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Voluntary liquidation - Getting the money & assets out of a company paper

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.

Author profile:

Michael BUTLER
Michael Butler FTIA is a Partner at Finlaysons' Tax & Revenue Group. Michael advises both domestic and foreign clients on federal, international and state tax matters, and has a special interest in property tax issues. Michael is the author of the book "Australian Federal Company Taxation" and a regular contributor to Taxation Institute of Australia events.
Current at 23 March 2009 Current at 15 April 2009 Click here to expand/collapse more articles by Michael BUTLER.
 

 

This was presented at 17th National Tax Intensive Retreat: Extracting Value .

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Individual sessions

Recent developments relating to discretionary trusts - getting money out of trusts against the wishes of the trustee & appointor

Author(s):  Lisa HESPE

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