With only a further 3 months until the end of the financial year, now is the perfect time to plan the Members Voluntary Liquidation (MVL) of solvent companies your clients may no longer need.
Why Commence MVL on 30 June?
By commencing the MVL on 30 June 2024, you should only need to prepare an electronic final tax return for the year ended 30 June 2024. This creates efficiencies to the distribution process as upon electronic lodgement, a tax clearance can be requested immediately.
If the MVL commences during the year, a part year final tax return must be lodged, which can only be prepared using a paper form. This results in the ATO having to manually input the information and may add additional time (approximately eight weeks but could be more depending on the ATO’s workload) to process.
When an MVL is Effective
- An MVL may be used where:
- there is a need to simplify a group structure or where a company is no longer required or has achieved its purpose;
- the shareholders no longer wish to be in business together or want access to any entitlements they may have (e.g. a family company);
- the shareholders want certainty. A Liquidator will advertise for creditors’ claims which must be received within the notice period and before assets are distributed to be paid otherwise such claims cannot be pursued at a later stage;
- the shareholders wish to take advantage of various tax treatments of the different reserves; or
- assets may be distributed in-specie potentially saving on stamp duty.
Timing and Quote
Planning of an MVL can take several weeks especially where specialist tax advice is required. Accordingly, we recommend that you make contact as soon as possible so that suitable documents can be provided and any necessary tax advice can be obtained.
- We have extensive experience in MVLs and can provide a cost estimate if we are provided with the following documents:
- Company’s Constitution or Memorandum and Articles of Association; and
- The most recently prepared balance sheet.
Alternatively, please contact us to discuss your client’s particular situation so that a tailored solution can be provided. Note that our cost estimates are usually on a fixed fee basis so that clients are certain of the costs involved in the process.
Further Information
If you would like further information regarding the process of liquidating solvent companies, you may refer to the Members Voluntary Liquidation for more information.
To find out more or if you wish to obtain a cost estimate, please contact your local SV Partners’ office on 1800 246 801.
Article written by Alan Scott and Travis Olsen (Directors) – Adelaide