We are delighted to launch RadioNooneCasey a tax and financial initiative to save tax and structure your financial affairs efficiently. Our first podcast How to reduce your tax bill focuses on simple tax planning opportunities. If you have any questions on how to save taxes or how to structure your commercial & personal tax affairs more efficiently please contact Anthony Casey at 01 6766 476 or by email
So, the Revenue Commissioners have announced a review of ”the tax affairs of companies and their directors, where the main source of income is a contract or contracts “for service” with a larger company or companies (directly or through intermediaries), the company in question does not appear to have a substantial business separate from these contracts, and in most cases the director(s) are the only employees of the company and pay tax through PAYE”.
Revenue have “established that in many cases there are deficiencies in accounting for input costs and expenses, with the result that there has been a significant understatement of tax liability to the benefit of the director(s)”.
In other words, Revenue believe contractors are over claiming expenses relative to their work profile.
It is our understanding that Revenue are also examining the Umbrella/Managed company status of many contractors. There is real concern that the PRSI class applicable to many contractors operating through Managed companies is incorrect and substantial liabilities may exist.
This review is being carried out in the Revenue South West region incorporating Cork, Limerick, Kerry & Clare.
At Noone Casey we look after the tax affairs of many hundreds of contractors using our real time online accounting tool I-Finance. We ensure only appropriate expenses are claimed thus avoiding the issue of underpayment of taxes.
I-Finance is structured so that you
• Operate as a proprietary director of your own limited company. Why is that important?
o You have greater control over your own money – no 3rd parties controlling the bank account.
o You have no exposure from Revenue should they move against the umbrella/composite company structures.
o You can maximise simple tax saving techniques which are not available in a Sole Trader/Umbrella Company structure.
• We process all the financial administrative tasks relating to your contract – which gives you more time to focus on the things you want to do.
• We prepare and issue all your client-approved invoices.
• You dictate how much you want to be paid, we process the payroll for you and make sure all your PAYE/PRSI is correctly deducted and returned on your behalf.
• We monitor your company bank account and assist you execute a ‘same day payment’ model via online banking into your personal bank account.
• We offer you up-to-date advice on all allowable business related expenses.
• We prepare and file all your annual returns (both personal and company related).
• We advise you on how to financially plan for the future and assist you in selecting the best savings and investment options for you personally.
If you are operating as a contractor in the Munster region and have concerns over the expenses you have claimed and /or your Managed company structure, contact me today acasey@noonecasey.ie or 01 6766476 to discuss your affairs.
We will advise you on the correct route out of your potential difficulties.
A SARP return must be made by an employer of
employees who availed of relief under the Special
Assignee Relief Programme (SARP) during the year
ended 31 December 2012 on or before 15 February
2013.
Under the SARP program 30% of basic salary (to a
maximum of €127,500) is excluded from the charge to
Income Tax for employees who take up full time
employment in Ireland. Qualifying employees must have
been a full time employee with a Company incorporated
and resident in a Treaty State for the 12 months prior to
arriving within the State. The individual must also be
resident in Ireland to qualify for the relief. The relief
does not apply to Universal Social Charge or PRSI. An
Employer will also be able to bear the cost of certain
items for a relevant employee on a tax free basis to
include the cost of a return trip for the employee and
family to an overseas country to which they are
connected plus primary and or post primary school fees
up to €5,000 per annum per child where the school is
approved by the Minister of Education.
The SARP return is available on the Revenue website
and requests:
• details of the Employer and Employee registration
numbers
• employee name
• amount of income, profits or gains in respect of
which no tax was deducted
• costs associated with an annual return trip to the
country of residence or nationality for self and/or
family
• costs of school fees for children paid to an approved
school in the state
• increase in number of employees as a result of the
operation of the relief or number of employees
retained by the company as a result of the operation
of the relief
4
The Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (Act) was signed into law on 19 July 2011. The purpose of the legislation is to extend to registered civil partners the same tax treatment as is currently provided to married couples under the Tax Acts. It was anticipated that the Act would extend a similar tax treatment to cohabitants however the rights of cohabitants with regard to tax legislation have not been significantly increased in this Act.
Civil Partnership
A civil partnership is defined as a same sex relationship similar to a marriage where both parties have entered into a legal agreement under the Act. The Civil Partnership is required to register with the relevant Registrar in order to qualify for favourable tax treatment. Following the registration of the Civil Partnership, civil partners must notify their local Revenue office of the date of registration.
Thereafter the civil partners will be entitled to broadly the same tax treatment as is currently in place for married couples. To that end they will be entitled to the ‘married tax band’ and credits for Income Tax purposes. They will be entitled to transfer assets to each other without triggering Capital Gains Tax and Stamp Duty. Likewise any gift or inheritances made between civil partners will be exempt from Capital Acquisitions Tax.
In the year of registration, both partners will continue to be taxed on a single assessment basis. In subsequent years, the civil partners can elect for joint assessment, separate assessment or separate treatment as appropriate. Where a civil partnership is legally dissolved, Revenue will record the dissolution and each party will be treated as individuals for tax purposes from the date of dissolution.
Cohabitants
A qualifying cohabitant is defined as a person who has lived with another for 2 years or more in the case where they have one or more dependant children and 5 years or more in any other case. As noted above, the Act does not extend the tax treatment of married couples to cohabitants. However under the legislation, a qualifying cohabitant will have the right to seek redress from the courts similar to married couples. For example where a relationship has ended and a qualifying cohabitant can demonstrate that he/she was financial dependant on the other cohabitant the court may order:
1. That property be transferred from one party to another
2. That maintenance be paid
3. That a pension adjustment order be granted
4. That a cohabitant be provided for from the estate of a deceased cohabitant
Those wishing to avoid the effects of the new Act will need to enter into a cohabitants’ agreement.
If you wish to discuss the implications of civil partnership or cohabitation on your personal tax position, do not hesitate to contact Anthony Casey at 01 6766 476 or by email at acasey@noonecasey.ie
While Agency workers do not have the same employment rights as regular workers, under the EU Directive on Temporary Agency Work, Temporary Agency Workers have the right to equal treatment regarding basic employment conditions. The EU Directive on Temporary Agency Work came into effect on the 5 December 2011. The Directive is transposed into Irish Law by the Protection of Employees (Temporary Agency Work) Act 2012. It provides that all Temporary Agency Workers must have equal treatment with regular workers in respect of hours of work and rest periods; pay and work done by pregnant woman, children and young people. The Act came into effect on the 16 May 2012. Temporary Agency Workers covered by the Act have the right to the same employment conditions as if they had been directly employed by the hirer under a Contract of Employment. The right to equal pay has retrospective effect to the 5 December 2011. The Act applies to Agency Workers employed by an Employment Agency who are assigned to work for a temporary period to another Organisation. The Act may exclude employees under a Managed Service Contract which is a Contract for Services, for example, cleaning, where the Contractor is responsible for managing and delivering the service. The Act does not apply to work done in the course of a Work Placement Scheme or any publicly funded Vocational Training or a Re-training Scheme. Pay is defined as including only basic pay, shift premium, piece rates, over-time premium, unsocial hours premium and Sunday premium. Pay does not include Occupational Pension Schemes, Financial Participation Schemes, Sick Pay Schemes, Benefits-in-Kind or Bonus Payments.
The Minister for Justice has published the long-awaited Personal Insolvency Bill aimed at reforming insolvency laws, some of which have been in place for over a century. Debt arrangements reached between borrowers and banks will be subject to court approval under the Personal Insolvency Bill. The Bill proposes the establishment of an independent body to be known as the Insolvency Service that will oversee the non-judicial personal insolvency system.
The Bill includes a number of new non-judicial debt resolution processes. To avail of one of these processes an individual will have to be insolvent-i.e unable to pay debts as they fall due. The proposals will have to be made through a Personal Insolvency Practitioner and can only be applied for once in a lifetime in relation to each procedure.
Debt Relief Notice (DRN)
A DRN will allow for the write-off of qualifying debt up to €20,000, subject to a three year supervision period; the terms to qualify are strict and the debtor will have to have a monthly disposable income of €60 or less after the provision of “reasonable” living expenses. They must hold assets of €400 or less, with the exemption of certain household appliances or tools needed for employment and one motor vehicle up to the value of €1,200. Debts that will qualify for a DRN would include Personal Loans, Bank Overdrafts, Credits cards etc. Debts that will not qualify for inclusion in a DRN include, Court Fines, Family Maintenance payments , Taxes and service charge arrears.
Debt Settlement Arrangement (DSA)
A DSA is available only in respect of unsecured debt and cannot be utilised to affect the rights of the holders of secured assets. A Personal Insolvency Practitioner must advise the debtor as to their options in regard to the insolvency processes, and assist in the preparation of the necessary Prescribed Financial Statement . Upon registration of a Protective Certificate there is a standstill period of 70 days ( which can be extended by another 40) during which creditors may not take action against the debtor. The DSA is then put to the creditors for agreement and requires the approval of 65% in value. If approved and no objection within 10 days there will be formal registration with the Insolvency Service and with subsequent court approval thereafter the DSA will come into effect. The Personal Insolvency Practitioner will then administer the DSA for its duration over a period of 5 years
Personal Insolvency Arrangement (PIA)
A PIA is available in respect of secure debt up to € 3 million (this limit can be waived by all creditors) and all unsecured debt. The debtor must owe a debt to at least one secured creditor. The debtor must apply for a Protective Certificate and upon registration there is a standstill period of 70 days (which can be extended by another 40). A PIA must be supported by at least 65% of creditors in value of actual votes cast and at least 50% of secured creditors and 50% of unsecured creditors in terms of value. When agreed it is binding on all creditors. The Personal Insolvency Practitioner will then administer the PIA for its duration over a period of 6 years.
Bankruptcy
The Bill also provides for a number of amendments to the Bankruptcy Act 1988 The main new provisions are as follows: • The new minimum amount for a creditor to petition for bankruptcy is €20,000.
• The automatic discharge from bankruptcy after 3 years from the date of adjudication (reduced from the current 12 years).
• Bankruptcies existing for 3 years or more at the time of commencement of the Act will be automatically discharged after a further six months have elapsed.
• The Official Assignee or a creditor may apply to the court to object to the discharge of a person from bankruptcy. The grounds for such an objection are that the debtor has failed to co-operate with the Official Assignee or has hidden or failed to disclose income or assets. The court may suspend the discharge pending further investigation or extend the period before discharge of the bankrupt up to a maximum of 8 years from the date of adjudication.
• Provision for a court to make a payment order requiring the discharged bankrupt to make certain payments in favour of creditors, allowing for reasonable living expenses for a period of up to five years.
• An extended timeframe of 3 years prior to petition from bankruptcy in regard to certain fraudulent transfers or settlements of assets or voluntary settlements of property.
The Revenue Commissioners have today issued E-Brief 12/12 updating their position on the pensioners returning Department of Social Protection (DSP) pensions for tax purposes.
Families with three or more children can expect to have their child benefit payments curtailed in this week’s Budget, which will also see a rise in student registration fees, according to The Sunday Business Post.
A cap on retirement income would be preferable to any further reductions in tax relief on pension contributions, according to the Minister for Social Protection, Joan Burton. But the days of people in their 50s retiring on pensions of €150,000 are numbered because Ireland can no longer afford such largesse.
Income tax increases may be off the political agenda but gardaí are claiming other government charges will have the same impact when introduced in the New Year, according to The Sunday Business Post.
Two-fifths of people would reduce their pension contributions if tax reliefs are reduced, according to a survey carried out on behalf of pensions company Invesco.
The Revenue owes around 70% of PAYE workers hundreds of millions of euro and would like to pay up but very few individuals ever come forward to claim it, according to The Sunday Business Post.