This month we have prepared two articles that cover current issues we believe are relevant to SME advisors. Both articles relate to tax issues arising on the exit of a shareholder from a private company.

The first article looks at why selling shares in a private company may not be the best way for a shareholder to exit their interest in the company.

The second article considers the tax issues which may be triggered under a share buy-back and how to manage them in a private company.

Exit strategies: is selling shares always the best option?

When a client is looking to exit from a shareholding in a private company, a direct sale of shares by the departing shareholder is often assumed to be the best option. Despite this, alternative methods can be used which may provide significant advantages over a simple share sale.  Do you know whether a share sale really gives the best outcome for your client?

Share buy-backs in private companies: what are the tax issues?

Most public awareness of share buy-backs is around their usage by listed companies, primarily as a way of returning excess capital in an attractive way to shareholders (such as SMSFs).  However, share buy-backs can also be extremely useful tools for private companies to provide a tax-effective means for a shareholder exit.  Do you know what the tax issues are for buy-backs in a private company?