One of the main reasons to do a Members Voluntary Liquidation is to maximize the CGT concession benefits where there are proceeds from the sale of a pre-CGT asset or where there are Small Business CGT concessions available. Below are some details on the Small Business CGT Concessions and then we explain the significant benefits of a Members Voluntary Liquidation in getting the proceeds of an asset sale to the shareholders.
Small Business CGT Concessions for your business
There are four types of CGT Small Business Concessions:
You should obtain advice from your tax accountant to see if you qualify and meet all of the conditions. But in general, where a company is eligible to apply for the first two types of concessions above, part or all of the capital profits arising from a CGT event may be exempted from tax at the company level. However, when the amounts are distributed to shareholders (via a dividend), the amount becomes ordinary income, and thus, taxable.
The only exception is when the distribution is made by a Liquidator. When a liquidator makes the final distribution, capital profits are treated as “capital proceeds” from the cancellation of the shares. That can result in a very significant tax saving.
Please note that the above only applies to the distribution of the capital profits. If your company has retained earning (which is also subject to distribution), the amount will be deemed dividend and taxable.
We suggest that you firstly discuss the sale of your business with your tax accountant to see if you will qualify for the Small Business CGT Tax Concessions and if so, you should then contact us to receive the extra tax benefits received through a Members Voluntary Liquidation.
“I’ve now referred two liquidations to Dissolve and in both cases my clients were amazed at the ease of the appointment process and how quickly the liquidation was finished.”…
Partner of a Sydney Accounting Firm
“Cliff and his staff provided a fast, efficient and friendly service. The process was simplified and all steps were communicated well. The price was exactly as advertised with.”…
Director of a Property Development Company
“…after I gave Dissolve the go-ahead I received the No Asset Liquidation Package within two hours and I had the company in liquidation the next morning.”…
Director of a Fashion Retailer