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Removing funds from a company - some of the hidden dangers paper


Removing funds from a controlled company - and not suffering a hefty tax penalty in the process is no easy matter. At least three different tax dangers have to be negotiated – avoiding additional tax on the Company, avoiding further tax on the shareholder and avoiding a penalty debit to the company's franking account. This paper looks at a few of the possibilities for a satisfactory outcome, and some of the dissonant dangers that lurk in this territory:

  • accessing retained earnings
  • avoiding the wash-out of concessions
  • dividends and dividend access shares
  • stripping and streaming rules
  • capital reductions - is this feasible for SMEs?
  • loans out
  • liquidation of companies
  • redundancy payments and other benefits
  • FBT issues.

Author profile

Graeme is Professor of Taxation Law at the University of Sydney and Chairman of the NSW Technical Committee. He has worked as a consultant to the ATO, Treasury, Board of Taxation, OECD, World Bank and IMF. He is a frequent speaker at Taxation Institute events and has written many articles in Australian and overseas journals. He was admitted to legal practice in NSW (1980) and Victoria (1999) and practised commercial law and tax in Sydney before entering teaching. He has taught tax in Law Schools in Australia, Europe and the United States, and holds degrees from the University of Sydney, University of Illinois and Columbia University, New York.
Current at 12 March 2008
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This was presented at Western Australian Annual Convention .

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