Strategic tax planning

Written on Feb 17, 2023.

The circumstances

Jill and Wei were the co-owners of a successful food business that reached a degree of maturity, turning over $30 million per year. The couple were positioning themselves to either sell out or sell a majority share in the business in order to cash out a significant sum of money. However, their business was not structured in the right way to minimise tax, which meant they could end up paying a significant amount of tax if they did sell.

Capital Five’s considerations

Business restructuring

We advised Jill and Wei to change the structure of their business for commercial reasons which also put them in a position to reduce the tax further down the track in the event they did sell. This took the form of a mini transaction.

Complex tax planning

With the aim to minimise the tax burden for Jill and Wei, some very strategic tax planning was required across both the business structure and the future transaction. We kept the business tax effective while remaining compliant.

Business transaction

Jill and Wei sold the business 3 years later for $80 million. If they had not undertaken the restructuring that we suggested they would have paid $40 million in tax, but instead they only paid $30 million. As a direct result of Capital Five’s advice, Jill and Wei kept an additional $10 million.

By proactively improving the tax efficiency of their position well before selling their business, Jill and Wei were able to reap a significant benefit of $10 million. This was made possible through the implementation of strategic advice on the structuring and tax planning of their business, which allowed them to make financially sound and compliant decisions with foresight.