YOUR GUIDE TO A STRESS-FREE TAX SEASON · There is a USC surcharge of 3% if your non- PAYE income is more than €100,000 a year. Annual income less than €13,000 is exempt from

YOUR GUIDE TO A STRESS-FREE TAX SEASONThe Experts Guide to Self-AssessedTax Returns

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M a r i a n R y a nConsumer Tax Manager

P e t a r B o g d a n o vIrish Tax Expert

SPEAKERS

Y O U R G U I D E T O A S T R E S S - F R E E T A X S E A S O N


TAXBACK.COM OVERVIEW


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1Our ISO 9001 certified team of tax experts help you file fully compliant returns

2Maximum legal refund guaranteed including all relevant deductibles and allowances

320+ years of experience and over 1 million tax returns filed

4Taxback.com forms part of the Taxback Group, which offers a suite of services including specialist tax return, finance and travel consultancy services for individual and corporate clients

5

WHAT WILLBE COVERED?


1. Self-Assessment (SA)

2. Relevant Contract Tax (RCT)

3. Tax Rates

4. Credits & Deductions

5. Flat Rate Expenses

6. Expenses

7. Non-residents

8. Notable Elements of July Stimulus



SELF-ASSESSMENT


Who needs to file a self-assessed return?

You will be considered 'a chargeable person' for self-assessment purposes if you are due to pay tax on behalf of yourself (or another person) for a particular tax period.

Income Tax is payable by a chargeable person

Chargeable person mainly refers to:• Self employed person (Sole Traders, Company Directors,

Contractors etc.)• PAYE worker with additional sources of income such as

investment income or rental income


WHAT IS (RCT)?


Relevant Contract Tax

How does RCT work?

• Principal contractors must deduct RCT at a rate of 0%,

20% or 35% via the RCT online system and pay the tax to

the Collector General on behalf of sub-contractors.

• Principal contractors are obliged to notify Revenue of all

relevant contracts, payment details and tax withheld.

• The RCT system must not be mixed with Pay As You Earn

(PAYE) system. The PAYE system applies to employees

while the RCT system applies to self-employed persons.

RCT is the withholding tax that applies to such payments made by principal contractors to sub-contractors in the construction industry.


RCT Rates?


The RCT tax rates differ depending on your compliance record with Revenue.

The three tax rates in the RCT system for subcontractors are:0% - for an up-to-date tax compliance record20% - a substantially up-to-date tax compliance record35% - a poor tax compliance record, or for those who have not registered with Revenue

Tax filing obligations as a Subcontractor?

• Subcontractors are obliged to register for income tax and

file an income tax return Form 11 though the self-

assessment system each tax year.

• All income sources should be reported.

• All deductible expenses should be included.

• Same filing deadline as a chargeable person.

• RCT details should be reported on their annual tax return

Form 11.



Who else needs to file a self-assessed return?

PAYE worker with non-PAYE income will also be considered a chargeable person when:

• Their total Gross non-PAYE income in excess of €30,000, or Net assessable income is in excess of €5,000

• Or they have non PAYE income less than €5,000 and does not have it coded into their tax credit certificate

• They are a Proprietary director with shareholding in excess of 15%

• If they open a foreign bank account

• If they have a gain arising on exercise, assignment or release of a right (e.g., exercise of a share option)

• They acquire material interest in an offshore fund or foreign life policy


IMPLICATIONS


Implications of being a chargeable person

• Register for Income Tax (Form TR1)

• Submit Tax Return to the Collector General before 31 October the following year

• Pay Balance of Tax before 31 October the following year

• Pay Preliminary Tax before 31 October

• Keep records of all supporting documentation for the following 6 years in case Revenue commissioners decide to audit the tax return

TAX RATES


P AY A SY O U E A R N

( P AY E )

U N I V E R S A LS O C I A L

C H A R G E( U S C )

P AY R E L A T E DS O C I A L

I N S U R A N C E( P R S I )

As a self-assessed individual your income will be subject to the following tax heads:• Income tax @ 20% up to €35,300• Income tax @ 40% over €35,300

• First €12,012 @ 0.5%• Next €8,472 @ 2%• Next €49,560 @ 4.5%• Balance @ 8%There is a USC surcharge of 3% if your non-PAYE income is more than €100,000 a year. Annual income less than €13,000 is exempt from USC.

• PRSI @ 4%Annual income less than €5,000 is exempt from PRSI


FILINGDEADLINES


FORM 11 – INCOME TAX RETURN

Persons required to file an annual tax return Form 11, must file the tax return for a year of assessment on or before 31 Oct in the following year.

When you pay and file through the Revenue Online Service (ROS), the 31 October deadline is extended to mid November. This year’s extended deadline is 10 Dec 2020.

NB: Pay and file on time to avoid surcharges, interest and penalties, and reduce your risk of a tax audit.

CGT1 – CAPITAL GAINS TAX

A Capital Gains Tax Return needs to be filed after the disposal of a capital asset or shares, where the individual is not required to file an income tax return Form 11. CG1 return must be filed on or before 31 Oct in the following year.

The obligation to file a CG1 return exists even where no tax is due because of the use of reliefs, losses etc. Exception can apply in case of CGT loss where there is no a capital gain to be offset against in the same tax year.

CGT payment dates will depend on when the disposal was made during the year:

• Disposal during period 01/01/2020 and 30/11/2020, tax is due on or before 15/12/2020

• Disposal during December 2020, tax is due on or before 31/01/2021

Capital Gains Tax should be paid in full by the due date. There is no Preliminary Tax element to Capital Gains Tax.



2019 self-assessed tax filing deadline extended to 10 December 2020


• Self-assessed taxpayers will now have an extra four weeks to file their 2019 tax return.

• Deadline for 2019 self-assessed income tax returns and 2020 preliminary tax payments has been extended to 10 December.

• Taxpayers who do not intend to pay and file online cannot avail of the extension and must adhere to the 31 October deadline.

INTEREST & SURCHARGES


INTEREST• Overdue Tax• Charged at 0.0219% per day or par of a day

SURCHARGES• Late submission of return• Two months late – 5% of liability• More than two months late – 10% of liability• Director – no credit allowed for PAYE paid in determining

the tax liability for applying the surcharge



TAX CREDITS & DEDUCTIONSTax Credits

Credits available for a tax year decrease individual’s tax liability.Resident individuals are entitled to the personal tax credit in amount of €1,650 and the Employee Tax Credit of €1,650.

Subcontractors are also entitled to the Earned Tax Credit in amount of €1,500 or 20% of their qualifying earned income, whichever is lower.

If you have income that qualifies for the Employee Tax Credit (income paid through the PAYE system) and the Earned Income Tax Credit.

If so, the combined value of these credits cannot exceed the maximum value of the Employee Tax Credit, which is €1,650.

Deductions

Deductions in general reduce your taxable income. Deductions could be personal pension contributions, legally enforceable maintenance payments and other.

Relief could be up to 40% if you income is taxed at 40%.

Other credits that could be claimed are:

• Relief for non-reimbursed medical expenses paid• Relief for non-routine dental expenses paid• eWorker Relief • Medical Insurance Relief• Single parent child carer credit• Home carer tax credit • Incapacitated child tax credit • Flat rate expenses



FLAT RATE EXPENSESFlat-rate expenses are those that cover the cost of equipment your employee needs for work.

This equipment may include tools, uniforms and stationery.

Relate to costs in performing the duties of their employment, and the costs must be directly related to the nature of their employment.

Flat-rate expenses are available to a wide range of professions.

Examples of Flat Rate Expenses:

• Engineer €331.00• Carpenter €220.00• Bricklayer €175.00• Electrician €153.00• Architects €127.00• Mason €120.00• Plasterer €103.00• General Operatives €97.00• Scaffolder €52.00



EXPENSES


Can my expenses offset my tax bill?

Any expenses made wholly and exclusively for business purposes could be offset against your taxable income.

The word “wholly” refers to the fact that the full amount should be spent for business purposes. In practice if it is possible to distinguish between the business and private element of the expense, Revenue may allow the business element to be deductible (private vs business use of car).

“Exclusively” refers to the motivation behind incurring the expense. If it is for trading – the condition is fulfilled. There should be no dual purpose.

It should be noted that some expenses are statutory disallowed:Business entertainment including the provision of accommodation, food and drink or any other form of hospitalityCapital expenses such as tools and overalls.

Capital expenses could qualify for capital allowance @ 12.5% a year over 8 years until it is fully utilized.



NON RESIDENT INDIVIDUALS

An individual is regarded as resident in Ireland if:

• spent 183 days or more in a tax year• spent 280 days or more over two consecutive years and at

least 30 days in the year of assessment• elects to be resident based on his intentions to stay resident

in the following tax year

If an individual does not meet any of the above criteria they would be deemed as non-resident for tax purposes.

TAX CREDITS FOR NON-RESIDENTS

• Non Resident individuals are not entitled to tax credits in Ireland.

• Relief for RCT deducted could be claimed in cases where there is a double treaty between Ireland and the country of resident and the specific form is completed.

• Non resident person can apply for proportional tax credits where they are Irish nationals, nationals of EU countries or certain countries with which Ireland has double taxation treaty (not all countries with treaty are entitled for proportional tax credits)

How to calculate proportional tax credits:(Irish Tax Credits X Irish Source income)

(Irish + Foreign source income)

EU nationals of which Irish-sourced income represents 75% of their total income for the year are entitled to full tax credits and allowances



NOTABLEELEMENTS OF THE JULY STIMULUSDEBT WAREHOUSING

The warehousing scheme includes 3 periods:1. Restricted Covid-19 trading phase + 2 months• For PAYE debts (employer) this begins from Feb 2020• For VAT debts this begins from Jan 2020• No interest will be charged on any unpaid PAYE or VAT

2. Zero interest Period – beginning from the end of period one for 1 year• 0% interest on any unpaid PAYE or VAT

3. Reduced Interest Period – beings on the 1st day after Period 2• 3% interest rate on any unpaid PAYE or VAT (this is generally 10%)

IMPORTANT TO NOTE

• All tax returns must be filed.• Scheme applies automatically to small and medium

enterprises and Revenue will contact them shortly.• Other business (with turnover above 3m) – an application

should be made to Revenue • The debt is deferred with no interest applied on it, but it

should be paid at some time.



Reduced Interest Rate For Outstanding Non-Covid19 Tax DebtsReduced interest rate of 3% per annum reduction from standard interest rates on late payment of taxes of 8% and 10% per annum.

If a taxpayer has an outstanding liability or previous years not cleared they can contact the collector general before 30th of September and be charged a reduced rate of 3% per annum.

To avail of this measure, taxpayers must agree a phased payment arrangement with Revenue before 30 September 2020. The reduced rate is applicable from 1 August 2020 or from the date of the agreement, whichever is later.

For taxpayers with PPA in place – arrangements will be reviewed automatically so they can benefit from the 3% reduced interest rate. They will be contacted by Revenue shortly.

This scheme applies to sole-traders and covers – Income Tax, CGT, RCT, VAT, CT and PAYE (employers).



Temporary Income Tax Relief For Self-Employed IndividualsIn general, where a sole-trader incurs a loss for a year of assessment, that loss could be carried forward to be set against the profits of the following tax year (it could be also used for offset against other income during the year, but there was no option to be carried back).

However, the new scheme permits that up to €25,000 of the loss incurred during 1 Jan – 31 Dec 2020 to be carried back to the year of assessment 2019.

Similar provision applies to any unused wear and tear allowances (capital allowances) for plant and machinery as well as writing-down allowances for industrial buildings and structures and farm buildings.

The limitation of €25,000 applies to both trading loss and capital allowances. If the claim for trading loss uses the full limit, any unused capital allowances will be carried forward to the following year as usual.

Before such a claim is made, the taxpayer should be fully tax compliant and the claim cannot be made after 31 May 2021.

There is a huge uncertainty in making such claims.It should be noted that if someone makes an interim claim, he or she is required to make a final claim in order to avoid under or overestimated loss or capital allowances relief that is carried back to 2019.


WHY FILE WITHTAXBACK.COM?


I N D I V I D U A L C O N S U L T A T I O N

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R E D U C E D T A X L I A B I L I T Y

Our tax specialists will aim to reduce tax liabilities by advising on all relevant credits and deductible expenses.

R E L I A B L E

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E F F I C I E N T

End to End Service.We take care of the entire process from start to finish to ensure a fast and comprehensive process

P I E C E O F M I N D

you can be sure that your position has been examined, that you are fully compliant and you have claimed all allowances and credits.

HOW TO CONTACT TAXBACK.COM


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Web address:www.taxback.com

Free phone:1800 991805

Phone:056 7797345


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Documents

YOUR GUIDE TO A STRESS-FREE TAX SEASON · There is a USC surcharge of 3% if your non- PAYE income is more than €100,000 a year. Annual income less than €13,000 is exempt from