Structure
A family company holds assets (real estate, investments, business interests) with family members as shareholders. By gradually transferring shares from parents to children (through gifts or at nominal cost), the family effectively transfers wealth without triggering immediate tax events. The company continues to manage the assets professionally.
Tax Advantages
Transferring shares in a family company to children is a gift to relatives – exempt from capital gains tax. The children receive shares with a basis equal to the parent's original investment. Dividends from the company can be distributed to all shareholders at 25% tax. The company can use the family company election (Section 64A) for transparent taxation if all shareholders are family members.
Practical Considerations
Family company structures require careful planning: shareholders' agreements, governance rules, dividend policies, and exit mechanisms should all be established from the start. Without these, family disputes can be costly and disruptive. Professional legal and tax advice is essential.
בסיס חוקי
- Section 64A – Family company election
- Section 97(a)(5) – Gift to relative
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.