got dental client operating as partnership with wife for over 10yrs - they want to form ltd co by transferring partnership business to LTD
Q can they include their minor children as non voting shareholders and
Q can they claim Entrepreneurs allowance of 10% on goodwill - even when it will be family owning shares ?
thank you
Replies (6)
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Q1) Yes - But if the motive is saving tax, then it wont achieve that.
Q2) No - Assuming that the transfer is taking place after December 2014.
Be careful incorporating a dental client, as there can be superannuation consequences.
They should obtain professional advice from an accountant, as it sounds like they are basing their decision on incorrect information. For example, they may not understand that the dividends paid to their children are taxable on themselves, and that there is unlikely to be any tax savings from such a change. Are you their bookkeeper? You should advise them to talk to an accountant who can review the figures and give them a better idea of what incorporation is likely to cost.
Take legal advice from solicitors and tax advice from accountants. You are dealing in a complex area and it is easy to form incorrect conclusions as you're already discovering. If it were possible to avoid significant tax by transferring ownership to minor children then everyone would be doing it, as it is such an obvious ploy.