Acceptable director salary

A

Annalee123

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Hello,
If a company proprietary director has sole trader income also and wishes to take as little as possible as a salary from company, what would an acceptable salary be in order to be seen as a bona fide working director? Thank you
 
Doesnt it depend on revenue, profitability, source of revenue of the company. Contribution made by the director to that revenue. Do they have a contract of emp and documented role/responsibilities.
How would Revenue view it all.
 
Why would you want to take minimum salary? I used to do that as a UK director which made financial sense due to the tax treatment of dividends. But I've never seen it make sense in Ireland where I'm currently a proprietary director.
 
time to plan said:
Why would you want to take minimum salary? I used to do that as a UK director which made financial sense due to the tax treatment of dividends. But I've never seen it make sense in Ireland where I'm currently a proprietary director.
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When it comes to pension funding, a year where a director doesn't receive a salary doesn't count as a year of service.
 
Annalee123 said:
Hello,
If a company proprietary director has sole trader income also and wishes to take as little as possible as a salary from company, what would an acceptable salary be in order to be seen as a bona fide working director? Thank you
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...for what purpose exactly?
 
T McGibney said:
...for what purpose exactly?
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Good question. It's hard to understand. It could be for tax reasons although I can't work out how. Or it could be to act as Director on behalf of a relative who is disqualified. Maybe other reasons.


But without context, there are circumstances when a Proprietary Director wouldn't take any salary, e.g. because it is a new company with no sales yet.
 
time to plan said:
Good question. It's hard to understand. It could be for tax reasons although I can't work out how. Or it could be to act as Director on behalf of a relative who is disqualified. Maybe other reasons.


But without context, there are circumstances when a Proprietary Director wouldn't take any salary, e.g. because it is a new company with no sales yet.
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It's not really that hard to understand as being a full time working director is a necessary pre-requisite for certain tax reliefs. If the OP's query is in that context, they'll probably need proper professional advice tailored to their specific circumstances.
 
Thank you. Yes, I was thinking of future tax reliefs, eg, on retirement. My sole trader income tips me into the higher tax bracket, so I wanted to keep my director salary to a minimum to avoid pushing too far into higher tax bracket. But, I still want to be a "working director" in eyes of Revenue.
 
Retirement relief has a full time working director requirement and entrepreneur relief has a 50% of working time requirement. Neither provision states that a salary should be drawn. However, the onus would be on the you, as the person claiming the reliefs, that you satisfied the full/part time rules as required by the particular provision. If you have significant earnings from a sole trade how much of your time does this take? Can you still work full/part time and carry on the sole trade? This is a matter of fact situation and depends on the particular circumstances.
 
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