19th november cfb event - speaker slides
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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
THIS ADVICE CAN ONLY BE RELIED UPON BY OUR CLIENT ON THE TERMS AND CONDITIONS AGREED AND RECORDED IN OUR
ENGAGEMENT LETTER AND SHALL NOT BE COPIED, REFERRED TO OR DISCLOSED, IN WHOLE OR IN PART, TO ANY OTHER PARTY
WITHOUT OUR PRIOR WRITTEN CONSENT. WHERE WE DO GIVE SUCH CONSENT THEN THE ADVICE WILL BE TRANSMITTED TO THAT
PERSON FOR INFORMATION ONLY AND CANNOT BE RELIED UPON BY THEM UNLESS WE HAVE EXPLICITLY AGREED IN WRITING THAT
THEY MAY RELY ON IT.
TO THE FULLEST EXTENT PERMITTED BY LAW, KPMG ACCEPTS NO LIABILITY FOR ANY LOSS OR DAMAGE SUFFERED OR COSTS
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
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