DCU CFB workshop - The Family Business: preserving and transferring wealth - Speaker Slides Mr Vincent Carton, Manor Farm Mr Tim Lynch, KPMG

1. The Family Business:
preserving and
transferring wealth
19th November 2014

2. A PRESENTATION TO
DCU - Family Business Succession
by
Vincent Carton

3. Poultry Industry -
up to 1960’s
Boiling Fowl Spring Chicken

4. 2014
41m Birds
155,000T feed
€238m
865 employees
Carton Bros, Poulterers since 1775
2013
40m Birds
151,000T feed
€231m
815 employees

5. Succession – Carton’s Story
Succession

6. 1. William Carton 1723 – 1790 Carpenter/Livery stable
2. George Carton 1755 – 1804 Livery stable
3. Peter Carton 1787 – 1830 Poulterer
4. Denis Carton 1813 – 1865 Fowl & Game Factor
5. Thomas Carton 1844 – 1927
Joseph Carton 1842 – 1921 Partners, Carton Bros.
Peter Joseph Carton 1851 – 1938
6. Vincent Denis Carton 1888 – 1963
Fonso Carton 1885 – 1981 Directors, Carton Bros
Ado Carton * 1894 – 1990
Thomas Martin Carton 1897 – 1967
Leo Anthony Carton 1887 – 1913 Worked in Carton Bros
Peter John Carton 1898 – 1936
7. Thomas P. Carton 1922 – 2012
Brian Carton 1924 – 1985 Directors, Carton Bros
Myles Carton * 1928 –
Hugh Carton * 1920 – 2003
8. Vincent Carton 1958 –
Justin Carton 1959 –
Carton
Bros
Estd. 1775

7. Poultry & Game - 1775 - Present
Boiling Fowl 1775 – 1960’s
Turkey (Christmas) 1880’s – 1976
Rabbits 1890’s – 1956
Game 1890’s – 1980’s
Chickens - 1961 – present
Hatchery 1968 – 2008
Processing 1961 – present
Feed Mill 1976 - present
Eggs 1890’s - 1988
Tea 1930’s - 1969
Grocery 1890’s – 1976
Cash & Carry’s 1950’s - 1976
Butter 1880’s - 1970
Bachelors' Peas 1927 - 1938
Wines & Spirits 1850’s - 1965
Imported Tinned Fruit Agents 1950’s - 1986
Chilled Food Distribution 1991 - 2003
Carton
Bros
Estd. 1775

8. Family Business Dilemmas
• Family
– Happiness
– Wealth transfer & growth
– Togetherness
– Fairness
• Business
– Values
– Meritocracy
– Professionally managed
• Divorce / Spouses / Capital

9. 1. William Carton (1723 – 1790)
2. George Carton (1755 – 1804)
3. Peter Carton (1787 – 1830)
4. Denis Carton (1813 – 1865)
Family
Peter Joseph Carton
(1851 – 1938)
Carton
Bros
Estd. 1775
Joseph Carton
(1842 – 1921)
Thomas Carton
(1844 – 1927) 5
6 Ado Carton *
Vincent Carton
(1894 – 1990) (1888 – 1963)
Fonso Carton
(1885 – 1981)
Thomas Carton
(1897 – 1967)
Leo Carton
(1887 – 1913)
Peter Carton
(1898 – 1936)
Hugh
7
Ruth Brian Ann Myles Garret Mary
Thomas Miriam Enid Helene
8 Vincent Justin
9 Kate Sophie Isabelle Geraldine Chloe Holly Aimee Alanna

10. Succession without a Plan
• Gen 1 to 6
• Gen 7
• Gen 8
– 1979
– Vincent
– 1980’s
– Not happening
– The talk (1998)
• Learning's

11. Family in the Business
a) Family Council & Charter
b) Good Shareholder
c) Summer work
d) Criteria for next gen
e) Skillset
f) Passion
g) Progression plan
h) Choosing the leader
i) Standing on the shoulders of giants

12. Learning's
• Transfer timing – Crisis
• Wealth transfer – what exists
• Who selects the leader ?
• Family engagement
• Non family
• Talk of failures

13. Thank You

15. The Legacy Series
The Family
Business:
Preserving &
transferring
wealth
Event Partner:
Supporters:
Quinn Family
Foundation

16. The Family Business:
Preserving and
transferring wealth
19 November 2014
Mr Tim Lynch

17. Transferring family business – general tax considerations
Parent Child
Family business transferred
Family Business
Transfer or sale of Family Business to child
1. CGT @ 33% for parent
2. Retirement Relief available:
 Over 55 and less than 66 (for some)
 Owned assets for 10 years
 Director for 10 years (full time at least 5 of those years)
 Chargeable business assets / family trading company
 Clawback – 6 years
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 17
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

18. Transferring family business – general tax considerations
Parent Child
Family business transferred
Family Business
Receipt of family business from parent
1. CAT @ 33% on market value of gift
2. Business Property Relief – reduce value of business by 90%:
 Parent held the assets for 5 years
 Child receives shares in family trading company
 Clawback – 6 years
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 18
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

19. Transfer business/shares to Son/Daughter
Assume value of Family Co Ltd is €10 million
No Reliefs Reliefs Claimed
CGT for parent €3.3 million Nil
CAT for child €3.3 million €330,000
Aggregate Taxes Payable €6,600,000 €330,000
Effective Tax Rate 66% 3.3%
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 19
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

20. Transferring shares – use of special share
Parent Child
Family Business
Step 1
Step 2
Step 1 : The company issues special share capital to parent – this special share
entitles the parent to a dividend each year
Step 2: The parent transfers the ordinary shares to the child
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 20
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

21. Sale of family business to child at undervalue
Parent Child
Family Business
€10 million
€ 1 million
Sale of100% shares
 CGT Retirement Relief
 CAT Business Property Relief at 3.3% on amount of gift (€9 million)
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 21
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

22. Gift 90% of shares to child and 10% of shares redeemed by the
company
Parent Child
Step 1:
90% shares
90Family Business€10 million
Step 2:
10%
Family Business
€7.5 million
Step 1: The parent gifts 90% of the ordinary share capital to child
Step 2: The company redeems the remaining 10% of shares from parent
 90% to child:
– Parent qualifies for CGT Retirement Relief
– Child qualifies for CAT Business Property Relief
 10% redeemed by company:
– CGT Retirement Relief up to €750,000
– N.B. Trade benefit test
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 22
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

23. Other CAT reliefs
1. €3,000 annual small gift exemption
2. CAT threshold: Group A - €225,000
3. Dwelling house relief
4. Payment for support, maintenance and education:
 “is reasonable having regard to the financial circumstances of the disponer.”
 Change included in Finance Bill 2015
5. CGT / CAT offset
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 23
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

24. CGT 7 year exemption
Acquired
7/11/2011 31/12/2014
Gain
Exempt
7 years after
purchase
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 24
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

25. Personal Holding Company
Personal Holding
Company
Trading Company
Other
Investments
© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 25
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

26. Thank You
Presentation by Tim Lynch
Telephone - 01 7004032
Mobile - 087 0504032
Email - tim.lynch@kpmg.ie
THIS ADVICE CAN ONLY BE RELIED UPON BY OUR CLIENT ON THE TERMS AND CONDITIONS AGREED AND RECORDED IN OUR
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WITHOUT OUR PRIOR WRITTEN CONSENT. WHERE WE DO GIVE SUCH CONSENT THEN THE ADVICE WILL BE TRANSMITTED TO THAT
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TO THE FULLEST EXTENT PERMITTED BY LAW, KPMG ACCEPTS NO LIABILITY FOR ANY LOSS OR DAMAGE SUFFERED OR COSTS
INCURRED BY ANY PARTY OR PERSON, OTHER THAN THE CLIENT UNDER THE TERMS OF OUR ENGAGEMENT LETTER, ARISING OUT OF,
OR IN CONNECTION WITH, OUR ADVICE, HOWSOEVER THE LOSS OR DAMAGE IS CAUSED.

27. Event Partner
Our Supporters
Quinn Family Foundation

28. DCU Centre for Family Business
www.dcu.ie/centreforfamilybusiness
Email: familybusiness@dcu.ie
Phone: +353 1 700 6921
Linked In: DCU Centre for Family Business
Quinn Family
Foundation