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 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 corporate restructurings, cross-border investment, property, wine and mining taxation, trusts, and estate and succession planning. Michael is a past chair of The Tax Institute’s South Australia State Council and a regular contributor to Institute events.
- Current at
22 September 2021