How to Close an Australian Company That Is No Longer Operating

When a business venture comes to a natural end, or a corporate structure is no longer required, many directors simply walk away. They assume that if a company isn't actively trading, it doesn't require any maintenance.

Unfortunately, this is a costly misconception.

An inactive Australian company is considered "dormant," not dead. As long as it remains on the Australian Securities and Investments Commission (ASIC) register, it will continue to incur annual review fees, late payment penalties, and strict compliance obligations. Left unchecked, these fees quickly compound into thousands of dollars, and ASIC can take legal action against directors for failing to meet their statutory duties.

If you are wondering how to close an Australian company cleanly and legally, you have two primary pathways depending on your company's financial situation.

The Two Pathways to Wind Up a Solvent Australian Company

If your company is solvent (meaning it can pay all of its bills and debts in full), you must choose between Voluntary Deregistration or a Members’ Voluntary Liquidation (MVL).

Path 1: Voluntary Deregistration with ASIC (The Simplest Route)

For small businesses that have completely wound up operations and have cleared their balances, voluntary deregistration is the fastest and most cost-effective method.

However, ASIC enforces incredibly strict criteria. To qualify to lodge an ASIC Form 6010, your company must meet all of the following conditions:

• All members (shareholders) must unanimously agree to close the company.
• The company is no longer conducting business.
• The company’s total assets are worth less than $1,000.
• The company has no outstanding liabilities (unpaid debts, employee entitlements, or tax).
• The company is not involved in any current or token legal proceedings.
• All outstanding ASIC fees and penalties have been paid in full.

The Step-by-Step Deregistration Checklist

1. Clear the Ledger: Sell or distribute any remaining assets so total assets legally fall below $1,000, ensuring every outstanding supplier and employee is squared away.
2. Close Bank Accounts: Ensure your company bank accounts are brought to a zero balance and formally closed.
3. Finalise Tax with the ATO: This is where many directors get stuck in an endless loop. You must lodge your final Company Tax Return and Business Activity Statements (BAS), cancel your ABN, GST, and PAYG withholding registrations, and ensure your ATO account sits at a perfect $0 balance.
4. Corporate Secretarial Documentation: Hold a meeting to pass a formal Members' Resolution and Directors' Resolution to ensure your corporate governance is bulletproof before filing.
5. Lodge ASIC Form 6010: Submit the application along with the $50 ASIC lodgement fee.

Tenfold Pro-Tip on Timing: Always aim to submit your Form 6010 at least two weeks before your next ASIC annual review fee is due. If ASIC’s mandatory two-month processing window overlaps with your annual review date, you will be liable to pay the annual fee anyway before the closure goes through.

Path 2: Members’ Voluntary Liquidation (MVL)

If your company has stopped operating but still holds more than $1,000 in assets (such as retained earnings, commercial property, or investments), you cannot use the simple deregistration form. Instead, you must undergo a Members’ Voluntary Liquidation (MVL).

This is where strategic accounting becomes vital. An MVL allows for the tax-effective distribution of the company’s remaining cash and assets to shareholders. Done incorrectly, you could trigger unnecessary income tax hits; done correctly with a specialist accountant, we can often classify distributions as capital rather than income, potentially saving you thousands via small business capital gains tax (CGT) concessions.

The MVL Process:

1. Declaration of Solvency: Directors review the balance sheet and sign a formal declaration (Form 520) stating the company can pay its debts within 12 months.
2. Shareholder Special Resolution: Shareholders pass a special resolution (requiring a 75% majority) to wind up the company and appoint a liquidator.
3. Appointing a Liquidator: A registered liquidator takes control of the company, realizes the assets, pays any final creditors, and distributes the remaining wealth to the shareholders.
4. Final Deregistration: The liquidator finalises the affairs, and the company is automatically dissolved by ASIC three months later.

Don't Forget the "Three-Year Record Rule"

Even after your company is successfully deregistered or liquidated, your legal obligations don’t completely vanish overnight.

By Australian law, company directors are required to retain all corporate books, financial records, and tax histories for a minimum of three years following a voluntary deregistration, or five years following a liquidation.

Let Tenfold Wealth Accountants Handle the Heavy Lifting

Closing a company requires precise coordination between ASIC, the ATO, shareholders, and financial institutions. One missed tax return, an uncancelled business name, or a lingering $50 fee can completely halt the process, triggering further annual review cycles and unnecessary administrative stress.

Whether you qualify for a quick voluntary deregistration or need a highly strategic, tax-optimised Members' Voluntary Liquidation to extract your hard-earned wealth, the team at Tenfold Wealth Accountants will manage the entire process for you. We take care of the paperwork, finalise your tax positions, and ensure your next financial chapter starts with a completely clean slate.

Ready to close the chapter on your inactive company cleanly and compliantly? Contact the team at Tenfold Wealth Accountants today to schedule a corporate consultation.