Business Taxes

10.6.Detail the issues surrounding assets held on trust for participators and associates

Section 436A TCA97 treats the transfer of any asset on or after 21 January 2011 to a trust held for the benefit of a participator (excluding a loan creditor) or a relative of a participator as a distribution by the company to the trustees of the settlement.

When a participator or relative of a participator receives a benefit from the settlement, either directly or indirectly they will be subject to a charge to tax under Schedule D Case IV if the benefit is not already subject to income tax. Consideration should also be given to whether any CAT Issues arise (although this is outside the scope of this module).

This applies to benefits received from a relevant settlement on or after 21 January 2011 regardless of when the settlement was originally made.

This section does not apply where it is shown that the settlement was not made as part of a scheme or arrangement the purpose or one of the purposes of which was the avoidance of tax.