Archive for the ‘Tax Adviser’ Category
- The new tax provisions for civil partnership have been published. They affect a wide range of taxes. Essentially, they allow a legal civil partnership the same tax status as marriage. For example civil partners will be entitled to joint assessment for Income Tax
The s moking ban forced many businesses to erect smoking areas. Hotels and bars had to install large facilities to cater for their smoking customers. These would normally class as buildings. As such, they get no capital allowances. An English court case decided that a large gaebo style smoking area attached to a bar building by metal fixings counted as plant.
As such it is entitled to capital allowances against taxable profits
Business should review this to see if they can make a claim
People with vacant land or buildings sometimes make them available for sales or auctions and similar events. Owners of premises may also provide them for concerts or other entertainments. These owners need to comply with certain VAT rules where
there are mobile traders not established in Ireland e.g. from Northern Ireland and they will trade for less than 28 days at the venue
Where VAT on an activity is due in the place where it is performed. For example, if a venue owner allows a British promoter to run a concert at his premises, the VAT is due in Ireland.
The premises owner notify Revenue 14 days in advance of the event or trading activity.
If they do not, Revenue may make them jointly liable with the trader or promoter for any VAT due. If the promoter fails to pay the provider will have to foot the bill
The Universal Social Charge will affect how you pay Preliminary Tax for the 2011 tax year. This will fall due on 31 October 2011.
before the Social Charge you would have had to pay
- 90% of your 2011 liability
- 100% of your 2010 liability
- 105% of your 2009 liability if paying by direct debit, where 2009 liability greater than zero
Now these amounts must include an extra provision for the Universal Social Charge. The charge did not apply for 2010. Therefore, the preliminary Tax should be calculated as if the USC had existed. ROS software is being adjusted to assist the taxpayer in the calculation
Electronically Traded Funds
In recent years these have become a common method of fund investing. However, they can sometimes lead to tax problems as the correct treatment is not understood. many investors believe that they qualify for Capital Tains Tax treatment. This is not the case.
What are Exchange Traded Funds(ETFs)?
ETF’s are funds which invest in baskets of shares and securities across international exchanges. The investor buys units of these funds. This enables him to spread his investment risk across a number of investments using a single fund. in effect, this is the same as investing in unit trusts.
What are the tax implications?
The investments are liable to income tax under a special regime. The key factor is where the fund is resident. These will almost certainly be offshore i.e. non-irish resident. The treatment depends on whether the fund is a
- good offshore fund
- bad offshore fund
When you acquire a “material interest” in the fund you must diclose it in your return. A material interest is any investment which can be sold within 7 years.
Good Offshore Fund
These are resident in an OECD country which has a Double Tax Treaty with Ireland. Both conditions must be met. China has a ttreaty but is not in the OECD. Therefore it does not qualify.
Tax is chargesd at 30% on
- receipts from the fund
- sale of units
- accumulated gains during an 8 year roll up period
If you fail to declare the acquisition of a material interest in a “good” fund it will be treated as a “bad” fund
Bad Offshore Funds
These are taxed at a special rate of 48%.
Losses on funds
Losses cannot be offset agains gains on other funds. They cannot be carried forward. In effect, they are useless.
These are brief notes for guidance. When dealing with the tax treatment of funds you should seek professional advice.
The National Asset Management agency has been set up to manage non-performing property loans. As part of the set-up the government aims to prevent windfall gains from re-zoning land.
It has imposed an 80% rate of Capital Gains Tax on certain land disposals. This has caused some confusion as many taxpayers think that it relates to all land disosals are caught.
The disposals caught by the tax are
- Where the land has been rezoned.
- Getting planning permission is not rezoning.
- The designation of the land must change from
non-development to development
from on type of development to another e.g from commercial to residential
Finance Act 2010 introduced a provision that planning perissions involving a material contravention of the Local Development Plan are also caught by the tax
This very brief outline shows how complex this issue is. You should always seek professional taxadvice.
There is some evidence of increased Revenue focus on rented property. The main reasons for this are
undeclared rental income
possible undeclared income used to buy the property
possible invalid claim of stamp duty exemptions
If a taxpayer falls foul of any of these it can lead to significant interest and penalties. Stamp duty problems could cause bills of tens of thousands alone. Revenue get information on rentals and are able to link up with stamp duty payments and exemptions.
Landlords who feel they may have a problem should contact their tax adviser to help resolve it.
There were no changes to basic rates and cut-off points. The main changes were
- Mortgage Interest Relief
- High Earners restrictions
Mortgage Interest Relief
Qualifying loans taken out before 1st July 2011 will get relief for 7 years
There will be transitional measures for loans taken out between 1st July 2011 and 31st 12 2013.
Those whose entitlement to relief would expire in or after 2010 will continue to get the relief till the end of 2017.
The relief expires at the end of 2017.
High Earners Specified Reliefs
This affects taxpayers who had availed of what are called specified reliefs e.g. Section 23. They are taxed on an adjusted income calculation which reduces the value of these reliefs. Previously, the entry point to this restriction was €250,000. It is now decreased to €125,000. The full restriction kicks in at €400,000. The aim is to raise these taxpayers effective tax rate to 30%.
This can be a complex area and tax advice should be sought
Non-resident individuals who
- Retain Irish domicile and
- Have Irish assets exceeding €5 million and
- Worldwide income over €1 million
will pay an annual levy of €200,000.
A new tax on fossil fuels has been introduced based on the carbon content. The tax is
Excise duty on Alcohol
This was reduced with effect from midnight on 9th December 2009. Wholesalers who had built up stocks will be hit as there is no reclaim mechanism.
The exemption from Corporation Tax for the first three years trading by a start-up company has been extended to start-ups in 2010.
Value Added Tax
The standard rate of VAT has been changed back from 21.5% to 21%. This is effective from 1st January 2010.
Capital Gains Tax
There were no changes in Capital Gains Tax.
Capital Acquisitions Tax
There were no changes
For any queries or help on your tax affairs, we at Conlon O Sullivan & Co, Registered Tax Consultants can offer you a proactive and expert service. Please contact us to arrange a consultation.