4,180 inclusive of GST and disbursements. For further information regarding MVL’s please contact Rowena Sigelski – Newcastle – (02) 4962 2294 or Brad Tonks – Sydney – (02) 8346 6000.
