Business has ceased or has been sold 043-03130090

Is/was the business conducted by a private company or private trust?

• Yes:
• Scan all relevant documents supplied for processing
• Refer to the Complex Assessment Officer (CAO)
• Note: CAOs can continue to follow the steps below to reassess the trust or company. If the entity has been sold, a new attribution decision may be required. CAO, go to Step 3

No, go to Step 2

Has the advice about cessation of the business been received as part of a new claim?

• Yes, go to Step 3
• No, go to Step 4

Where there is an existing business recorded on the customer’s record which needs to be ceased, investigate further if needed to decide if involvement has completely ceased and what was done with any assets held by the business.

Claims for JobSeeker Payment and Youth Allowance (job seeker):

• Where the customer’s most recent employment situation before claiming was self-employment (sole trader or partnership), they must complete and return a MOD F to verify cessation
• If any doubt exists about the accuracy of the details given, then evidence can be requested

Claims for other payment types:

• If the customer is providing advice of a business which has ceased and this business has not previously been recorded, the customer's declaration from their claim is usually suitable to decide that involvement has ceased
• Where the customer's partner is already in receipt of an income support payment, evidence to confirm cessation is needed
• If any doubt exists about the accuracy of the details given, then evidence can be requested

Note: where a customer has ceased involvement in a private trust or private company within the last 5 years before claiming, they must complete a MOD PT (private trust) or MOD PC (private company).

Is evidence required to verify cessation of business involvement?

• Yes, go to Step 4
• No, go to Step 6

The ABN Lookup tool can verify if the business has a cancelled ABN status. A cancelled status confirms the business has ceased trading and can be used to verify that business income has ceased.

If business assets are recorded, more details are needed before the business is considered completely ceased. Evidence may be needed:

• to confirm the business no longer holds assets, for example if they have been sold
• depending on the type of business and the assets it held

Note: small sole trader businesses can verbally advise what has happened to the business assets is where appropriate.

Does the ABN Lookup tool reflect the business has ceased trading?

Yes:

• Document the record to confirm cessation of trading is verified by an ABN cancellation status
• If verification is needed to confirm what has happened to business assets recorded, go to Step 5
• Otherwise, go to Step 6

No, go to Step 5

Evidence of cessation of the business and/or verification of sale of assets may be needed when:

• it cannot be verified that business has ceased trading through a cancelled ABN status
• the business has been sold
• business assets are recorded

Suitable verification documents for business income can include, but are not limited to:

• A contract of sale for the business
• Company deregistration
• Proof of deregistration of business name
• Confirmation a lease on a shop has expired
• A copy of the last contract
• A copy of notice showing expiration of the contract
• Deed of Vesting of trust
• Trustee Minute as to final distributions
• A copy of last Income Tax Return with Final Return indicating ‘Y'
• A signed statement confirming the date the business ceased trading and the reason
• A letter from the customer's accountant confirming the cessation of the business

Suitable verification documents for business assets can include, but are not limited to:

• Confirmation plant and equipment are sold
• Balance sheet dated post sale of cessation
• Liquidators Report
• A signed statement confirming what happened to the business assets upon cessation.

Has the customer supplied suitable verification documents where needed?

Yes, go to step 6

No, request the lodgement of relevant documents to verify the details and allow extra time for mail delivery. See Requesting information (CLK). Procedure ends here

Is cessation of current business activity because of regular seasonal factors?

• Yes, see Seasonal business activity has ceased completely. Procedure ends here
• No, go to Step 7

Is the Business sold?

• Yes, see Table 2
• No, go to Step 8

Has the business ceased because of a change in circumstance or some event which is not part of the normal cycle of activity for the business, for example, illness?

• Yes, go to Step 9
• No, go to Step 10

Is anyone else operating the business for the customer during their absence?

• Yes, see Unexpected downturn of a business. Procedure ends here
• No, no business income is to be maintained. The customer must provide evidence or make a statement, go to Step 12

Has a letter from the customer's accountant been received which states the business has ceased?

• Yes, go to Step 13
• No, go to Step 11

Does the business have a current contract or any work on hand?

• Yes, business has not ceased but may have an unexpected downturn of a business. Procedure ends here
• No, go to Step 12

Does the customer and the documentation confirm the business has ceased to operate or has closed?

• Yes, go to Step 13
• No, if applicable, see Unexpected downturn of a business or, go to Step 13

Discuss whether the business has ceased or is just in a period of downturn. Do not cease business income unless it is proven the business has ceased/closed.

For trust and company businesses, CAOs must update the entity income and asset details. See Assessment of income and assets from trusts and companies

For sole traders and partnerships, if it has been proven that the business has closed or has ceased to operate, update the business details to reflect this.

On the Real Estate Business Details (REBS) screen, update the:

• business or property status to reflect that the business has either ceased or been sold, use the code CEA (Business has ceased). If using Customer First update on the Real Estate/Business Identifying (REBI) screen
• business income to nil

Note: a system error E607CQ may be presented if the customer's relationship status has changed since the REBS screen was last updated.

If this error presents:

• take a screen shot of all historical pages on the REBI and Business Details (BUS) screens
• delete the relevant entry on the REBS screen and in the same activity recode all the relevant details including historical REBI and BUS screen entries and the correct % of ownership for both the customer and partner (or ex-partner)

After recording the property details on the REBI screen the E607CQ error should no longer show.

Record the details on a DOC.

The assets continue to be maintained until customer supplies a revised balance sheet reflecting what has happened to the assets of the business.

For more details on assessment and coding of the business, for:

• Sole traders and partnerships, see Table 2 > Steps 5 and 6 in Assessing and coding the Business details for sole traders and partnerships MOD F
• Private companies, see Assessing and coding the Private Company details from the MOD PC
• Private trusts, see Assessing and coding the Private Trust Mod PT

Tell the customer that if they restart the business while in receipt of a payment, they must notify Centrelink according to their notification provisions. They must provide an interim profit and loss statement and interim balance sheet for the business so it can be reassessed.

Record the assessment details on a DOC.

Was the business conducted by a private trust or company?

• Yes, go to Step 2
• No, go to Step 3

An updated balance sheet is required reflecting what has happened to the proceeds of the business.

Can the customer supply this?

• Yes:
• Scan all relevant documents provided by the customer
• Refer to the Complex Assessment Officer (CAO)
• No further action for Service Officers, CAOs go to Step 7
• No:
• Current customers are required to make a statement regarding their changed circumstances, pending an updated balance sheet being available
• New customers are required to lodge a claim (and modules), pending an updated balance sheet becoming available
• Refer to Complex Assessment Officer (CAO)
• No further action for Service Officers, CAOs go to Step 7

A contract of sale is required to verify that the business has been sold and to verify the amount received from the sale of the business. If available, an updated balance sheet should also be requested.

Can the customer supply a copy of the contract of sale?

• Yes, obtain and copy the contract of sale. Go to Step 4
• No, obtain a statement regarding their changed circumstances, pending the contract of sale becoming available. Go to Step 4

If customer is not receiving any income from the business that has been sold, then no income from the business is to be maintained.

Follow up what the customer has done with money received from the sale of the business, that is, were the proceeds invested or have other assets been purchased.

Business assets value will be set to zero.

Update the customer's record with current income and assets. Update the Business Details (BUS) screen and any other screens necessary. For more details on coding, see Assessing and coding the Business details for sole traders and partnerships MOD F.

On the BUS screen, set the:

• income amount to zero by coding the total net income from the business as zero in the Income p.a. $: field
• income percentage to zero by coding both the percentage income for the customer and the percentage income for the partner as zero in the % Income (C/P): field
• date of event is the same as the date of settlement on the contract

If the assessed assets of the business have reduced to zero code a zero in the Net Asset Customer $: field and Net Asset Partner $: field.

When updating the Real Estate/Business Identifying (REBI) screen, if the business has been sold, then update the Sold/Gifted/Ceased field as CEA (Business has ceased).

The SLD (Property sold) option in the Sold/Gifted/Ceased: field is to be used for sale of the property not sale of the business.

Note: a system error E607CQ may be presented if the customer's relationship status has changed since the Real Estate Business Details (REBS) screen was last updated.

If this error is presented:

• take a screen shot of all historical pages on the REBI and BUS screens
• delete the relevant entry on the REBS screen and in the same activity recode all the relevant information including historical REBI and BUS screen entries and the correct % of ownership for both the customer and partner (or ex-partner)

Once the property details have been recoded the REBI screen should no longer display the E607CQ error.

Record the details on a DOC.

Did the customer receive adequate financial consideration for the sale of their share of the business?

• Yes, procedure ends here
• No:
• Apply deprivation if the consideration received was less than the value of customer's share of the business. For more details, see Assessing deprivation/gifting
• Procedure ends here

For Complex Assessment Officers (CAOs) only

• The updated balance sheet of the entity and statement from the customer should be assessed to determine what has happened to the sale proceeds of the business, whether these have been:
• distributed to shareholders or beneficiaries, or
• reinvested by the entity
• The entity will continue to be assessed while the entity remains in existence
• Update the entity record with any changes to the income or assets of the entity because of the sale of the business
• Update the entity record with any extra distributions or dividends paid by the entity
• Update distributions to controllers to zero
• Record the details on a DOC