The Family Business: preserving and

transferring wealth

19th November 2014

A PRESENTATION TO

DCU - Family Business Succession

by

Vincent Carton

Poultry Industry -up to 1960’s

Boiling Fowl Spring Chicken

201441m Birds

155,000T feed€238m

865 employees

Carton Bros, Poulterers since 1775

201340m Birds

151,000T feed€231m

815 employees

Succession – Carton’s Story

Succession

1. William Carton 1723 – 1790 Carpenter/Livery stable

2. George Carton 1755 – 1804 Livery stable

3. Peter Carton 1787 – 1830 Poulterer

4. Denis Carton 1813 – 1865 Fowl & Game Factor

5. Thomas Carton 1844 – 1927Joseph Carton 1842 – 1921 Partners, Carton Bros.Peter Joseph Carton 1851 – 1938

6. Vincent Denis Carton 1888 – 1963Fonso Carton 1885 – 1981 Directors, Carton BrosAdo Carton * 1894 – 1990Thomas Martin Carton 1897 – 1967Leo Anthony Carton 1887 – 1913 Worked in Carton BrosPeter John Carton 1898 – 1936

7. Thomas P. Carton 1922 – 2012Brian Carton 1924 – 1985 Directors, Carton BrosMyles Carton * 1928 –Hugh Carton * 1920 – 2003

8. Vincent Carton 1958 –Justin Carton 1959 –

Carton Bros

Estd. 1775

Poultry & Game - 1775 - PresentBoiling Fowl 1775 – 1960’sTurkey (Christmas) 1880’s – 1976Rabbits 1890’s – 1956Game 1890’s – 1980’sChickens - 1961 – present

Hatchery 1968 – 2008Processing 1961 – presentFeed Mill 1976 - present

Eggs 1890’s - 1988

Tea 1930’s - 1969

Grocery 1890’s – 1976Cash & Carry’s 1950’s - 1976

Butter 1880’s - 1970

Bachelors' Peas 1927 - 1938

Wines & Spirits 1850’s - 1965

Imported Tinned Fruit Agents 1950’s - 1986

Chilled Food Distribution 1991 - 2003

Carton Bros

Estd. 1775

• Family– Happiness

– Wealth transfer & growth

– Togetherness

– Fairness

• Business– Values

– Meritocracy

– Professionally managed

• Divorce / Spouses / Capital

Family Business Dilemmas

1. William Carton (1723 – 1790)

2. George Carton (1755 – 1804)

3. Peter Carton (1787 – 1830)

4. Denis Carton (1813 – 1865)

Peter Joseph Carton(1851 – 1938)

Joseph Carton (1842 – 1921)

Thomas Carton (1844 – 1927)5

Ado Carton *(1894 – 1990)

6 Vincent Carton (1888 – 1963)

Fonso Carton(1885 – 1981)

Thomas Carton (1897 – 1967)

Leo Carton(1887 – 1913)

Peter Carton(1898 – 1936)

Hugh

7

BrianRuth Ann Myles Garret Mary

Thomas Miriam Enid Helene

8 Vincent Justin

Kate Sophie Isabelle Geraldine Chloe Holly Aimee Alanna9

Carton Bros

Estd. 1775Family

• Gen 1 to 6

• Gen 7

• Gen 8– 1979

– Vincent

– 1980’s

– Not happening

– The talk (1998)

• Learning's

Succession without a Plan

a) Family Council & Charter

b) Good Shareholder

c) Summer work

d) Criteria for next gen

e) Skillset

f) Passion

g) Progression plan

h) Choosing the leader

i) Standing on the shoulders of giants

Family in the Business

• Transfer timing – Crisis

• Wealth transfer – what exists

• Who selects the leader ?

• Family engagement

• Non family

• Talk of failures

Learning's

Thank You

The Legacy Series

The Family

Business:

Preserving &

transferring

wealth

Event Partner:

Supporters:

Quinn Family

Foundation

The Family Business:

Preserving and

transferring wealth

19 November 2014

Mr Tim Lynch

17© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Transferring family business – general tax considerations

Family Business

Transfer or sale of Family Business to child

1. CGT @ 33% for parent

2. Retirement Relief available:

Over 55 and less than 66 (for some)

Owned assets for 10 years

Director for 10 years (full time at least 5 of those years)

Chargeable business assets / family trading company

Clawback – 6 years

Family business transferred

Parent Child

18© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Transferring family business – general tax considerations

Receipt of family business from parent

1. CAT @ 33% on market value of gift

2. Business Property Relief – reduce value of business by 90%:

Parent held the assets for 5 years

Child receives shares in family trading company

Clawback – 6 years

Family Business

Family business transferred

Parent Child

19© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Transfer business/shares to Son/Daughter

Assume value of Family Co Ltd is €10 million

No Reliefs Reliefs Claimed

CGT for parent €3.3 million Nil

CAT for child €3.3 million €330,000

Aggregate Taxes Payable €6,600,000 €330,000

Effective Tax Rate 66% 3.3%

20© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Transferring shares – use of special share

Family Business

Step 1

Step 2

Step 1 : The company issues special share capital to parent – this special share

entitles the parent to a dividend each year

Step 2: The parent transfers the ordinary shares to the child

Parent Child

21© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Sale of family business to child at undervalue

Family Business

€10 million

Sale of100% shares

€ 1 million

CGT Retirement Relief

CAT Business Property Relief at 3.3% on amount of gift (€9 million)

Parent Child

22© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Gift 90% of shares to child and 10% of shares redeemed by the

company

90Family Business€10 million

Step 1:

90% shares

Step 1: The parent gifts 90% of the ordinary share capital to child

Step 2: The company redeems the remaining 10% of shares from parent

Step 2:

10%

Family Business

€7.5 million

90% to child:

– Parent qualifies for CGT Retirement Relief

– Child qualifies for CAT Business Property Relief

10% redeemed by company:

– CGT Retirement Relief up to €750,000

– N.B. Trade benefit test

Parent Child

23© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Other CAT reliefs

1. €3,000 annual small gift exemption

2. CAT threshold: Group A - €225,000

3. Dwelling house relief

4. Payment for support, maintenance and education:

“is reasonable having regard to the financial circumstances of the disponer.”

Change included in Finance Bill 2015

5. CGT / CAT offset

24© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

CGT 7 year exemption

7/11/2011 31/12/2014

AcquiredGain

Exempt

7 years after

purchase

25© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

Personal Holding Company

Trading Company

Other

InvestmentsPersonal Holding

Company

Thank You

Presentation by Tim Lynch

Telephone - 01 7004032

Mobile - 087 0504032

Email - tim.lynch@kpmg.ie

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THEY MAY RELY ON IT.

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INCURRED BY ANY PARTY OR PERSON, OTHER THAN THE CLIENT UNDER THE TERMS OF OUR ENGAGEMENT LETTER, ARISING OUT OF,

OR IN CONNECTION WITH, OUR ADVICE, HOWSOEVER THE LOSS OR DAMAGE IS CAUSED.

Our Supporters

Quinn Family Foundation

Event Partner

DCU Centre for Family Business

www.dcu.ie/centreforfamilybusiness

Email: familybusiness@dcu.ie

Phone: +353 1 700 6921

Linked In: DCU Centre for Family Business

Quinn Family

Foundation