Dormant Company Obligations in Australia

Two regulators still think your company is alive, and neither of them has noticed it stopped trading.

Dormant company obligations in Australia come from two bodies that do not talk to each other. The ATO wants a return, or a formal notification that no return is due. ASIC wants its annual review fee, which is $342 a year for a proprietary company. Satisfying one does nothing about the other.

One detail is worth having before the rest. The ATO generally does not apply a failure to lodge penalty where the return comes out as a nil result, which describes almost every dormant company return ever prepared. That relief stops applying the moment the ATO applies the penalty first. At $364 a penalty unit and up to five units, waiting long enough turns a return worth nothing into $1,820.

Do you still need to lodge? Almost always, yes

Yes, for as long as the company is registered. The obligation attaches to the company existing, not to it doing anything.

“Dormant” has no legal standing in Australia. Neither the ATO nor ASIC recognises a dormant category, and there is no form to declare one. The United Kingdom does have a formal dormant company regime with its own filings, and a good share of what is written about dormant companies describes that system rather than this one.

What Australia has instead is a company that either meets its obligations or does not. A company that traded in a small way, held an asset, or simply existed as a shell carries the same annual obligations as one that turned over a million dollars, on much shorter paperwork.

What the ATO requires

A company lodges a company tax return. There is no income threshold for business income, so earning nothing does not remove the obligation, it only changes what the return says.

Companies also have fewer lodgement channels than people expect. A company return goes through Standard Business Reporting enabled software, a registered tax agent, or on paper. myTax is not an option, and neither is Online services for business, which surprises directors who assume they can self-serve the way they would with a personal return. Which return a business lodges follows its structure, and the business tax return that a company files is a different document from the one a sole trader includes with their personal return.

When a return genuinely is not necessary

There is a second path, and it is narrower than most people hope. Where a company has no obligation to lodge for a year, the ATO can be notified that a return is not necessary for that year. Nothing is lodged, and the year is closed off properly rather than left looking outstanding.

The ATO blocks that route in three situations: it has already issued a demand to lodge for the year, the company has an active ABN and operated a business during the year, or the company has PAYG instalment credits for the year. Where there is no obligation, the notification is due by 30 June for the year in question.

The two paths produce different records, and only one of them puts a document on the company’s file.

Choosing between them is a determination on the year’s facts, not a preference. Get it wrong in the optimistic direction and the year sits unlodged.

Due dates

A small company lodging its own return is generally due on 28 February. That moves forward to 31 October where prior-year returns are outstanding, which catches a lot of dormant companies. Lodging through a registered agent puts the company on the agent lodgement program instead, where the tax return deadlines run months later. The company return sits on the small business tax calendar alongside activity statement dates, and for a company with nothing else running it is usually the only entry on it.

GST and PAYG registrations run separately

If the company is registered for GST or PAYG withholding, those registrations keep generating activity statement obligations no matter how quiet the business is. Nil activity statements are still activity statements. Cancelling a registration is a deliberate act, and it is the step most often skipped by someone who has mentally closed the business but never told anyone.

What ASIC separately requires

ASIC charges an annual review fee on the anniversary of the company’s registration. From 1 July 2026 that is $342 for a proprietary company, payable whether or not the company traded, and a late payment fee applies if it is not paid within two months of the review date. ASIC puts the position plainly: a company that is no longer in business but is still registered must continue to meet its legal obligations.

There is a cheaper rate, and it catches people out. A special purpose company that is a proprietary company pays $70 rather than $342. The definition sits in regulation 3 of the Corporations (Review Fees) Regulations 2003, and the trustee limb of it covers a company whose sole purpose is to act as trustee of a regulated superannuation fund. That means an SMSF trustee company. A corporate trustee of a family or discretionary trust is not a special purpose company and pays the full $342, which is not what most people with a trust structure assume.

Director duties continue through all of this, as does the obligation to keep company details current with ASIC. And because ASIC indexes its fees to CPI every 1 July, any fee figure published before the most recent 1 July is out by a year.

What a dormant company costs to keep each year

Add the two obligations together and you get the real carrying cost of an idle company: the ASIC fee, which nobody can avoid, plus whatever an accountant charges to prepare and lodge the return.

Plenty of firms still charge full company rates for a nil return, somewhere between $500 and $1,200 in our experience, on the reasoning that a company return is a company return. The work is not the same. A dormant return takes an experienced accountant well under an hour, which is why ours is a flat $330 for a dormant company return rather than a discount off a bigger number. If the nil year is the company’s first, the same logic applies from day one, and a first company tax return starts at the same flat rate.

Roughly $672 a year is the price of holding the company open.

What happens if you ignore it

The ATO warns before it penalises. It generally does not apply penalties in isolated cases of late lodgement, and where it does intend to apply a failure to lodge penalty it warns by phone or in writing first and issues a notice to lodge.

When the penalty does apply, the base rate is one penalty unit for each 28 days or part of 28 days the return is late, capped at five units. A penalty unit is $364 for infringements on or after 1 July 2026, so the ceiling is $1,820 per document. Higher multipliers exist, but they are set by withholding volumes and turnover a quiet company does not have.

For a company with nothing to report, one relief does most of the work. The ATO generally will not issue a failure to lodge penalty notice for a late-lodged return where the lodgement results in a refund or a nil result. Three things take that relief away: the penalty was already applied before the document was lodged, the document is a third-party data report, or the taxpayer is a large withholder. For a dormant company the first one is the live risk. Lodge late and you are usually fine. Lodge after the penalty has landed and the nil result does not undo it.

Leave it long enough and the ATO can stop waiting for your numbers and use its own. A default assessment estimates the company’s position from third-party data and benchmarks, and carries an administrative penalty of 75% of the tax-related liability, rising to 90% where there is a pattern of non-compliance. A failure to lodge penalty can sit on top of it. The estimate is built from industry data rather than from your genuinely empty bank account. The full escalation, from reminders through to prosecution, is set out in what happens if you don’t lodge a tax return.

The ASIC consequence is less known and arguably worse. Unpaid annual review fees are the most common reason ASIC deregisters a company itself. Doing nothing is not keeping the company. It is losing the company on ASIC’s timetable instead of choosing to close it on yours.

Deregistration does not clear the decks either. Directors remain liable for PAYG withholding, net GST and super guarantee charge incurred before the company was deregistered.

Dormant or deregistered? How to decide

If the company has no future, deregistering is far cheaper than paying $672 a year to keep an empty shell compliant. Voluntary deregistration costs $52 and requires all six of these to be true.

• All members (shareholders) agree to deregister
• The company is not conducting business
• The company assets are worth less than $1,000
• The company has no outstanding liabilities, such as unpaid wages
• The company is not involved in any legal proceedings
• All fees and penalties owed to ASIC have been paid

The $52 application fee is payable when you apply and is not refunded even if ASIC rejects the application. Timing matters: apply at least two weeks before the next annual review fee falls due if you want to avoid paying it, because if ASIC has not published its notice before the fee falls due, you pay the fee first. Once the notice is published, the company may be deregistered two months later.

The ATO side comes first though. Every tax and super obligation has to be up to date before you apply, which means:

• all overdue and final returns, activity statements, fringe benefits tax returns and taxable payments annual reports lodged and processed by the ATO
• all outstanding debts paid
• super finalised, including any super guarantee charge
• end of year reporting closed off, such as Single Touch Payroll

Dispose of the company’s assets first as well, or they generally vest in ASIC or the Commonwealth.

Keeping it dormant makes sense where you expect to trade again, where the company name or intellectual property matters, where there is a trading history worth preserving, or where the company is a trustee. Deregistering makes sense where you are genuinely finished, the company holds nothing, and nothing else depends on it. If the company did in fact trade this year, neither of these is your situation and a standard company tax return is.

Reinstatement exists, so the decision is not quite final, but it is not free either. A reinstated company is treated as though it was never deregistered, except that anything lodged during the deregistration period has to be lodged again.

If your company is a corporate trustee

The most common dormant company in practice is not a failed business. It is a Pty Ltd that exists only to be the trustee of a family trust, or to sit behind one as a bucket company receiving distributions. It never trades in its own right, which is precisely why its director assumes nobody is watching it.

Three things apply here that do not apply to an ordinary shell:

• It pays the full $342 ASIC fee, not the $70 special purpose rate, unless it is an SMSF trustee.
• It lodges its own company tax return, separate from the trust return. Two entities means two returns.
• It cannot simply be deregistered. The ATO lists appointing a replacement trustee as a precondition for deregistering a company that acts as corporate trustee of a trust or super fund, and deregistering without one leaves the trust with no legal trustee.

Catching up if you’re behind

Several outstanding years is the ordinary case for a dormant company, not an unusual one. The company went quiet, the returns stopped, and nobody chased it hard enough to force the issue. There is a date attached to fixing it.

Multiple years can be bundled into a single fixed quote, which is usually how this gets resolved. The mechanics of working backwards through several years, including what the ATO already holds on file for you, are covered in how to catch up when you’re years behind, and overdue returns is the service for it.

One thing to get right in the order of operations: a final return has to be lodged before ASIC deregisters the company, and once a company is deregistered a return cannot be lodged or processed at all. Catching up is a precondition of closing the company, not an alternative to it.