Close Corporations (Additional Liquidators' Recovery Trust Fund Contribution) Act 1989

Overview

The Close Corporations (Additional Liquidators’ Recovery Trust Fund Contribution) Act 1989, enacted on 14 July 1989, was designed to address a gap in the financial obligations of close corporations by imposing a tax known as an additional liquidators’ trust fund contribution. This Act was passed by the Queen, with the assent of the Senate and the House of Representatives of the Commonwealth of Australia, to supplement the Close Corporations Act 1989. The policy objective of this legislation is to ensure that close corporations contribute to a fund intended for the recovery of liquidators' costs, thereby protecting creditors and maintaining the integrity of the insolvency process. The Close Corporations (Additional Liquidators’ Recovery Trust Fund Contribution) Act 1989 incorporates and integrates with the Close Corporations Act 1989, ensuring that the financial responsibility for liquidators' recovery costs is clearly defined and enforced. The Act mandates that any tax, determined by the Commission and not exceeding $50, is imposed on close corporations as an additional liquidators’ trust fund contribution. This legislative measure ensures that the financial burden on liquidators is shared by the corporations they liquidate, thereby supporting the efficiency and fairness of the insolvency regime.

Scope and Application

The Close Corporations (Additional Liquidators’ Recovery Trust Fund Contribution) Act 1989 applies to close corporations as defined under the Close Corporations Act 1989, imposing a tax on these entities to establish an additional liquidators’ trust fund contribution. This tax is levied to support the recovery process in the event of a corporation's liquidation, ensuring there are adequate resources for liquidators to manage the winding-up process effectively. The tax is limited to a maximum of $50 and is determined by the relevant authority in writing. The Act operates at the Commonwealth level and is incorporated with the Close Corporations Act 1989, which means it is read as part of the same legislative framework. The Act does not specify any exclusions, exemptions, or thresholds beyond the maximum tax amount, and its application can be extended or restricted through subordinate instruments as necessary.

Key Provisions

The Close Corporations (Additional Liquidators’ Recovery Trust Fund Contribution) Act 1989 (section 4) imposes a tax, referred to as the additional liquidators’ trust fund contribution, on close corporations. This tax is to be levied in accordance with the provisions of section 128 of the Close Corporations Act 1989, and its amount, not exceeding $50, is determined in writing by the Commission as specified in section 5. This Act is incorporated with the Close Corporations Act 1989, as outlined in section 3, meaning it is to be read as one cohesive legal framework. Under this Act, close corporations are required to pay the additional liquidators’ trust fund contribution tax. This requirement is fundamental to ensuring that close corporations contribute to the financial stability of the liquidators’ recovery trust fund, which is designed to support liquidators in their duties. The tax is a specified contribution towards this fund and is essential for maintaining the fund’s integrity and effectiveness. The Act imposes certain obligations on close corporations, primarily the payment of the additional liquidators’ trust fund contribution tax. These corporations must ensure that they comply with the determinations made by the Commission regarding the amount of the tax. Failure to do so could result in legal repercussions and financial penalties. Additionally, the Act mandates that these corporations adhere to any procedural requirements set forth by the Commission or other relevant authorities for the timely and accurate payment of the tax. In the event of non-compliance or breach of the provisions of this Act, there are potential consequences. While specific offences, penalties, or maximum penalties are not explicitly stated in the text provided, it can be inferred that failure to pay the additional liquidators’ trust fund contribution tax or non-compliance with the Act’s requirements could lead to legal action. The exact nature and severity of penalties would typically be outlined in the Close Corporations Act 1989 or in associated regulations, but they could include fines, legal proceedings, or other forms of enforcement to ensure adherence to the Act.