how to secure capital gain from within company

Hi All

Finally pulled my finger out and went and saw a solicitor to organise our wills power of attorney etc.

Out of this discussion came a new concept that I had not been aware of. We own some of our RE within a company the company shares are then held by one of our family trusts. The story of why is for another time. It was suggested that I could have the company sign some options to sell the RE to another trust (not associated with this company) in this way any capital gain from the date of the option would accumulate to the trust rather than the company.

for instance when selling the property the trust would sell it and call the option to buy the property from the company at the agreed price any further amount over the option price would be capital gain for the trust not the company.

A simple solution if it works.

CHeers

 

I would think that this would all need to be done on an arms length commercial basis?
Otherwise you could just buy all your properties in the name of the highest income earner to get full negative gearing benefits, and sell your stay-at-home spouse an option on the property so that they got all the capital gain on the property. Doesnt sound right to me...

 

Hi, does this sound like the 'Lend Lease Custodian Case' ?

This worked by dealing at arm's length.

Regards,

Rob G.

 

I think you'd need to be careful with the Option, as that could trigger the CGT event for the compay when it is exchanged ie from now. If that was the case and the company paid the CGT now, then it could work.

You may also like to ask your solicitor about Equitable Transfers - personally I don't like them as they seem pretty high risk to me, but they can save on CGT and stamp duty.

The other possibility maybe to use the services of a liquidator, particularly if they are pre CGT.