Transitioning a company for wind-down or exit – 2017 WA Tax Intensive

Chris Wookey CTA
Preparing a company for the exit of the current owners or a winding-down presents a unique set of challenges.

Transferring the company or its business assets to new ownership often means that financial relationships need to be unwound or cleared at either or both the company and shareholder level.

From forgiving debts and dealing with shareholder loan accounts to decisions on liquidation versus capital reduction or share buy backs, there are also complexities with ss 45A, 45B, and 177EA. In addition, advisers need to ensure they've considered the debt equity rules, pre and post CGT shareholdings and how any value will be extracted using the small business CGT concessions.

Chris Wookey CTA is a Principal in the tax consulting division of Deloitte Private in Melbourne. At the 2017 WA Tax Intensive in November this year he will present ‘Transitioning a company for wind-down or exit’, a two-part session covering the key tax issues arising when a company is wound down or when certain shareholders want to exit.

We spoke with Chris about some of the key issues facing advisers in this situation and what to expect from his presentation. 

“Although trained as an accountant and qualified as a chartered accountant, more than once I’ve been accused of thinking more like a lawyer!" Chris said.

"That might explain why I like figuring out how new provisions work and contributing to their development through my involvement with The Tax Institute’s Technical Resource Committee. For many years I have worked in the private client space and enjoy being able to meet the people my work benefits.

“At the Intensive, I’ll be looking at preparing a company for wind down or exit, covering such things as cleaning up the balance sheet and working through various ways to liberate the value accumulated in the corporate entity. There is a veritable minefield of anti-avoidance provisions that potentially apply that advisers need to be aware of, and I’ll look at how these can be worked through.

The first part of Chris’ session will look at the issues in tidying up the balance sheet and will cover the decisions around what works best for the company and for shareholders – a liquidation, cancellation, buy back or capital reduction.

Looking at making tax-effective distributions of profits and assets, Chris will also detail how the small business CGT concessions can be accessed.

In the second part of his session, he will present a case study that uses a number of examples to deep-dive into some of the topics he will have covered. The case scenarios will address situations found in practice in relation to privately held companies, including extracting amounts sheltered by the small business CGT concessions, attempts to divert taxable income, assigning loans within the family, calling on credit loans, and dividends as part of the sale or arrangement.

Asked about the issues that commonly trip up advisers, Chris said: “On the technical front, there are things such as taxable loan repayments, deemed capital gains and being prevented access to franking credits. On the practical side, we usually need to watch out for complicated family relationships and the need to anticipate what the needs of the next set of shareholders will be.”

“I’m big on practical application and would like to think attendees will walk away from my session with some tools they might be able to apply in their own client situations.”

This focus on practicality extends to Chris’ life outside work, where he says: “I like to do practical things with a physical result – like making things out of wood or working in the garden – that you can stand back from when they are finished and say, with satisfaction, “I did that!” I also enjoy mountain bike and road cycling and, in times past, hot air ballooning.”

Chris will be joined at the Intensive by Matthew Burgess CTA (View Legal), who will present the session on Succession planning for family trusts and Linda Tapiolas CTA (Cooper Grace Ward Lawyers), who will look at ‘Dealing with difficult structures’. Grahame Young FTI (Francis Burt Chambers) will open the day with his session on ‘Reflections from decades of practice’.

The 2017 WA Tax Intensive will take place on 9-10 November 2017 at the Perth Convention and Exhibition Centre. 

You can find out more about Chris Wookey’s session, and the rest of the program, on our website.

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