ATO ID 2005/257: Income tax: who is responsible for lodgement of a company return when a liquidator has been appointed?
Date of decision: 6 September 2005
Business line: Consolidation Centre of Expertise

Issue
Is the liquidator appointed to wind up a company responsible for lodgement of the company's income tax return when they have control of the financial records of the company?

Decision
Yes. Where the liquidator has control of the financial records relating to the income tax affairs of the company, the liquidator is required to lodge the return for the full income year.

Facts
A liquidator is appointed to wind up Insolvent Company on 1 December in a particular income year. The financial records of Insolvent Company are handed to the liquidator as required under the Corporations Act 2001 , on 1 February of the same income year. As part of the winding up process, several transactions occurring in the beginning of the income year are reversed by the liquidator. The public officer of Insolvent Company no longer has access to, or control of, the financial records.

Reasons for decision
Summary: Section 254 of the Income Tax Assessment Act 1936 (ITAA 1936) makes a liquidator personally responsible for the income tax requirements and liabilities arising under the ITAA 1936 from the time of their appointment. Thus, it is clear that the liquidator of Insolvent Company has responsibility for lodging an income tax return in respect of the period commencing from their appointment on 1 December of the income year. This responsibility overrides the responsibility of the public officer to lodge the return, which arises as a result of section 252 of the ITAA 1936. Taxation Determination TD 94/68 Income Tax: who is responsible for lodgement of a company income tax return if both a receiver/manager and a liquidator have been appointed?, provides guidance in the situation where conflicting duties to lodge arise, as may occur when a liquidator is appointed to a company. In the above situation, both the public officer and liquidator have legal obligations to lodge a return. However, in TD 94/68, the Commissioner accepts that in some cases not all persons who are obligated to lodge returns have control of the financial records necessary to do so. Accordingly, the Commissioner will look to the person or persons who have control of the financial records to lodge a return for the whole of the income year. In this case, the public officer of Insolvent Company has no control over the records they need to compile and lodge an accurate income tax return for Insolvent Company. The liquidator has the records and also has information relating to transactions that occurred prior to their appointment. Accordingly, the Commissioner will look to the liquidator of Insolvent Company for lodgement of the return for the full year.

Legislative references: Income Tax Assessment Act 1936 section 252 section 254
Related public rulings and determinations: Taxation Determination TD 94/68
Subject references: Insolvency Lodgment compliance Lodgment exemptions Lodgment of tax returns Lodgment requirements Ownership, interests, control & rights Tax administration Tax returns