Archive for the ‘Tax Returns’ Category

Exchange Traded Funds

Friday, December 31st, 2010

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 treatment

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.

Who needs to file an Income Tax return?

Monday, January 4th, 2010

A common assumption is that only business owners need to file a personal tax return. In fact, quite a number of other people must complete a return.

Basic Rule

You must file a return if your non-PAYE income is higher than can be catered for by Revenue adjusting your credits and allowances. In practice, this is about €3,510.

Certain categories of people must always file a return, regardless of amount e.g.

  1. Proprietary directors owning over 15% of a company even if paying PAYE
  2. Employees who receive share options.

Some other examples of income which can mean your having to file a return are


  1. Business profits
  2. Deposit Interest
  3. Loan interest receivable
  4. Rental Income
  5. Mutual Funds
  6. Capital Gains

If you need help with a tax return you should get professional advice

Employed or Self-Employed Status

Monday, January 4th, 2010

Revenue are increasingly querying the status of self-employed contractors such as

  • Consultants
  • Tradesmen
  • Locum doctors, opticians, pharmacists

Why is this happening?

Revenue prefer employee status. They can collect tax easier through PRSI

Some self-employed schemes were shams used for tax avoidance

Employees pay higher PRSI

What does it mean to you?

As a business owner you need to be careful in this area. If you treat someone as self-employed and revenue deem it an employment

  1. You could be assessed for PAYE and PRSI on top of previous payments
  2. The “employee” might acquire rights like redundancy .

How is the issue decided?

There are no set rules. Each case is decided on its own facts. The legal basis is whether the person is in fact “in business on their own account” The main guidelines are

  • Previous cases decided
  • Guidelines issued by the Committee on the Status of Employment. Key Factors
Does the employee provide labour only?.  Favours employment
Can they send a substitute? Favours self-employed
Can they make a loss in the activity? Favours self-employed
Are they integrated into your business e.g. Holiday pay, pension?. Favours employment
Are they closely supervised e.g. working hours, routine task monitoring. Favours employment

 If faced with a challenge on these issues you should consult your tax adviser for support