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  • #982341
    Anonymous
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    Hi Guys,

    Would it be possible for the company to pay its director by purchasing ASX listed shares i.e. TLS, CBA as a form of payment? Can the company purchase these shares under someone else’s name (Wife)?

    If so what are the tax implications.

    Cheers,
    Adriano

    #1136252
    Anonymous
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    Hi Adriano, and welcome to Flying Solo.

    I hope someone around here will be able to point you in the right direction there, but suspect you may need to speak to your accountant.

    All the best, and thanks for joining us.
    Jayne

    #1136253
    al.giffard
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    Hi Adriano,

    A director of a company can be remunerated pretty much however they and the company agree, including purchasing listed shares on behalf of someone else. But I assume you’re main question is whether this sort of thing would be tax effective? The short answer is no.

    If the director already had some salary or bonuses payable to them, and then agreed for the company to issue the shares instead, this is what is called “constructive receipt” of the income. The director is treated as though they were paid the cash they were owed.

    If the agreement were made before any amounts became payable (that is, before the director performed their services to the company), it would likely be subject to Fringe Benefits Tax. While this might reduce the director’s tax bill, the company would probably have to pay FBT on the value of the shares – which is effectively at the top marginal tax rate. It’s really just shifting the tax obligation from the director to the company.

    I hope that answers your question.

    Cheers,

    Al.

    Standard disclaimer: This is general information and should not be relied on as professional advice.

    #1136254
    ONE STOP TAX
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    May cause FBT implications and even CGT on transfer.


    ONE STOP TAX
    http://www.onestoptax.com.au

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