Ideal for companies with capital reserves including Pre-CGT assets

A Members’ Voluntary Liquidation (MVL) is a solvent wind-up process that can be a highly tax-effective way to distribute accumulated profits and reserves to shareholders. If the company has ceased trading and holds capital reserves or pre-CGT assets, an MVL may help unlock value with minimal or no tax consequences.

A hallmark of our MVL service is working collaboratively with the referring accountant or advisor prior to appointment to assess the suitability, determine the strategy, identify potential issues, and agree on intended outcomes including the proposed liquidator’s distribution.

Key Tax Benefits of an MVL

1. Capital Returns. Distributions made by a liquidator in an MVL are generally treated as capital rather than income allowing shareholders to access Capital Gains Tax (CGT) treatment instead of being taxed at high marginal income tax rates.
2. Tax-Free Distribution of Pre-CGT Reserves. Where reserves relate to the sale of pre-CGT assets the resulting distributions can often be made completely tax-free to shareholders
3. Access to CGT Discounts and Small Business Concessions. Post-CGT capital reserves distributed under an MVL may still qualify for 50% CGT discount and Small Business CGT concessions.
4. Avoidance of Unfranked Dividends. Without an MVL, returning capital reserves often results in unfranked dividends taxed at up to 47%.

Example 1: Pre-CGT Capital Reserves

A company owns property acquired in 1975. It is sold in 2025 with a capital profit of $5 million. Because the asset was acquired pre-CGT, the gain is not subject to tax. If the company enters an MVL and there is a liquidator’s distribution the $5 million can be distributed tax-free to shareholders. No CGT or income tax will apply.

Example 2: Mixed Reserves (pre- & post-CGT)

A company has $2 million capital reserve from a pre-CGT asset sale and a $3 million capital profit reserve from a post-CGT business sale. In an MVL the $2 million may be distributed tax-free and the $3 million can qualify for CGT discount or Small Business Concessions.

Tax advice is essential.  The above is not a substitute for tax advice.

How We Can Assist

David Levi is a Registered Liquidator and trusted problem solver. For over 20 years, Levi Consulting has assisted accountants, lawyers, company secretaries, company directors and advisors in managing solvent wind-downs.

If a company or a group of companies is no longer required or holds capital reserves, talk to us about the merits of an MVL. We have successfully completed more than 250 MVLs ranging from dormant family companies to entities within listed and unlisted corporate groups.

Contact David Levi on 0418 602 466 or use Contact Us.