Tax implications of share transfer to family member between UK and Australia

Question

What are the tax implications of an Australian residing in Australia working as a director on a board of a small private UK company transferring shares to a family member in Australia.

The shares would not be bought or sold, just a transfer of ownership.

The share transfer would potentially only be temporary, and be transferred back within a few years.

During that time the price of the shares would most probably be changed.

Is there any other information I would have to provide for this question to be answered such as other roles in the company, the type of company, and income of both parties involved in the transfer.

Answer 1

The transfer of shares would generate two Capital Gains Tax events, one disposal from the director and one acquisition to the family member. The director would (potentially, depending on the original acquisition details) be up for CGT at this point. The subsequent transfer back would have a similar, mirrored effect, with the family member now potentially liable for a CGT payment (assuming an increase in value). While holding the shares, any dividends will be added to taxable income, declared as foreign taxable income.

As you're dealing with shares in a private company, valuation will be fun to prove to the Australian Tax Office, especially given the planned ping-ponging.

Consult an accountant. Foreign dividend income, international tax treaties: yuck. Does the UK even have dividend imputation?