Business has ceased or has been sold 043-03130090

Each business must be assessed on its merits. It is important that the assessment of business income and assets continues to be maintained until investigation has confirmed that the business has been permanently ceased or sold.

It may also be necessary to examine if there have been business cycles in past years to determine if the business income is of a seasonal nature. This is particularly important, as the previous year's business income must be maintained unless there is a change in circumstances. The fact there is no current business income may not be a true reflection of the continuing annual business income of the customer (or their partner). For example, is the closedown:

• due to a change in personal circumstances, for example, the customer is ill
• due to the new circumstances of the business, such as the loss of a major contract or major downturn in the industry
• a part of the normal seasonal cycle of activity applicable to the business
• a result of a natural disaster such as a bushfire or flood

Such factors could have a significant influence on the Income Test and Assets Test assessment of the business.

When a business has been impacted because of a natural disaster, such as a bushfire or flood, a reassessment of the income and assets will be required. If the business has suffered a reduction in activity as a result of the event, it must be reassessed as an unexpected downturn of a business.

If the business activity has completely ceased because of the event, whilst the business structure may not have ceased to exist, the current income would be nil, and the asset value may have to be revised.

A business has ceased when, the:

• customer and/or partner has sold the business and there are no more assets and will receive no further income, or
• business has permanently ceased trading and there are no more business assets to assess and will receive no further income

If the business has been sold or ceased operation, the income previously assessable in respect of the activity undertaken by the business is no longer relevant. However, the assets of the business must be reassessed. For example:

• If some of the business assets, or the business itself, have been sold, then proceeds from the sale may have been reinvested through the business structure, or used to pay debts
• If the proceeds are invested, the investments may produce a different income, and the business asset values may be different to the previous financial statements provided
• If the customer indicates the previous balance sheet is no longer an accurate indication of the current net asset position of the business, a revised balance sheet of the sole trader or partnership business and a statement outlining what has happened to the assets of the business is required

Information and evidence may be required to verify ceasing or sale of the business. For details of suitable evidence and when it is required, see the Process page.

If the business is operated by a private trust or private company (entity) and the business has been sold or has ceased, the case may need a referral to a Complex Assessment Officer (CAO). See Identifying and making suitable referrals to the Complex Assessment Officer (CAO).

See Date of event for new claim activities on the Background page in Assessment of income and assets from business structures and Centrelink payments.

For change of circumstance activities, the date of event (DOV) is the actual date the change occurred. For example:

• The date the business was sold
• The date the business permanently ceased trading
• The date of deregistration for a private company, or
• The date of vesting for a private trust

Note: for private trust or private company assessments, ensure that the correct date of effect rules are applied to each linked stakeholder.