You are a tax senior working in a large tax practice in Dublin. A client of yours, Tony Murphy, has provided you with the following information:

1) Tony, who will turn 66 on the 1st of May 2022, is married to Ann. They have no children. Tony has been a working director of his family company for the past 20 years. He owns 80% of the voting rights of the company and plans to continue working in the company for the foreseeable future. His niece, Maria, has worked in the company for the past 15 years on a full-time basis.

Tony is considering gifting some of his shares in the family company to Maria. The current market value of the shares he wants to gift to her is 4,000,000. He is also considering selling some of his remaining shares to a third party. The market value of these shares is currently 600,000. The market value of all shares is expected to remain the same for the foreseeable future.

2) Tonys wife, Ann, is a sole trader and has been in business for 5 years. She is considering incorporating her business as she has heard of the many benefits that are attached to incorporation including the potential availability of tax relief for start-up companies.

Tony and Ann have asked you to provide taxation advice in relation to all of the above.

REQUIREMENT:

Prepare a report for Tony & Ann detailing your advice in relation to Capital Gains Tax & Corporation Tax.

Your report should include advice in relation to:

1. Capital gains tax reliefs/exemptions that Tony may be entitled to on the proposed gift to his niece, Maria.

2. Capital gains tax reliefs/exemptions that Tony may be entitled to on the proposed sale of shares to a third party.

3. Any potential clawbacks of any reliefs/exemptions which may be available.

4. The pros and cons associated with operating a business as a company as opposed to a sole trader.

5. Tax relief for start-up companies and whether Ann would be entitled to claim this if she does incorporate her business.