Readers’ forum: Antipodean venture

Our client who is resident and domiciled in the UK wishes to invest £500 000 in an Australian company that runs a restaurant in Perth. This will be in the form of a loan repayable within two years and carrying an interest rate of 6%. Our client will own 50% of the issued share capital at a cost of £500.

We anticipate that the company will: first repay the loan to our client; second pay dividends to both the shareholders; and third be sold at a profit within five years. Our thoughts are as follows.

First we believe it would be more beneficial in terms of reducing the amount of Australian and UK taxation on interest income for the loan to be granted by our client personally. However we also believe there may be advantages in the shares being owned...