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Buy/ sell and key man insurance paper

Published on 18 Oct 08 by TASMANIAN DIVISION, THE TAX INSTITUTE

A buy-sell agreement is an agreement under which the proprietors of a business contract to buy the equity or interest of another proprietor in the event of death/trauma or total or permanent disablement. To finance the transfer or the equity, the parties usually take out some form of insurance. This paper looks at key tax and commercial issues associated with buy-sell agreements, with special focus on:

  • self insurance and insurance trusts
  • using super funds for this purpose
  • share buy-back and unit redemption traps
  • when equity is held by trusts but insurance proceeds are paid to individuals.

Author profile:

Author Photo - Paul Hockridge CTA
Paul Hockridge CTA
Paul is a Tax Partner at Mutual Trust with over 30 years' experience in tax, asset protection, estate succession planning, FBT and salary packaging. Paul specialises in advising high wealth families and closely held businesses as well as many accounting and law firms. Paul teaches in the Masters program in the Law School at the University of Melbourne and has been involved in consultation with both federal and state governments on a variety of tax matters. Current at 08 July 2015 Click here to expand/collapse more articles by Paul HOCKRIDGE.
 

This was presented at 2008 Tasmanian State Convention.

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