Business relief

ted2767

I have a quick tax question a friend of mine has a small business where he lets out apartments to students in term time and to tourists the rest of the year.
Would the fact that most of his earnings are case V have any affect on him trying to gift the business to his nephew as a fav nephen?

ianuss

AFAIK, no. It makes no difference.

censuspro

Is he a sole trader or limited company?

ted2767

He's a sole trader.

barneystinson

ted2767 wrote: »

I have a quick tax question a friend of mine has a small business where he lets out apartments to students in term time and to tourists the rest of the year.
Would the fact that most of his earnings are case V have any affect on him trying to gift the business to his nephew as a fav nephen?

Totally open to correction here, but Case V income isn't trade income. The legislation doesn't seem to specifically exclude it but I fail to see how rental properties could fall within the meaning of this definition of "relevant business assets" (www.revenue.ie/en/practitioner/law/cat-act-guidance-notes-2010.pdf):

"property consisting of a business or an interest in a business (the property in question must consist of a whole business or part of a whole business. For example, a transfer of a factory or any other individual asset used in a business will not qualify for relief if transferred to the beneficiary without the business)"

Ownership of a property, and deriving estate income from it isn't treated as earned income anywhere else under the tax code; it is considered passive income, more akin to investment income than trade income.

CAT isn't my neck of the woods at all, so maybe I'm missing something here.

ted2767

barneystinson wrote: »

Totally open to correction here, but Case V income isn't trade income. The legislation doesn't seem to specifically exclude it but I fail to see how rental properties could fall within the meaning of this definition of "relevant business assets" (www.revenue.ie/en/practitioner/law/cat-act-guidance-notes-2010.pdf):

"property consisting of a business or an interest in a business (the property in question must consist of a whole business or part of a whole business. For example, a transfer of a factory or any other individual asset used in a business will not qualify for relief if transferred to the beneficiary without the business)"

Ownership of a property, and deriving estate income from it isn't treated as earned income anywhere else under the tax code; it is considered passive income, more akin to investment income than trade income.

CAT isn't my neck of the woods at all, so maybe I'm missing something here.

Thanks Barney that's what I suspected was going to be the case.