Asking on behalf of a friend, who has a slightly complex situation:
- She has a pty ltd company where she is the sole shareholder and director. She is near retirement age
- The company was created ~18+ years ago to purchase and operate a small clothing related business for $x amount. This purchase $x value was repaid by the company to my friend years ago.
- That business was recently sold with a profit for $x + $y. Given the business has been owned for 15+ years, I assume the capital gains tax is 100% exempt per the small business 15 year exemption
- The company has stopped all activites since the business was sold, but now holds in the bank account $x + $y + $z (proceeds from previous earnings). The business has no other significant assets (other than a car i think).
- Since the business was sold, only some small dividends have been paid to my friend
So the key question is, what's the most tax efficient way to distribute the remaining cash of this small company, to my friend?
My friend has an accountant who's only advice has been to distribute this cash via dividends to my friend, but this will take a number of years. I've also done some research and come across:
- Members' Voluntary Liquidation, but am concerned this will result in a large tax event for my friend, if indeed all company cash transferred to my friend becomes a large one off 'income'
- I've also heard the money could be paid by the company into my friend's super (though the company is no longer paying her an income), or
- The capital gains ($y) can be transferred directly by the company to my friend given the 15 year CGT exemption.
Appreciate any advice on this!
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645 views
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