Hamilton Murphy Advisory encounters many situations where long established “asset rich” company structures continue to be maintained where it may be preferable and more beneficial that that the assets now be in the hands of the shareholders.
Members Voluntary Liquidation enables the company assets to be distributed (transferred) to the shareholders with the following potential benefits:
– Important tax advantages including treatment of certain distributions on capital account that may be eligible for CGT discount and/or small business concessions where they would otherwise have been taxable dividends
– The transfer of assets to the shareholders may be exempt from transfer (stamp) duty in certain States, including exemptions for family farming transactions.
– The shareholders can independently deal with their share of the distributed assets. This could include, sell, or mortgage assets, invest cash distributions or payout personal borrowings
– “Tidying-up” a corporate structure or as part of a broader estate or asset protection planning exercise
– Simplifying a corporate structure to obtain a reduction in ongoing compliance cost
Case study: Farming Company
– Assets over $4 million including land holdings, cash, and loan accounts
– Assets distributed at nominal transfer (stamp) duty
– Simultaneous transfer of farming land from the Company to the shareholder and then to the shareholder’s son (also at nominal transfer duty) via family farming property transfer exemption
– Enabled retired farmer (father) to receive cash distributions used in part to payout long term personal borrowings
Case study: Investment Company
– Long established family company
– All assets sold including businesses and properties
– Cash at bank of over $5 million
– 43 shareholders including deceased estates and beneficiaries with pre/post CGT shareholdings
– Cash distributed to shareholders tax free in the hands of the shareholders
Should you have any queries regarding the Members Voluntary Liquidation process or related matters, please do not hesitate to contact our team via our website Hamilton Murphy or send us an email at [email protected].
The enclosed information is a brief overview and it is not intended that readers rely wholly on the information contained herein. No warranty expressed or implied is given in respect of the information provided and accordingly Hamilton Murphy, or any member of the firm, take no responsibility for any loss resulting from any error or omission contained herein. Last Updated: 10 Jan 2021 “
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