Bromney Posted May 14, 2014 Share Posted May 14, 2014 Wondering if someone can help with this question. I ran a limited company in the UK (IT Contractor) and left it open when I arrived in Australia in December 2012 on a PR. I left it open on the advice of a UK accountant and was told I should close it in April 2013. I promptly closed it in April 2013 but the question is; am I subject to income tax in Australia on dividends and the cash reserve the company held at the time of it's closure? Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted May 14, 2014 Share Posted May 14, 2014 Wondering if someone can help with this question. I ran a limited company in the UK (IT Contractor) and left it open when I arrived in Australia in December 2012 on a PR. I left it open on the advice of a UK accountant and was told I should close it in April 2013. I promptly closed it in April 2013 but the question is; am I subject to income tax in Australia on dividends and the cash reserve the company held at the time of it's closure? Quite possibly, yes in respect of the dividend income received while a tax resident of Australia. Distribution of retained profits by way of a return of capital may also be taxable in Australia by virtue of the deeming of such receipts as income under section 47 of the relevant Act: https://www.ato.gov.au/Business/Starting-and-running-your-small-business/In-detail/Changes-in-your-business/End-a-business/Selling-or-closing-your-business---things-to-consider/?page=8 It is always best to take advice from an accountant who is aware of the tax position in both countries, before you wind up a UK limited company. IMHO. Sometimes - but not always - the 10% tax rate that is available in the UK under the Entrepreneurs Relief provisions is a better option. Best regards. Quote Link to comment Share on other sites More sharing options...
Bromney Posted May 14, 2014 Author Share Posted May 14, 2014 Thanks Alan. Hindsight is a wonderful gift, looks like I'll be getting hit with a tax bill that I could gave reduced with the right advice. Frustrating as I had sought advice from three different accountants! Quote Link to comment Share on other sites More sharing options...
Echidna66 Posted May 18, 2014 Share Posted May 18, 2014 Thanks Alan. Hindsight is a wonderful gift, looks like I'll be getting hit with a tax bill that I could gave reduced with the right advice. Frustrating as I had sought advice from three different accountants! Well it all depends how honest you are doesnt it...:wink: They go after the easy targets and the honest... Quote Link to comment Share on other sites More sharing options...
nickdodd79 Posted February 18, 2015 Share Posted February 18, 2015 Hey Bromney, I emirgrated to Australia in January 2013 having been an IT contractor via my own limited company. I too had advice from my accountant that I should just keep it going (no mention of closing it in the next tax year though), which I did and it is still going. However, I haven't done anything with it since being in Australia and it is certainly somewhat of a drain doing the various returns and paperwork. I am therefore considering closing the business, but in the back of my mind I have the ramifications of being caught by IR35 - though I always tried to ensure I was outside of it. I was just wondering what process you went through to close your business when you were in Australia? Did you have someone like your accountant do it for you? How did it go? Any hurdles to jump through as part of it? Thanks, Nick. Quote Link to comment Share on other sites More sharing options...
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