Closing Down Company - Starting A New One Abroad - Capital Gains Tax Implication

I'm winding down my company at the moment & will be moving to Australia in July. Things seem to going fine regarding the sale of the business. I reckon I should get 40K for the business & there'll be 40K in the Company Account by the time I leave (with no Debtors/Creditors/Loans etc) Am I correct in saying that I'll have to pay 20% Capital Gains Tax on 80K? I've got a business Idea that I'm looking to set up in Australia. I reckon it'll cost me 50K to get up & running with this. As you can imagine, I'd prefer not to have to pay out 16K & then find myself stumping up money later on down the line. Is it possible to defer the CGT element, move to Australia, set up as a company there & reinvest whatever is coming out of the company here?

Bobby, You'll have to give a bit more detail.

Your company in Ireland is a Ltd company ?
You plan to sell the company (ie the shares) OR you plan to sell the assets ?

It's a Ltd Company - I'm selling the whole thing. There's no assets so it'll just be a 100% Share Transfer.

BobbyFowler said:

Is it possible to defer the CGT element, move to Australia, set up as a company there & reinvest whatever is coming out of the company here?

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No. There is no relevant provision in the Irish tax code for rollover relief when one is selling shares in a private trading company.

BobbyFowler said:

Am I correct in saying that I'll have to pay 20% Capital Gains Tax on 80K?

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Only in certain limited circumstances. Have you received professional advice on this?

Haven't received advice yet. Will be sitting down with the guy who helps me out with my Accounts soon. I've found the site here great to educate myself so thought I'd throw it out there to see what people thought.

BobbyFowler said:

Haven't received advice yet. Will be sitting down with the guy who helps me out with my Accounts soon. I've found the site here great to educate myself so thought I'd throw it out there to see what people thought.

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You might be able to take redundancy

Basic exemption € 10k
Increased exemption if you have not received it in the last 10 years € 10,160
Yearly amount € 765 X # years

There are accountants who specialise in selling/exiting companies, they will save you a good few quid more than they cost.

Cheers for that H

Yep, it's on the IT 21 Revenue Document. Was collecting my Audited Accounts earlier & mentioned it. It seems pretty straightforward.

This has been discussed previously on AAM. I don't know if it is as straightforward as you think. There would be doubts in particular as to whether an owner-manager of a trading company could be classed as being in a redundancy situation if they decide to close down their company.

uiop said:

Whats wrong with using your existing company as the investment vehicle for the new Australian company ? Kind of like a subsidiary ? That way wouldnt you get the maximum capital invested and minimum losses to tax ?

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Incredible "advice". I don't think this would be a good idea. For a start, group companies cannot avail of audit exemption so an Irish auditor would each year have to audit a semi-dormant Irish company with an operating subsidiary in Australia. Your €80k would be eaten up by audit fees within a few years.

ubiquitous said:

This has been discussed previously on AAM. I don't know if it is as straightforward as you think. There would be doubts in particular as to whether an owner-manager of a trading company could be classed as being in a redundancy situation if they decide to close down their company.

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I rang revenue earlier & was told that I could do this.

Not sure If I'm supposed to open another thread, but here's another accountancy related question which follows on from my inital question........

Let's say I get 12K out of my Company Bank Account as a result of claiming redundacy. So if there's now 20K still in my company account, should I ask the potential buyer to give me 60K for the business (40K for business & 20K for what's in the Company Bank Account) & then pay CGT of 20% on 60K, rather than getting 40K for the business & having to take a 40% hit on the 20K that I would withdraw from the bank. Hopefully I don't confuse people with how I've spelt that out. While it may be beneficial for me to do this, is there a downside to the buyer carrying out the transaction in this way?

the 40K in the bank belongs to the company, so when you sell the company, the money goes with it.

Therefore, take this into account when selling.

Redundany is a good option. Minimum of 10k, can be much more depending on prior years salary and years service.

Also, consider a pension lump sum payment prior to selling.

Are you eligable for retirement relief? 55yrs

Did you buy the company?? Offset cost against sale proceeds..

Did you incorporate from a sole trader, was there goodwill, put on the balance sheet?

As you can see, lots of options, so get good advice....