Insolvency, tax and liquidation distributions: dividends, capital gains and the dead hand of the past
✍ Scribed by John Duns; John Glover
- Publisher
- John Wiley and Sons
- Year
- 2006
- Tongue
- English
- Weight
- 198 KB
- Volume
- 15
- Category
- Article
- ISSN
- 1180-0518
- DOI
- 10.1002/iir.140
No coin nor oath required. For personal study only.
✦ Synopsis
Abstract
Shareholders are normally entitled to the surplus, if any, which remains after a liquidator has paid off the company's creditors and discharged all of its outstanding liabilities. Surplus distribution to shareholders is an anticipated event in the liquidation of a solvent company. Shareholders in insolvent companies, by contrast, are likely to be pleasantly surprised to receive surpluses prior to the cancellation of failed investments. Taxation liabilities are likely to arise for the shareholders in both events—under independent and, to a degree, inconsistent regimes provided by the Income Tax Assessment Act 1936 (Cwth) (‘ITAA36’) and the Income Tax Assessment Act 1997 (Cwth) (‘ITAA97’). This paper analyses Australian taxation of liquidation surpluses, noting historical factors and the approaches taken in four comparable tax jurisdictions. Company law applicable to liquidation surplus distributions is surveyed by way of introduction. Copyright © 2006 John Wiley & Sons, Ltd.