Deregistering Your Company: A Warning for Directors

Leigh Dudman, Director

Before considering making an application to voluntarily deregister your company, you need to ensure that your ATO obligations have been dealt with.

You may have a company that serves no useful purpose and you want to get rid of it and avoid the ongoing ASIC fees. A company is able to be deregistered pursuant to Section 601AA of the Corporations Act by a director or member of the company providing the following criteria is met:

• All members of the company agree to deregistration
• The company is not carrying on a business
• The company’s assets are worth less than $1,000
• All ASIC fees have been paid
• There is no outstanding liabilities
• There is no legal action against the company.

The fee is minimal ($44) and would appear to be a cheap solution to get rid of an unwanted company.

Directors however must be very careful before applying to deregister their company because if there are taxation debts and/or lodgment obligations outstanding (including end of year reporting obligations, BAS returns) where there may be a potential debt payable upon lodgment, the director(s) are potentially exposing themselves to being served a directors penalty notice down the track by the ATO with respect to a tax or superannuation debt owed by the company.

The deregistration of the company does not eliminate the personal exposure the director has with unpaid ATO debts as the ATO still has the power and is able to issue a directors penalty notice even if the company has been deregistered as the penalty notice is a personal liability, not a company liability.

If there is a refund or amendment to a lodgment required that would eliminate or rectify an assessed debt by the ATO there would have to be an application to ASIC to reinstate the company which may require a court order and that would be an expensive exercise. Once the company is reinstated then and only then can lodgments or amendments be made.

Should you be considering to proceed down the voluntary deregistration path to get rid of an unwanted company, please ensure that all ATO lodgments including superannuation obligations have been attended to, otherwise you may be at risk to receiving a directors penalty notice that will be payable by yourself personally.

To learn more about voluntary deregistration of a company or our other corporate insolvency services, please contact our team.