Unlocking value from private companies: Ten things you might want to know but were too afraid to ask paper

Published on 07 May 09 by SOUTH AUSTRALIAN DIVISION, THE TAX INSTITUTE

Our tax system ensures that a company is not a personal bank account or cash box to be dipped into as and when required without tax implications (whether we understand them or not). In tough economic times, the temptation is to not pay close enough attention to the tax pitfalls in accessing wealth located within a company or a corporate structure. This paper considers ten things you might want to know about liberating wealth from companies, including:

• can a trust make distributions of income to a company without ever transferring cash or property?
• can a company issue a dividend access share and bypass existing shareholders in distributing funds?
• can returns of capital be taxed as dividends?
• can private company groups ever demerge?

Author profiles

Paul Sokolowski CTA

Paul Sokolowski, CTA, is a partner at Arnold Bloch Leibler, and is the national leader of the firm’s taxation practice. Paul advises clients, including high-net-worth individuals, large private groups and public entities in tax reviews, audits, disputes and litigation, and in domestic and international transactions. Paul is a regular speaker and writer for the Tax Institute, and other organisations and publications. He actively contributes to tax policy, legislative, technical and administrative development and debate. In March 2019, Paul won The Tax Institute’s 2019 Chartered Tax Advisor of the Year Award. - Current at 16 December 2020

More by Paul SOKOLOWSKI

• Individual tax residency update paper - 15-October-2020
• Who would want to be a company director? Duties, obligations, and liabilities in a tax context paper - 11-March-2020
• Lessons to be learned for litigators from tax cases in the last 12 months paper - 15-August-2019
• Member profile: Paul Sokolowski - 01-August-2019
• Section 100A: What are ordinary family and commercial dealings, and will they save you? paper - 17-March-2016
• “Nurturing willing participation” - The 2014 offshore voluntary disclosure initiative: A contextual, situational and comparative analysis paper - 09-October-2014
• The penalty provisions and their administration: Living meaning or dead letter? paper - 26-March-2014
• Dealing with Division 7A disasters paper - 23-August-2012
• Fear and loathing in Division 7A: A savage journey to the heart of the UPE dream paper - 28-October-2010
• The administrative penalty regime - A swinging reminder or just swinging paper? - 05-March-2010
• Section 45B: dealing with Frankenstein's creature paper - 10-August-2007
• Playing the tax theremin: private groups and demerger and scrip for scrip tax relief paper - 17-March-2007
• HWI audits: the long and winding road paper - 06-October-2006
• Legal professional privilege and the Commissioner's Guidelines for Accountants' working papers convention paper - 10-September-2004
• Getting money out of companies seminar paper - 26-August-2004

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Shaun Cartoon FTI

Shaun advises on a broad range of taxation issues in corporate, international and employment taxation, with a focus on M&A, capital management, employee share plans and superannuation. He also has experience in tax audits and disputes and has been involved in the carriage of tax cases through the Australian courts. Shaun is a member of Allens' Accelerate, an initiative aimed at providing cost efficient tax and legal services to high growth startup companies in Australia. - Current at 24 April 2017

More by Shaun CARTOON

• Employee share schemes and corporate transactions - 01-February-2020
• Taxation of Australian inbound investments paper - 19-September-2019
• Employee Share Schemes for SMEs paper - 23-August-2018
• Taxation of startups – Recent development paper - 29-June-2017
• The new tax incentives for early stage investors paper - 15-September-2016
• Navigating the new employee share schemes tax rules - 01-October-2015
• Applying the new employee share schemes tax provisions paper - 30-July-2015
• Playing the tax theremin: private groups and demerger and scrip for scrip tax relief paper - 17-March-2007

Click here to expand/collapse more articles by Shaun CARTOON.