Tax Risks of Liquidation Distributions – Navigating the TAAR
Recorded March 2025 · Episode 6 · 7:34
In this episode I examine the risk that a distribution made in the course of winding up a company is taxed as income rather than capital, under the targeted anti-avoidance rule. Where the conditions are met — broadly, where the individual carries on a similar trade or activity within two years and one of the main purposes is to obtain a tax advantage — an otherwise capital distribution can be recharacterised as a dividend. With no binding case law on the point, I explain how the rule operates, where the uncertainty lies, and how to approach a members’ voluntary liquidation with the TAAR firmly in mind.
This podcast is not a substitute for professional advice.