Private ruling: Income tax - liquidation costs
Date of advice: 12 March 2020
Published: April 2020
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are the costs of liquidating your company a deductable expense to you in your capacity as shareholder? | A1: Yes. It is considered that the liquidation expenses incurred by you were directly related to bringing to an end the company through which the business was carried on. The liquidation expenses incurred by you are capital in nature and are deductible over a five year period.

Relevant facts and circumstances: You became the sole shareholder and director of the company in the 20xx income year. The company carried on a business for a taxable purpose. You derived assessable income from the company in the years previous to the liquidation. The company appointed a liquidator in the 20xx income year. You incurred professional fees for liquidating the company.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 40-880