Over the years, we have come across many directors whose companies would benefit being placed in liquidation. These companies have no assets and have tax debts they could not possibly repay. The directors however have been unable to place their companies in liquidation due to the costs involved.

Starting 1 July 2023, liquidating these companies could be free.

How much does it cost to liquidate a company?

If a company has no assets which can be realised to generate funds to cover a liquidator’s fees, liquidators will usually require funds to be made available to be applied towards their costs. Where a company has limited or no funds or assets the funding for a liquidator’s costs will have to be advanced by a third party, usually the director.

When appointing a Liquidator from our firm the amount required to be paid will be around $5,000 but it could be more than this for more complex matters.

Proposed Federal Government funding

The requirement to make funds available for a liquidator’s costs has stopped many directors from winding up their companies, leaving risks such as having director penalty notices issued.

The Federal Government however has recently announced funding of $20 million for assetless liquidations. With the funding being described as follows:

“To ensure that liquidations with insufficient assets can proceed, from 1 July 2023 the Government is also providing an additional $20 million in funding over two years to the Assetless Administration Fund, a grant administered by the Australian Securities and Investments Commission. Liquidators will be able to apply for a maximum grant of $5,000 per assetless liquidation, without needing to provide evidence of potential misconduct.”

What does this mean for directors?

There may be no requirement for directors of assetless companies to make funds available to a Liquidator from 1 July 2023 onwards. This is good news for directors whose companies have tax debts they cannot pay.

How we can help

July 2023 is a long way off and in the meantime if you need advice or if your company has insurmountable tax debts, contact us for the free consultation. At TAX DEBT SOLVED, we can provide you with options to deal with tax debts and advise you on minimising personal risks.