William Buck Australia
As a fully integrated firm of Chartered Accountants and advisors, William Buck provides a complete solution. Putting you at the core of the business, our advisors work together to ensure that careful consideration is given to your business and personal wealth affairs.
Working closely with you and your team, our Business Advisors can help you plan and implement contemporary business strategies and practices to meet your business’s full potential.
Our commercially minded tax specialists offer clear, responsive advice to manage your tax risk, address local and international issues, and develop strategies to optimise your tax position.
Our audit team has extensive experience in a range of engagements, giving stakeholders independent and objective assurance on financial information, transactions and processes.
Our Corporate Advisory team provides objective, strategic and commercial advice across a broad range of business issues. Our work spans the breadth each engagement from the origination of ideas to managing the transaction process, valuation and structuring.
Our highly experienced team of liquidators and trustees use their extensive expertise to assist in times of financial distress, achieving the best outcome for all stakeholders.
By understanding not only what you want to achieve but why it’s important, our wealth advisors can create strategies attuned to your key priorities. The end result is a plan focused on your life goals.
The William Buck Hour could be the most profitable hour you spend this year.
Sweeping changes to financial reporting may impact your financial position and business operations.
Our experts are here to help you understand what you need to know about Safe Harbour legislation.
Check our Private Business Tax Reform resource centre to see how the most significant changes may affect you and your business.
William Buck has a team of professionals with specialist experience and know-how on a range of industry sectors.
Our advisors understand the risks and opportunities unique to the agribusiness sector. Taking a strategic view of your operations they provide relevant guidance and advice.
Assisting public and private schools, vocational colleges, universities and private training providers, our education specialists provide timely and valuable assurance services together with strategic, financial and management advice.
Our Government and public sector team has substantial experience in assisting all levels of government to review their structures and develop strategies, in line with relevant legislative requirements and accounting and audit standards.
Working with over 1,600 clients in the health sector, our advisors help practitioners and health care corporates achieve their business and personal goals
Our hospitality and tourism team has a working knowledge of the industry which, when combined with our technical knowledge, can assist you in reaching your commercial goals.
By staying on top of changes in the manufacturing sector, our industry experts provide relevant and timely guidance to a broad range of manufacturing business.
Our mining and energy team has the experience and resources to help start-ups, developing businesses and well-established companies to meet their commercial goals.
Integrity and transparency are at the heart of the best Not for Profit organisations. These values re shared by our dedicated Not for Profit team, which helps entities to establish to improve performance and develop strategies for long-term growth.
Our advisors understand the challenges and opportunities facing the professional services sector first hand. This experience together with our expertise helps to determine your strategic objectives and provide concise, relevant advice to help you achieve your goals.
Our property and construction team assist on a wide range of assignments from property development to construction and large infrastructure projects. Their diverse experience, technical expertise and commercial know-how to help you tackle the important issues.
Our retail and wholesale team works with a variety of businesses from family owned operations to franchises and larger chains, to provide advice and guidance on the issues that count.
Our transport and distribution team works with businesses to review their operations, improve efficiency and productivity and ensure compliance with the latest regulatory developments.
The William Buck Health Hour could be the most profitable hour you spend this year.
We work with individuals, businesses and community organisations with a particular focus on the mid-market. Drawing on our extensive experience, our advisors will challenge your thinking and re-frame problems to understand their root-cause.
We’re more than just accountants and advisors, we aspire to create positive change in the lives of our clients and our people.
Life as a CFO can be complex, exciting and demanding. Combining technical excellence with decades of working closely with and listening to the needs of CFOs, our advisors understand the competing demands of your role.
Whatever your needs, we have the expert resources to create the best outcome for you and your business. As our client, you’ll benefit from our integrated services model that puts you at the core of its business.
We create and implement personal wealth plans and tax strategies that give our clients greater certainty that their financial and personal goals will be met.
Send us a quick message to see how we can change your life.
Full of practical advice, news, opinion pieces and tips designed specifically for CFOs. Join the conversation today.
Our professionals are experts in their fields and are skilled at providing jargon-free, practical and comprehensive advice, allowing you to get to the heart of your matter.
Interested in joining our team? We have positions across Australia and New Zealand for forward thinking, enthusiastic, intelligent individuals.
Looking to join a team that offers more than just co-workers? We’re proud to have built a firm which engenders loyalty and provides an environment in which life-long professional connections and friendships can flourish.
Are you ready to achieve your career goals?
We offer a workplace where striving for excellence and being supported to achieve your professional and personal best, are par for the course.
Are you a proactive and innovative accounting professional interested in joining our team?
We foster a dynamic and respectful work culture, where growth and development are encouraged, and initiative is rewarded.
We’re committed to recruiting outstanding people. Our culture is built on respect and team work, making William Buck a great place to develop a rewarding career. From day one, you will be given every opportunity to realise your full potential.
We boast a culture that values each individual employee as an essential part of the team and places a high priority on helping you reach your full potential, personally and professionally.
Hello. Kia Ora. Talofa. Ni Ho. However, you say it, there’s always a warm welcome at William Buck. Creating an enjoyable environment to spend our days is part of our master plan to create an exceptional place to work.
Applying for a graduate position at William Buck is the first step in a rewarding career.
Our people are the reason for our success. In recognition of this we have comprehensive learning and development programs to ensure our employees are given the right opportunities to grow both as professionals and as people.
Interested in joining our team? Take a look at the answers to some of our most frequently asked questions.
Applying for a role at William Buck is the first step in a rewarding new career.
Here you’ll find the latest business news, thought leadership articles, technical updates and tools to help drive your business performance.
Check out our latest research reports, looking at the key trends and issues faced by the mid-market.
A dedicated area for our Wealth Advisory clients to provide information about their portfolio services.
Our dedicated client portal enables you to share files with your advisor, manage your portfolio and make payments.
The William Buck Tax Rates and Tools App is available for download today.
Check out some of our latest insights and news appearances on our dedicated video channel – William Buck TV
In just one hour our experienced business advisors can prepare an independent assessment of your business through analysis of the key fundamentals of successful growth; your business, your finance and your people.
Check out our latest news articles, looking at the key trends and issues faced by the mid-market.
Sign up to receive the latest insights relevant for your business.
Take a look at our latest research reports.
Packed full of useful features, our free App can help you.
Established in 1895, we’re more than just advisors; offering a full range of services and 360 degree support, we aspire to create a positive change in the lives of our clients and our people.
As a member of Praxity, the world’s largest international accounting alliance, our local team is supported by our extensive network, representing an unrivalled global resource and knowledge pool.
From Western Australia, to New Zealand; and everything in-between; check out our offices, and local team, representing an unrivalled global resource and knowledge pool.
By TODD WANT
DIRECTOR, TAX SERVICES
When a client is looking to exit from a shareholding in a private company, a direct sale of shares by the departing shareholder to the continuing shareholders is often assumed to be the best option.
However, 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 sales are commonly recommended by advisers to exit share holders from private companies. Often the exiting shareholder’s interest in the company may be sold to continuing shareholders in that company, with the ownership percentage of the continuing shareholders increasing.
Assuming the shares are on capital account, the departing shareholder would make a capital gain to the extent that their capital proceeds exceed their cost base in the shares. Conversely, where the capital proceeds are less than the reduced cost base, a capital loss will be made. Concessions such as the 50% general discount and the small business CGT concessions can apply to reduce the assessable amount of the capital gains.
Benefits of share buy-backs
As an alternative to a share sale it may be possible for a shareholder to exit their holding by way of a share buy-back. Under a share buy-back, the company buys back and immediately cancels the shares. This means that the number of shares on issue for the company is reduced and the ownership percentage of the continuing shareholders increases accordingly.
Potential tax savings can be achieved, depending on the tax profile of the exiting shareholders. For example:
In addition to the potential lower tax cost for an exiting shareholder, the use of a share buy-back can also provide advantages such as:
Each of these advantages are considered in more depth below:
Funding of exits
Under a share sale, the acquiring shareholder needs to fund the acquisition from their available financial resources or through borrowed funds. In some instances it may be contemplated that the company itself will lend the acquiring entity the funds in order to undertake the acquisition. This can lead to Division 7A and Corporations Act issues.
However, under a buy-back, it is the private company that funds the acquisition from its financial resources and the potential Division 7A issues are removed.
Depending on the State of incorporation, stamp duty may apply on the transfer of shares (for example in NSW) however in most jurisdictions stamp duty will not apply to a share buy-back.
Transfer of assets
If assets of the company are being transferred to an exiting shareholder (e.g. a company car), it may be possible to offset the value of these assets against some of the consideration payable under the share buy-back. Doing this under a regular share sale is often more difficult and could potentially trigger Division 7A issues if not appropriately managed.
Utilisation of franking credits
If the private company has a significant bank of franking credits which are not otherwise being utilised, a share buy-back provides a useful way to unlock the value of the credits.
Taxation of share buy-backs
Unlike a traditional share sale, the proceeds received under a share buy-back are split between two components:
For most private companies with limited paid up capital (e.g. $2), the capital component of a share buy-back will generally be minimal. This means that the majority of the proceeds will be represented by a dividend (which may be franked).
For companies with a more material level of paid up capital, there is a particular process that needs to be followed to determine the split of the capital and dividend components for the share buy-back.
The difference in tax outcomes that can arise under a share sale when compared to a share buy-back is essentially driven by the differing character of the proceeds under each option, with the share buy-back having a dividend component which the share sale does not. Determining the correct dividend and capital split is considered in this month’s other article: Share buy-backs in private companies: what are the tax issues?
Outlined below is an example scenario which demonstrates the differing outcomes that can arise for a shareholder looking to exit a private company.
Company A has two shareholders who each own 50% of the shares on issue. The shares were acquired when the company was formed (greater than 12 months ago), but do not satisfy the requirement to be considered an active asset.
One of the shareholders is looking to exit his interest in Company A on the 1st of July and will not have any other assessable income in that financial year. The shares will be disposed of for market value consideration of $70,001.
The equity section of the balance sheet of private company A is represented as follows:
All assets & liabilities of the company are recorded in the financials at their current market values. The company also has sufficient franking credits to fully frank all of its retained earnings.
The table below summarises the tax outcomes for the exiting shareholder if they were to exit under a buy-back or via a share sale. Under the share buy-back, the dividend component has been fully franked.
In this example, the use of a share buy-back to exit the shareholder would lead to an assessable dividend (including franking credits) of $100,000. As the franking credits of $30,000 exceed the tax payable on this income, the share buy-back results in a net refund of $3,553 to the exiting shareholder.
Under the share sale scenario, the shareholder instead makes a gross capital gain of $70,000. The assessable amount of the gain is reduced to $35,000 after applying the 50% general discount. As there are no credits available under a share sale, the shareholder has a tax liability of $3,272 arising on this $35,000 of income.
While the share sale gives a lower assessable income of $35,000, compared to $100,000 under the buy-back, the presence of the franking credits under the buy-back results in the exiting shareholder getting a tax refund (rather than having an amount payable).
The difference between the scenarios in this case is a net benefit of $6,825 for the exiting shareholder under a share buy-back (being the difference between having to make a payment of $3,272 compared to receiving a refund of $3,553).
In the above example, if the exiting shareholder was a company rather than an individual, the difference in tax payable between these options would increase to $21,000. This is because under the share sale scenario, the company would not be able to access the 50% discount for capital gains and thus would have an assessable capital gain of $70,000. This amount would be subject to tax at the corporate tax rate of 30%, resulting in a $21,000 tax liability.
Under a share buy-back however, if the exiting shareholder was a company it would instead receive a fully franked dividend of $70,000 plus $30,000 of franking credits (resulting in $100,000 of assessable income). The company would have $30,000 tax to pay on this income, however this liability would be fully offset by the availability of $30,000 franking credits. This would mean that for the exiting shareholder company, a share buy-back would not lead to any net tax liability.
Other factors to consider
While the advantages outlined above can make share buy-backs an attractive option for exiting private company shareholders, other factors to consider include:
Determining the most appropriate way for a client to exit their shareholding in a private company requires a thorough consideration of tax, financial and other factors. While a share buy-back may not be appropriate in all circumstances, it provides an alternative which can be the most suitable to all entities involved in the transaction.
William Buck has assisted numerous parties in assessing and implementing the most appropriate method to exit their private company shareholding. Should you have any queries relating to the exit of private company shareholdings, or would like to know more about the most appropriate options for your clients, please contact your local William Buck advisor.