Hit The Pause Button – The Difference In Your Tax Obligations If You Pause Instead Of Close Your Business

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If you pause your business activities for a time, there are certain things that you will need to know and do that differ from simply closing the business.

This includes registrations (ABN and GST), tax obligations, disposing of capital assets, Single Touch Payroll (STP) and record-keeping

Tax Obligations.

If you are pausing or permanently closing your business, you still need to meet your tax and super obligations. This may include:

  • fringe benefits tax
  • pay as you go (PAYG) withholding for employees
  • Super guarantee (SG) for your employees
  • income tax – including any capital gains tax (CGT) events
  • GST.

Discussing with your tax adviser your situation can assist in navigating the complexities of this area, particularly if you aren’t ceasing with your business activities.

Before pausing or permanently closing your business, contact the ATO to discuss your changed circumstances if you:

  • were on a payment plan for amounts you owe
  • had arranged for the deferral of some or all of the amounts you owe.

Registrations

You don’t need to cancel your ABN and GST registration if you have:

  • paused trading activities in your business with the intent of restarting
  • paused your business for a lengthy or uncertain time.

You will continue to receive a business activity statement (BAS). Even if you have nothing to report, you must lodge your BAS as ‘nil’.

Single Touch Payroll

STP reporting provides important information to the ATO. Having the most up-to-date employment information helps us support the community.

If an employee’s employment has ended, make sure you report their cessation (end) date in your STP report. If you have already paid them their final pay, you can still tell us this information by submitting an update event.

If you have let employees go, you don’t need to wait until the end of the financial year to finalise your STP data. Finalising is an important step as it allows individuals to lodge their income tax return at the end of the year

Disposing Of Capital Assets

When you dispose of your capital assets, there may be GST and CGT implications. It’s best to discuss these implications with your trusted tax adviser.

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