Help with what to do with a windfall

[johnpendles]

Hi JP.

If you old the shares what would you lose in CGT?
Without selling you ocould probably pay out that home loan in 1 to 2 years anyway. Do you think this is possible?

Hi mate,

No, i dont think so. Im still about 2.5 yrs away from a bump in income. So, i wont be putting in big chunks into the home loan till at least then. Over that time frame, we'll also be looking at having children which will also result in an increase in costs etc.

My view is that I am already heavily exposed to the stock as 50% of my holding is escrowed. So for risk management purposes it's prob reasonable to sell off the 50% i'm able to sell, it's just what to do with the proceeds that i'm not sure about.

 

[datto]

John,

What exactly is your profession.

Datto.

 

[Terry_w]

Hi mate,

No, i dont think so. Im still about 2.5 yrs away from a bump in income. So, i wont be putting in big chunks into the home loan till at least then. Over that time frame, we'll also be looking at having children which will also result in an increase in costs etc.

My view is that I am already heavily exposed to the stock as 50% of my holding is escrowed. So for risk management purposes it's prob reasonable to sell off the 50% i'm able to sell, it's just what to do with the proceeds that i'm not sure about.

It is june now - perhaps you could sell some shares this financial year and some next to reduce income tax - probably won't make much difference tho.

 

[Scott No Mates]

CGT is going to be an issue, why not gear against the shares to invest?

I would suggest you seek out Montgomery Wealth or the like (who do others in your line of work use)?

My concern is long term - will the company be around when you retire or is it flash in the pan?

 

[Scott No Mates]

John,

What exactly is your profession.

Datto.

Importer of pseudoeffedrine and cooks a little?

 

[johnpendles]

Importer of pseudoeffedrine and cooks a little?

 

[johnpendles]

CGT is going to be an issue, why not gear against the shares to invest?

I would suggest you seek out Montgomery Wealth or the like (who do others in your line of work use)?

My concern is long term - will the company be around when you retire or is it flash in the pan?

Hi mate,

-I guess i'm wary of taking on too much debt

-Your 2nd point is a fair one, low liklihood but not out of the realm of possibility. 50% of my stock is escrowed till i retire so i dont really have much choice with that, but im selling the 50% component i can sell to mitigate this risk.

 

[datto]

Hey John, you're one of the yellow wiggles. I"d never have guessed lol.

 

[Nattl3s]

Lol. I think Walter White was on more than $1mil a year tho.

 

[coastymike]

Have you factored in the tax on the employee share scheme arrangement.

 

[Paul@PFI]

Johnpendle - In my experience with ESPs (executive share plans rather than employee share plans), rights etc there is always a need to understand the precise trigger and tax points and the possible events and their tax consequence. Then document it and monitor it. There is always a tax impact of these arrangements and its often not kind. If its a foreign company the tax issues can be far worse. Tax law doesnt normally grant you free shares that are then taxed on the way out. While they might have sell conditions imposed the risk remains on those shares too. Some of these arrangements are very elaborate and they are a high risk of audit - If you get it wrong. There is an income tax event in acquiring the shares, the income it pays, and interest on a loan, a future capital gain etc.

I would suggest you get quality tax advice as a start point. One former client of mine received $48m tax free doing this. We asked a foreign govt if they wanted to tax it - No. We applied for an Australian private ruling. Not taxable as income or as a capital gain. He hadnt even considered it being tax free in his concern to pay the right amount of tax.

You may consider using the shares as loan security. I have several exec clients who do this who have bough property. The concern is that if the shares 'do a OneTel' you could end up with a massive loan to repay. So good fianncial advice should follow the tax advice.

 

[johnpendles]

Have you factored in the tax on the employee share scheme arrangement.

as best i can i have.

as in structures to hold them in and holding them for 12 months prior to selling etc

seen an accountant for this.

 

[johnpendles]

Johnpendle - In my experience with ESPs (executive share plans rather than employee share plans), rights etc there is always a need to understand the precise trigger and tax points and the possible events and their tax consequence. Then document it and monitor it. There is always a tax impact of these arrangements and its often not kind. If its a foreign company the tax issues can be far worse. Tax law doesnt normally grant you free shares that are then taxed on the way out. While they might have sell conditions imposed the risk remains on those shares too. Some of these arrangements are very elaborate and they are a high risk of audit - If you get it wrong. There is an income tax event in acquiring the shares, the income it pays, and interest on a loan, a future capital gain etc.

I would suggest you get quality tax advice as a start point. One former client of mine received $48m tax free doing this. We asked a foreign govt if they wanted to tax it - No. We applied for an Australian private ruling. Not taxable as income or as a capital gain. He hadnt even considered it being tax free in his concern to pay the right amount of tax.

You may consider using the shares as loan security. I have several exec clients who do this who have bough property. The concern is that if the shares 'do a OneTel' you could end up with a massive loan to repay. So good fianncial advice should follow the tax advice.

Thanks for your reply mate. Very helpful.

I have sought an accountants advice but i must say, whilst i'm sure he knows what he's on about, i dont think he did a great job of conveying it to me. I asked around to try and find an accountant that i could go forward with and settled on him after a recommendation.

you seem to know what you're on about.