As I’m considering liquidation for my company, I have yet to complete and submit the necessary tax returns.

Do I still need to do this prior to liquidation?

The answer has to parts: the requirement to submit all tax returns does not disappear even if the company is about to go into liquidation. However, since funds are often limited when a company is in the process of liquidation, it is not always possible to pay an accountant to update all the tax returns prior to the liquidation.

It is still possible to proceed with the liquidation process even if the tax returns are not up to date.

What then happens to the unpaid tax due from the not-yet-submitted returns? In most cases, the ATO will not demand repayment since they understand that the company is likely to be dissolved soon. Thus, the legal obligation to submit the tax returns remains, but in practice, the ATO usually does not pursue any follow-up action if the returns are not submitted.

The next point to consider is the tax owed from unlodged tax returns. Will this be absolved in a liquidation?

The answer is affirmative, since liquidation puts the company on an unavoidable path to cancellation, and all unquantified tax debt is also released in the liquidation process.