New Zealand

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?

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