Page 196 - DCOM508_CORPORATE_TAX_PLANNING

Unit 8: Tax Planning for Different Organisations

15. A retirement plan is a tax advantage to a person who is self-employed. Notes

16. A company owner needs to be aware of anything that might impact taxes paid.

Case Study A Self-employed IT Consultant

pes Wealth Trust met with Brian, a 41 year old self-employed IT Consultant earning
€140,000 per annum. Brian is married to Emma and they have two children aged
O7 and 4. They have a mortgage-free home. They have no Will in place. Opes Wealth

Trust began the ‘Financial Solutions Service’ by firstly carrying out a detailed fact-fi nding
exercise with Brian and Emma, followed by a comprehensive financial planning exercise.

We have detailed below some of the specifi c fi ndings.

1. We have helped Brian and Emma identify their financial objectives and the level of
lifestyle income they desire at their desired target date (when Brian is aged 60).
2. We outlined the capital fund required to meet this target.
3. We assessed their progress against this target based on their current asset base and
the existing regular level of pension funding and savings/investing.
4. We outlined the additional regular funding that would be required to reach their
fi nancial target.
5. We outlined tax-efficient planning tools and how such structures can greatly enhance

real returns.
We provided a detailed analysis of their investments and detailed the annual investment

returns that would need to be achieved to reach their financial goals. We also provided
an analysis of their stated tolerance to investment risk versus where their current assets
actually are at present relative to this. We outlined the relevance of this to them, and the
relationship between investment risk and reward.
Choosing the Right Business Structure
We outlined the drawbacks to operating as a sole trader and provided a comprehensive
outline of the benefits (of which there are many as outlined in more detail below) to Brian

of incorporating his business and operating as a company going forward.
Once we had quantified their monthly lifestyle income, which was €3,500 net per month,

we showed Brian the advantages of the corporate structure in reducing his effective tax
rate.
Protection
A comprehensive analysis of their protection requirements was undertaken.
Brian is the primary income earner, and particularly with two young children, it is essential
that his income is protected in the event of illness, disability or death. We put the appropriate
level of protection in place for the appropriate term at the most competitive cost.
Estate Management
As Brian and Emma have no Will in place, we highlighted the serious implications that this
can have on their estate and their children’s welfare in the event of their untimely death.
We held a number of meetings with them discussing the sensitive issue of their fi nal
wishes and who they would like to perform certain roles e.g. the Executor, Trustee and
Guardian.
Contd...

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