Purchasing shares via a company

F

Firefly

Registered User
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Hi,

I am interesting in purchasing some shares. I am a director in a company...If I get my company to buy e.g. 10k worth of shares, is this 10k deducated from taxable income just like other expenses like wages?

Thanks,
F
 
Lukily I have funds surplus to my wage requirements. Although nowhere near retirement age, I want to build up a reserve of cash/assets in my company that I can take out when I retire.

The current rules provide:

From:

Up to €500,000 can be paid tax-free from company monies to a retiring shareholding director
Rather than paying into a pension fund I am considering purchasing shares directly via my company. I was interested in knowing if the purchase of these shares by a company would be deductable from corporation tax.

The advantage for me with this approach is that it give me access to the funds at short notice if I need them (I can sell some shares rather than cashing in an entire pension fund early).

Hope this makes sense!
 
Hi Firefly

I presume you are the only shareholder in the company?

The main issue is whether it is a good idea to retain profits in the company, pay it as pension contributions or take it as taxable salary.

This is covered in this thread. While it is old, the principles remain the same.

If you choose to leave cash in the company, the company can buy shares or any other investment. But this is not an expenditure for tax purposes.

Brendan
 
There is the issue of whether or not the Revenue would consider this a trade or an investment within the company. There is the possiblity of the profits being taxed at 12.5% (good if you're actively trading and building a portfolio) or the possibility of offsetting losses against other income (not the sort of advice you'd want to seek but might soften the blow of losing your shirt).

As always get a good accountant and get reasoned advice based on your particular circumstances.
 
Firefly said:
Lukily I have funds surplus to my wage requirements. Although nowhere near retirement age, I want to build up a reserve of cash/assets in my company that I can take out when I retire.

The current rules provide:

From:

Up to €500,000 can be paid tax-free from company monies to a retiring shareholding director
Rather than paying into a pension fund I am considering purchasing shares directly via my company. I was interested in knowing if the purchase of these shares by a company would be deductable from corporation tax.

The advantage for me with this approach is that it give me access to the funds at short notice if I need them (I can sell some shares rather than cashing in an entire pension fund early).

Hope this makes sense!
Click to expand...

You need to consider the chance of this loophole continuing to exist at the time of your retirement.It could (and probably should) get closed down anytime.
 
The relief is available currently upto €750k for qualifying assets and marginal relief thereafter s598 TCA 1997.

Shares are not considered a qualifying asset.

As regards the last post this isn't a loop hole. It is legislated by law.
 
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