Learning Outcomes addressed and assessed in this Assignment:

• Identify exemptions and reliefs for the Transfer of a business.
• Demonstrate an understanding of the Irish taxation system in relation to Capital Gains Tax and Corporation Taxation
• Apply the general principles for the administration and computation of CGT

Tax Assignment

Part A

Jane is 53 years old and for the last 7 years has been running her business as a sole trader in the food production industry. She has been supported by the Local Enterprise office of her local authority and has been successful in gaining support from investors after being involved in the Super Value Food academy. She is interested in this support as she has great growth potential but limited access to resources on her own.

She has been approached by a number of investors who are interested in taking a share in her business. Jane would welcome the extra opportunity for business as well as a chance to achieve a return from her business. Jane has been advised by one of the investors that a corporate structure (limited company) would be a more suitable structure for her business.

Jane has asked you for advice in relation to Capital Gains Tax.

REQUIRED

Prepare a report for Jane which sets out the following details:

1. Implications of transferring her business to a corporate structure for Capital Gains Tax purposes.
2. Advise on any reliefs that may be available, Incorporation, retirement, etc. and the conditions that must be fulfilled
3. Capital Gains Tax treatment on any future disposals of shares e.g. valuation.
4. Any reliefs that she may be able to claim in the future and any restrictions or conditions that she must adhere to in order to avail of the reliefs.

You should use numerical examples to illustrate your advice.

Part B

In addition, Jane owns 2 separate properties, a holiday home, and her family home. Due to the future growth of the business, she notes that she will not require both homes and the proceeds from the disposal of one of the houses would help to fund the expansion of the business. She has no clear preference which one to hold on to as both would be ideal for her future needs.

REQUIRED

Jane has asked you to prepare a report advising her on the implications of selling the homes and to recommend which one she should sell. In your report, you should consider the following.

• Liability to Capital Gains Tax,
• Any reliefs that she may be able to claim
• Application of the reliefs to both properties.
• Show calculations to advise on position.
• Recommend which house to dispose of.
• Provide advice on any other conditions and/or remarks that you consider would be useful.