It’s that time of year again and you need to start thinking about your income tax return.Below I list income types which trigger an Income Tax Return and next week keep an eye out for my email on “Exempt Income & Tax Credits”If you are in receipt of any of the following classes of income, you must prepare & submit a tax return to the revenue authorities.
Income from Trades, Professions or Vocations
If you are self-employed, you need to declare the earnings from your business, regardless of whether it makes a profit. Actually in a loss making situation, it is also very important that you record your losses, in order that they can be off set against any future profits.
Tip: The Start Your Own Business scheme provides for relief from Income Tax for long term unemployed individuals who start a new business. The scheme will provide an exemption from Income Tax up to a maximum of €40,000 per annum for a period of two years to individuals who set up a qualifying business, having been unemployed for a period of at least 12 months prior to starting the business. It runs from 25 October 2013 to 31 December 2016.
Irish Rental Income
This includes income receivable from rents, premiums, easements and income from advertising hoardings.
N.B. With effect from 1 January 2006, entitlement to a deduction for interest paid on borrowed money employed in the purchase, improvement or repair of rented residential premises is conditional on compliance with the registration requirements of the Residential Tenancies Act 2004 in respect of all tenancies, which existed in relation to residential premises in the year 2014.
Irish Employment(s) / Directorships
All directors of any company must file an Income Tax return, regardless of whether of whether or not they are in receipt of remuneration for the company.
This refers to income (including any amount in the form of expenses payments received or benefits-in-kind derived) from foreign employment(s) in so far as that income relates to the performance in the State of duties of the employment.
Tip: Special Assignee Relief Programme SARP Section
This provides for income tax relief on a proportion of income earned by employees who, having worked with a relevant employer for a minimum period of 12 months, are assigned to the State to work for that employer, or an associated company, in the State.
Where certain conditions are satisfied an employee can make a claim to have 30% of their income between €75,000, the lower threshold, and €500,000, the upper threshold, exempted from tax. The income is not exempt from the USC or PRSI.
The relief can be claimed for a maximum period of five consecutive tax years and applies in the case of employees who are first assigned to the State in 2012, 2013, or 2014.
In order to avail of the relief the individual must –
Income from Irish employment not subjected to PAYE
This refers to Irish employment income which has not been taxed under the PAYE system. You are required to give details of any sum (not returned elsewhere on the Return) received by you, or by anyone connected with you, in the year 2014 from an employer as a result of:
Taxable Benefits (not taxed at source under PAYE)
Typically, Benefits-in-Kind include the making available of an asset by an employer to an employee or director and/or their families for non-business use – examples include cars/vans provided for private use, personal loans provided on favourable terms, private accommodation, etc.
Most Benefits-in-Kind are now taxed at source; however, a small number of benefits shown below are not and should be returned.
A contribution to a PRSA paid by an employer on behalf of an employee/director is a taxable benefit in the employee’s/director’s hands. However, the employee/director can claim tax relief in respect of the employer contributions as if he/she had paid the contributions, subject to the income and age-related limits.
Social Welfare Payments, Benefits or Pensions received
In general, income from the Department of Social Protection is taxable.
Withdrawal of funds from AVC
Section 782A TCA 1997 provides members of occupational pension schemes with a three-year window of opportunity from 27 March 2013 (i.e. the date of passing of the Finance Act 2013) during which they can opt to draw down, on a once-off basis, up to 30% of the accumulated value of certain additional voluntary contributions (AVCs).
For the purpose of the section, AVCs include additional voluntary PRSA contributions made to AVC PRSAs.
Where AVCs are subject to a pension adjustment order, both parties to the order may exercise the option independently in respect of their respective “share” of the AVCs.
Amounts transferred to scheme members in accordance with Section 782A are taxed at source by the administrator as Schedule E emoluments under PAYE, but are not liable to USC (Section 531AM TCA 1997) or PRSI.
In general, individuals who are resident in the State are taxable on their worldwide income. Where an individual is resident but not domiciled in the State they are assessable on Irish income including income attributable to the performance of the duties of a foreign employment in the State and remittances of other foreign income, that is, a transfer of money into this State made out of this other foreign income.
The question as to whether you are entitled to a credit/deduction for any foreign tax deducted, or whether the foreign tax should be refunded by the foreign State, depends on whether Ireland has a Double Taxation Agreement with the foreign State, and upon the terms of that agreement.
EU Deposit Interest
The EU Savings Directive ensures that individuals resident in an EU Member State who receive interest income from another Member State are taxed in the Member State in which they are resident for tax purposes. Interest paid/credited on or after 1 July 2006 is either (1) reportable by paying agents in the EU to the tax authorities in the paying agents home territory or (2) subject to withholding tax in those territories which have opted to apply withholding tax rather than report the payment.
Offshore Funds (Part 27 Ch4 TCA 1997) in the EU or EEA, or in a Member State of the
OECD with which Ireland has a Double Taxation Agreement
Individuals’ resident or ordinarily resident in the State must include details of acquisitions of material interests in all offshore funds during the period 1 January 2014 to 31 December 2014. An interest is a material interest if it is capable of realising an amount equal in value to the proportion of the underlying assets of the offshore fund represented by that interest.
An offshore fund can take the form of an investment in:
A Relevant Payment is a payment made annually or at more frequent intervals:
Where all payments, relevant and non-relevant payments, are not correctly included in the return of income the rate of tax is the taxpayer’s marginal rate of tax (highest rate).
For disposals, the gain, where the disposal is correctly included in the return of income, is taxed as income at 41%. These gains are not liable to the Universal Social Charge (USC).
Where the details of these gains are not correctly included in the return, the gains are taxed as income at the taxpayer’s marginal rate of tax. The USC applies to these gains.
Income From Fees, Covenants, Distributions, etc.
Fees, Commissions, etc. from sources other than employments or directorships should be entered on behalf of both self and spouse or civil partner.
Irish Deposit Interest
Give details of deposit interest from which DIRT at 41% was deducted.
Income Tax 2015
Income Tax 2015