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  • 16-12-2014 11:32pm
    #1
    myshirt
    Registered Users, Registered Users 2 Posts: 5,245 ✭✭✭


    I'm aware of the close company rules on interest paid to participators...

    But is there any way to structure it to avoid triggering treatment as a distribution, and getting the expense allowed as a deduction in the CT return.... thinking that if a participator had his pension fund or an investment company or something lend the money instead of him himself lending it, and whoever lent it receive the interest on his behalf.. would that sort it out...


Comments

  • #2
    dogsears
    Registered Users, Registered Users 2 Posts: 535 ✭✭✭dogsears


    myshirt wrote: »
    I'm aware of the close company rules on interest paid to participators...

    But is there any way to structure it to avoid triggering treatment as a distribution, and getting the expense allowed as a deduction in the CT return.... thinking that if a participator had his pension fund or an investment company or something lend the money instead of him himself lending it, and whoever lent it receive the interest on his behalf.. would that sort it out...

    Would be unusual to see this in practice, but would he not lose out on the (post tax) income? Why not make it interest free and pay extra salary, get CT deduction that way.


  • #3
    myshirt
    Registered Users, Registered Users 2 Posts: 5,245 ✭✭✭myshirt


    Well, marginal rate is c. 50% isn't it... so be easier to pay interest to an investment company or directors pension fund if could do it free of tax implications... that money could then be reinvested to grow the pension fund ..

    I know ultimately tax will have to be paid down the line, but a bill in 30 years is better than now


  • #4
    dogsears
    Registered Users, Registered Users 2 Posts: 535 ✭✭✭dogsears


    myshirt wrote: »
    Well, marginal rate is c. 50% isn't it... so be easier to pay interest to an investment company or directors pension fund if could do it free of tax implications... that money could then be reinvested to grow the pension fund ..

    I know ultimately tax will have to be paid down the line, but a bill in 30 years is better than now

    OK. Your original scenario appeared focussed on how to get a CT deduction.

    I believe there are rules against "self investment" for pension schemes - not sure if that would apply here but you'd better check it out.

    As to an investment company, I'm not sure what you mean - are you suggesting lending to a third party company, asking that to lend to your company and your company pays interest to it, I can't see what third party would agree to that.

    If you mean an investment company owned by the same people as this company, that doesn't work because the investment company would be taxed at 25% on the income and it would be surchargeable if not distributed.


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