Tax Query

Sounds like the company would have paid tax on that money and it is retained earnings. It may be possible for the company to issue a dividend – but the problem is that the shares are probably not owned by a trust.

The company probably can't get the money into a trust easily. The company could possibly donate it to the trust – but then you may have issues and would need legal and tax advice as the directors have various duties which they need to keep in mind.

Another option is to transfer the shares to a trust and then issue dividends – but stamp duty and CGT may apply.

The company could also loan the money to a trust. It would need a proper written agreement to do this and also more issues. Depending on shareholder's incomes it may be possible to gradually get the money out of the company without paying tax. BTW companies pay 30% tax, but here it will be the shareholders who would pay tax if the money was paid to them. Because the company has already paid tax on this money they would get franking credits and so they would not pay any tax, and may even get some back, if their incomes are low and they are on a tax rate of less than 30%. If their incomes are high, then they may pay more.

It could be that some of this money may be owed to family members from initial loans years ago too.

The company may also be able to employ family members on low incomes who wouldn't pay much tax if any, and they could then gift to the trust.

Also look at asset protection issues of gifting to a trust and later going insolvent – the money could be clawed back.

It may even be better to leave the money there and for the company to lend money to the trust for deposits to buy property and the trustee borrowing the remaining x% from a bank.

In summary, it is a lot of money so you should be seeking further advice.