I am getting confused with the settlement legislation.
Client is setting up a company and wants to make her spouse and 2 minor children shareholders.
My understanding is that the children's dividends have to be kept separate although they are taxed on the parent. Could someone please confirm this is the case (i.e. She can not use that money as her own)? This would affect her decision on how to best extract profits.
I would also appreciate any advice on how the dividends paid to the children are subsequently taxed, are they just added back to the mother's dividends (or split between parents?).
Edit: maybe I should add that the mother would be the only director, the husband doesn't participate in any capacity in the company.