Business has ceased or has been sold 043-03130090

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

• Yes:
• Where the business is a private trust or private company, go to Step 4
• Otherwise, go to Step 2
• No, go to Step 3

For advice of cessation of a business received as part of a new claim, evidence is only required where a customer is claiming a payment which requires a customer to verify that they have ceased work. This is to determine if a relevant waiting period is required to be applied, see Employment Separation Certificate (SU001).

Payment types include:

• Austudy
• Disability Support Pension (DSP) (except customers who are permanently blind)
• Farm Household Allowance (FHA)
• JobSeeker Payment (JSP)
• Parenting Payment Partnered (PPP)
• Parenting Payment Single (PPS)
• Special Benefit (SpB)
• Youth Allowance (YA)

For other claim types, verification is only required if the delegate has doubts about the accuracy of the information provided by the customer.

Is verification required?

• Yes, go to Step 3
• No, update the customer’s record, see Step 5 in Table 2

Request the lodgement of documents to verify their information with a Request for Information (RFI) letter using the Request for Information guided procedure. Ask for the information to be returned within 14 days.

Suitable verification could include:

• a contract of sale
• Company deregistration
• Liquidators Report
• Proof of deregistration of business name
• Letter from ATO or a copy of the ABN Lookup page for the business, verifying ABN has been cancelled
• confirmation a lease on a shop has expired
• confirmation plant and equipment have been sold
• a copy of the last contract
• a copy of notice showing expiration of the contract
• Deed of Vesting
• Trustee Minute as to final distributions
• a copy of last Income Tax Return with Final Return indicating ‘Y’
• balance sheet dated post sale or cessation
• a letter from the customer’s accountant confirming the cessation of the business

If the customer is unable to provide any of the above documents, ask them to provide a signed statement advising the date the business ceased and the reason.

Record the details on a DOC.

Procedure ends here.

When verification has been provided, go to Step 4.

• Yes, refer to Complex Assessment Officer (CAO). Ensure all relevant documents supplied are scanned for processing. 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. Go to Step 6
• No, go to Step 5

Is cessation of current business activity due to regular seasonal factors?

• Yes, see Seasonal business activity has ceased completely. Procedure ends here
• No, go to Step 6

• Yes, see Table 2
• No, go to Step 7

• Yes, go to Step 8
• No, go to Step 9

• Yes, see Unexpected downturn of a business. Procedure ends here
• No, no business income is to be maintained. (Customer must provide evidence or make a statement), go to Step 11

• Yes, go to Step 12
• No, go to Step 10

• Yes, business has not ceased but may have an unexpected downturn of a business. Procedure ends here
• No, go to Step 11

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

• Yes, go to Step 12
• No, if applicable, see Unexpected downturn of a business or go to Step 12

• 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

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 information on assessment and coding of the business:

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

Advise the customer that if they recommence the business while in receipt of a payment, they must notify Centrelink according to their notification provisions. An interim profit and loss statement and interim balance sheet for the business must be provided 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 the documents provided by the customer, and refer the file 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 information on coding, see Assessing and coding the Business details for sole traders and partnerships MOD F.

On the Business Detail (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 (RE) 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 Real Estate and Business (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 information, 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 as a result 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