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

Overview

The Close Corporations (Liquidators’ Recovery Trust Fund Contribution) Act 1989 was enacted to impose a tax, referred to as a liquidators’ recovery trust fund contribution, on individuals seeking to form close corporations. This Act, assented to on 14 July 1989, was passed by the Queen, the Senate, and the House of Representatives of the Commonwealth of Australia. It was designed to address the need for a financial contribution towards a trust fund intended to aid liquidators in their duties, thereby ensuring that there are adequate resources to support the winding up of close corporations. The Act is incorporated with and read as one with the Close Corporations Act 1989, with the tax amount prescribed not to exceed $50, subject to regulation by the Governor-General. This legislative measure aims to provide a financial safety net for liquidators, ensuring they have the necessary resources to effectively manage the dissolution of close corporations.

Scope and Application

The Close Corporations (Liquidators’ Recovery Trust Fund Contribution) Act 1989 applies to individuals who intend to form close corporations by imposing a specific tax known as the liquidators’ recovery trust fund contribution. This tax is applicable to subscribers to the founding statement of a proposed close corporation, and the Act is integral to the Close Corporations Act 1989, effectively making them one unified piece of legislation. The Act imposes a tax not exceeding $50, with the exact amount prescribed by regulations made under the authority of the Governor-General. This Act operates on a Commonwealth level and its jurisdiction is aligned with the provisions of the Close Corporations Act 1989, meaning its application is consistent across the nation. There are no specific exclusions or exemptions detailed within the Act itself, though the flexibility to establish the precise amount of the tax through subordinate regulations allows for some degree of adjustment to its application.

Key Provisions

The Close Corporations (Liquidators’ Recovery Trust Fund Contribution) Act 1989 (sections 1 to 6) outlines the imposition of a tax on individuals who wish to form close corporations. Specifically, section 4 imposes a tax, referred to as the liquidators’ recovery trust fund contribution, on subscribers to the founding statement of a proposed close corporation. The amount of this tax, as stated in section 5, is a prescribed amount not exceeding $50, with the exact amount to be determined through regulations made under section 6. These regulations allow the Governor-General to set the precise amount of the contribution. Under this Act, the primary obligation falls on the subscribers to the founding statement of a proposed close corporation. They are required to pay the liquidators’ recovery trust fund contribution, as stipulated in section 4. This tax is intended to support the liquidators' recovery trust fund, which provides financial assistance to liquidators in the event of insolvency or other financial difficulties. The Act ensures that the subscribers contribute to this fund to help safeguard the interests of creditors and other stakeholders in close corporations. The Act does not explicitly detail specific offences, penalties, or consequences for non-compliance. However, given its nature as a tax imposition, it can be inferred that failure to pay the required liquidators’ recovery trust fund contribution could lead to legal repercussions. Although the Act does not specify these penalties, non-compliance with tax obligations under Australian law can typically result in fines, legal action, or other administrative penalties. The exact consequences would depend on the specific circumstances and the applicable tax laws and regulations at the time of non-compliance.