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WE'RE BLOGGING TODAY

ARE TAX BENEFITS A GOOD REASON TO CHANGE COMPANY SHAREHOLDINGS?

11/14/2016

 

SCENARIO

You and your significant other each own 50% of the shares in an LTC. It owns negatively-geared rental property.  At tax time, you get your 50% share of the loss, which generates a nice tax refund.*

Previously you both earned about the same, but now there is a child in the mix, and one of you is working less as a result, and earning less as a result.

Suddenly that 50/50 company shareholding doesn't look so good. Should you change it to 99/1 to get better tax refunds?

CONSIDERATIONS

Picture
The short answer is no.  If you do anything with the motive to purely pay less tax, then you leave yourself open to being accused of tax avoidance.

What to do then? Well, there may well be economic reasons for the change, which had not previously been considered. When you take these into account, any so-called tax benefits could well become purely incidental.  

As each situation is different, it's not practical to outline these here, so please feel free to contact us to discuss.

​You may also wish to read a related article: Changing Shares in LTCs: Considerations


* From 1 April 2019, tax losses will no longer flow through from LTCs that are residential land rich.  Please see us or call for advice on how to get the best results from your portfolio, build wealth and minimise tax
P Davidson
8/24/2018 12:19:52 pm

Hi
We have an LTC which owns rental properties. My husband owns 99% of the shares with the remaining 1% in my name. He is planning on retiring and we would like to have an even split of rental income in retirement. Is it possible to transfer 49% of his shareholding to me?

Thanks
P Davidson

Garreth Collard
8/24/2018 12:55:57 pm

Yes it can be done. Is that the best for you at this time? Hmm. Please call us to discuss.


Comments are closed.

    Garreth Collard

    Accounting for your rental residential investment property; specialised property tax advice.  Buy me a coffee! 

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  • HOME
  • ABOUT
    • IN THE NEWS >
      • OWNERSHIP STRUCTURES
      • TURNING SKILLS INTO MONEY AND A BETTER LIFESTYLE
    • PARTNERS
    • SERVICES
    • TESTIMONIALS
    • WHY USE A PROPERTY ACCOUNTANT
  • FAQ
    • AML/CFT
    • ANTI-CORRUPTION
    • AUDIT SHIELD
    • DATA PRIVACY
    • FORMS
    • GETTING STARTED IN INVESTMENT PROPERTY
    • HOW TO CALCULATE RENTAL YIELD
    • INFO FOR NEW INVESTORS
    • INVOICES
    • NEW VS OLD VS LAND&BUILD
    • TAX RETURN FAQ
    • TAX POOLING
  • CONTACT
  • BLOG