Published on 27 Aug 09
by NATIONAL DIVISION, THE TAX INSTITUTE
Distributing money and assets out of a company by way of voluntary liquidation can often be a highly tax-effective method for returning value to shareholders provided care is taken to comply with the various statutory and judicial requirements. This paper covers:
- the reasons for liquidating and how it compares with other capital management approaches such as share buy-backs and capital reduction/share cancellation
- the basic framework and the operation of section 47;
- the ‘Archer Brothers principle' and the required accounting records;
- specific issues associated with distribution of assets in specie;
- the interaction with the franking rules, and managing the challenges associated with the benchmark franking rule and the timing of when franking credits arise;
- specific issues for pre and post CGT shareholders including the impact of CGT event K6;
- the interaction with the CGT discount and the small business CGT concessions;
- specific issues arising for consolidated groups; and
- stamp duty and GST issues.
Michael Butler CTA
Michael is the Partner in charge of the Finlaysons Tax & Revenue Group. Michael advises domestic and foreign clients on federal, international and state tax matters, and has a special interest in mining and property taxation, corporate restructurings, international tax issues, and estate and succession planning. Michael is the Visiting Lecturer in Tax at the University of Adelaide Law School, and is a regular contributor to The Tax Institute events. Current at 19 March 2015
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