At HLB Mann Judd Insolvency WA, we conduct many members’ voluntary liquidations every year. For effective taxation outcomes for shareholders, before the liquidation commences, we plan and prepare for the liquidation with the existing accountant to ensure there are no unexpected consequences for the company and its shareholders.

For example, a simple, but important review that we conduct when preparing to distribute pre-CGT capital reserves is to ensure that the shareholdings in the company have not been corrupted.

Division 149 of the Income Tax Assessment Act 1997 sets out circumstances in which a pre-CGT assets and their reserves cease to be protected from capital gains tax.

Division 149 is triggered at the earliest time when the majority underlying interests in the assets and/or reserves were not held by the ultimate owners who previously had majority underlying interests in the assets and/or reserves immediately before 20 September 1985.

Majority underlying interests consist of:

More than 50% of the beneficial interests that ultimate owners have in the assets and/or reserves (i.e. capital rights); and

More than 50% of the beneficial interests that ultimate owners have in the any ordinary income that may be derived from the assets (i.e. income rights).

If Division 149 is triggered, the asset is taken to have been acquired by the company for market value on the ‘Division 149 date’ (i.e. the date on which more than 50% of the shareholding changed hands). It follows that the market value of the asset on the Division 149 date will form the first component of the CGT asset’s cost base in calculating the capital gain or loss on any future CGT events.

There is also a potential issue for new shareholders or shares issued to existing shareholders post 1985.  Whilst there may not be more than a 50% change (i.e. no corruption and hence no tax implications for the company), any shares acquired post 1985 will be subject to CGT regime in the shareholders’ hands.

Whilst we are not tax accountants, we work closely with the referring accountant so as to address any tax implications for the company to be liquidated and its shareholders.

About the author

Greg Quin is a Partner and Registered Liquidator at HLB Mann Judd Insolvency WA and has been with the team for 12 years. Greg oversees the daily operations of the many insolvency appointments managed by the HLB Insolvency team and looks after the operations of the practice.

If you have any queries about insolvency matters, please feel free to contact Greg on 08 9215 7900, 0402 943 091 or via email to

Share to:


Get in touch

Whatever your question, our team in Perth will aim to find the best solution for you

Start the conversation

Share to:

Copy link:

Copied to clipboard Copy