When is a corporation or a company liquidated?
A company’s liquidation or “winding-up” takes place:
When a company is unable to pay its debts due to a creditor’s application; or a voluntary application by a company’s shareholders or members of a close corporation (often referred to as a creditors’ voluntary liquidation); or
In the case of a solvent firm/close corporation, by application of company shareholders or close corporation members.
What exactly is a liquidation?
When a company/close corporation goes through voluntary or compulsory liquidation (also known as “winding – up”), the process of selling all assets, paying off creditors, issuing any leftover assets to shareholders, and closing the company/close corporation is involved.
Who is in charge of the company’s or the corporation’s tax affairs in liquidation?
As part of the winding-up process, the appointed liquidator acts as the public officer for a company/close corporation in liquidation and is responsible for the entity’s tax affairs. The liquidator is also the taxpayer’s representative for the company/close corporation under liquidation.
SARS liquidator’s responsibilities as the taxpayer’s representative
Notifying SARS of the entity’s liquidation.
SARS interaction involving the entity
Outstanding tax returns must be submitted.
Payment of unpaid tax liabilities.
If a liquidator fails to comply with the provisions of the applicable tax Act and the Tax Administration Act for a company/close corporation in liquidation, that person may be held personally accountable for any tax payable in representative capacity. Such liability arises if the liquidator alienates, levies, or disposes of the income on which the tax is chargeable, or disposes of any fund or money in that person’s possession from which the tax could have properly been paid.
How can I begin the process of notifying SARS of an estate?
From the standpoint of SARS, a company or close corporation in liquidation is considered an estate. At this point, there are two alternatives for reporting a new Estate Case to SARS:
Sending an email to SARS’s email addresses or
by submitting it via the new SARS Online Query System
What is the impact of a liquidation on a bankrupt company?
When the insolvent company’s liquidation is complete, the Master provides a certificate to the CIPC and sends a copy of the certificate to the liquidator. The CIPC records the dissolution and issues a notification about it. The date of recording shall be the date of the company’s dissolution. In the case of any other corporate entity, the Master’s certificate shall constitute its dissolution.
Is the liquidation process different for a firm and a close corporation?
No. The processes for winding up a close company are similar to those for businesses under the Companies Act of 2008 and the Companies Act of 1973.
