Loans to Limited company

M

macbane66

Guest
Hi,

Does anyone know if any major tax implication and directors comliance issues arise if for example a director of a company takes a loan from his father or mother to part finance a major project.

I'd assume the only implication would be that the transaction would have to be at arms lenght and a reasonable level of interest would need to be paid over.

Would it need to be repaid within a certain timeframe in full in order to not be deemed taxable under capital acquisitions tax?

Thanks
D
 
Just to clarify - do you mean the parent lends money to the company or to the director?
 
Either really what do you think would make more sense?

From parent , this would be in personal capacity but obviously have to be repaid , is there a limit on timeframe in order to utilise a parent with cash resources but not to use up and trigger a tax bill on CAT i.e 2 years etc

To Company, if company folded this would probably not make as much sense unless it was set up as a secured creditor.
 
macbane66 said:
Either really what do you think would make more sense?
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I don't know - just think you should clarify so that people who might know the answer know more about what you want to do.

Presumably this is to finance a company project?
 
The CAT limits are very high. Your father can give you around €500k without triggering a tax liability and I presume that your mother can do the same.

If it's less than that, you don't have a problem. If it's more than that, then you should be doing more extensive and professional tax planning through a tax specialist.

If you are buying equipment, your parents could buy the equipment and lease it to the limited company. This would give them some security if the company fails.

Brendan
 
Brendan said:
Your father can give you around €500k without triggering a tax liability and I presume that your mother can do the same.
Click to expand...

Not quite. The €500k threshold is cumulative, ie including all gifts & inheritances from parents since Dec 1991.
 
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