If a company is seeking to sell a particular asset, or all of the assets comprising its business, a common concern for income tax purposes is whether any capital gain derived on sale may be "tainted".
This is because, if the gain is tainted, it cannot subsequently be distributed to the company shareholders tax-free.
However, a recent law change means that tainted capital gains are now far less of a concern for companies in the process of selling business assets.
In New Zealand a standard company can only distribute capital gains to shareholders on a tax-free basis upon a liquidation of the company.
A restriction applies, however, where the gain was derived from a transaction with an associated party, such as a business sale to the next generation of the family or to an entity with common ownership as part of a restructure.