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Paul – FS Concierge.
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November 9, 2021 at 9:32 pm #1232072Up::0
I’m looking at a company restructure that could result in a holding company that owns nothing except for cash holdings.
Let’s say a holding company owns $200k in cash profits and no other assets or liabilities. Would there be a market to sell this sort of company and would the value to close to the $200k that exists in profits?
The other option is to just pay out the dividends and wind up the company. Just from a tax perspective, it seems better to sell it and use the CGT dicount and small business tax concessions rather than pay out the dividends.
November 10, 2021 at 2:25 pm #1232103Up::1I’m looking at a company restructure that could result in a holding company that owns nothing except for cash holdings.
Let’s say a holding company owns $200k in cash profits and no other assets or liabilities. Would there be a market to sell this sort of company and would the value to close to the $200k that exists in profits?
The other option is to just pay out the dividends and wind up the company. Just from a tax perspective, it seems better to sell it and use the CGT dicount and small business tax concessions rather than pay out the dividends.
The Income Tax Assessment Act 1936 contains measures to prevent the strategy you are proposing. In short, any arrangement that substitutes capital profits in place of dividends from retained earnings will be treated as a dividend. So selling shares in a company with a balance sheet as you have described will not get you a CGT benefit. Nice try
Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900November 10, 2021 at 4:59 pm #1232115 -
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