Question asked:


Can dividend income from a private company also be construed as a gift?
I’m thinking of a family company, say mother and father who own all the equity in a company. Say some of the children hold shares which are only entitled to dividends (no equity or voting rights). If the children receive dividends (which they may receive tax free due to residency status), could it also be considered a gift from the parents?
My initial thought was no, but then I thought that Revenue may view it as passing assets (cash) to the children (who have no real ‘interest in the business’).

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Posted by (Questions: 16, Answers: 673)
Asked on 26 January 2017 3:31 pm
Private answer

No, it would be income, but if there was value shifting within the company (value passing from one shareholder’s shares to another shareholder’s shares) then the transferred value would be a gift in the hands of the value recipient – see CATCA 2003 s 44.

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Posted by (Questions: 5, Answers: 5006)
Answered on 4 February 2017 6:39 pm