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Closing down voluntarily
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Closing down voluntarily

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If you close down voluntarily,  Inland Revenue needs to know you are no longer operating a business. If your business is a company, you will also need to notify the Companies Office.

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Sole traders

As a sole trader, if you decide to cease trading, you need to send in your final accounts to Inland Revenue at the end of the tax year with your return (for example, March 31).

However, the chances are that you won’t stop the business exactly on the last day of your financial year. So if you cease trading earlier (for example, in October the year before), you still file your return for the end of the financial year. It just means the return won’t be for a full years trading.

If you don’t normally file your annual accounts yourself and your accountant or adviser does it for you, then notify them that you have ceased trading and they will file it on your behalf.

Find out more with Focus on sole traders.

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Partnerships

The tax treatment for each individual partner in a partnership is broadly the same as for sole traders. If you decide to exit a partnership, then the partnership may automatically cease so the partnership will need to file final accounts with Inland Revenue, and as a partner you will need to include your share of the partnership income or loss in your tax returns.

The main difference is that you split any joint-owned assets (or the proceeds from their sale) according to the deed of partnership.

There are some specific tax rules that deal with the tax consequences of exiting a partnership, so you should seek advice from an accountant on this.

Find out more with Focus on partnerships.

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Companies

Companies are entirely different because they are separate legal entities in their own right.

In addition to paying tax to Inland Revenue, all companies are registered with the Companies Office, the register of limited liability companies in New Zealand.

For a company to be closed, it needs to finalise its tax obligations with Inland Revenue and be removed from, or struck off, the companies register by the Companies Office.

Before applying to have your company removed from the companies register, you need to request a letter from Inland Revenue stating they have no objections to the closure.

Find out more with Inland Revenue.

Once you receive the letter from Inland Revenue, you can begin the process of removing your company from the companies register.

You must first make sure:

  1. All company details are correct on the companies register.
  2. The company has filed an annual return.
  3. Your company meets the criteria below:
    • your company has ceased trading
    • all business debts have been paid
    • all company assets have been distributed in accordance with the Companies Act and the company’s constitution
    • no creditor is seeking to liquidate your company
    • you have written notice from the Commissioner of Inland Revenue stating that the Commissioner has no objection to the company being removed from the register.
    • if you are filing for a formal removal, you have a copy of the special resolution of the shareholders that the company be removed from the register
    • if your company has been in liquidation, the liquidator has filed the prescribed final reports and accounts, and the removal notice has been published for more than 20 working days.

 

If your company meets these requirements, you can then apply to remove your company online at the Companies Office website.

Once you make a removal application, it should be processed in no more than five working days. You will receive a return email telling you:

  • the date the public notice of deregistration will be made in the New Zealand Gazette and the public notices section of the Companies Office website
  • the date the company will be removed from the register.

However, this date is provisional. Once the public notice is given, the public have 20 working days to object to the removal of the company from the register.

If no objections are made, the company is removed from the register. Its public details remain on record in the register under a struck-off status.

If evidence is produced to support an objection, it can be upheld by the Companies Office, which can then suspend the removal application until a time when the objector can satisfactorily finish their business with the company.

There are also income tax implications to consider when closing a company, such as further tax liabilities arising to shareholders or tax losses being forfeited. You should take advice from an accountant on this.

Find out more about companies with Focus on companies.

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Cancelling GST registration

If your business is registered for GST, you must contact Inland Revenue to cancel your registration when you cease trading.

If you’re in the process of filing, you can email Inland Revenue using your myIR secure online services account or send a letter with the final return.

You must continue to meet all your GST responsibilities, including filing GST returns, until your registration has been cancelled.

If you plan to keep any of your business assets, make sure you account for them in your final return to Inland Revenue – often this means paying GST to Inland Revenue based on 15% of the value of the assets.

Find out more with an Introduction to GST and GST obligations.

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Deregistering as an employer

If your business employs staff, you need to notify Inland Revenue that you will cease employing. You'll need to file your final Employer monthly schedule (IR348) and Employer deductions (IR345) form then you can complete a Business cessation form (IR315).

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Record keeping

Once you’ve notified Inland Revenue and the Companies Office (if applicable) of your voluntary closure, you must keep the records of all your returns on file for at least seven years.

Find out more about your record keeping obligations with Inland Revenue’s Tool for Business.

Last updated 31 March 2014
In association with:
Inland Revenue
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