WHO YOU GONNA CALL? …BANKRUPTCY BUSTERS!

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Bankruptcy is not a word that fills anyone with a sense of glee, but sometimes it is the only option for both you and your business during hard times. As is often said in business, there certainly comes a time when it is best to cut your losses and move on. For many, this involves the necessity of filing for bankruptcy until such a time as your finances are once again in order. In the past, becoming bankrupt has often been a very stressful and arduous time. Fortunately, new reforms are set to be introduced which could change this process and make it a lot easier and about as pain free as it is possible for this task to be.

 

Taoiseach Enda Kenny has said that there will be reforms introduced which will reduce the period that an individual is bankrupt for from three years to one year. These reforms would require an amendment in the Personal Insolvency Act of 2015, a change which the Taoiseach is said to be strongly in favour of.

 

This amendment would bring Irish insolvency and bankruptcy procedures into line with those currently in practise in the UK and Northern Ireland. TD Willie Penrose has been a major driving force behind this proposed change stating that in his believe it is better that these people be allowed to return to making economic contributions after one year rather than being outside of the business world for three. Penrose states that these people could be entrepreneurs ready to re-enter the business world, but they cannot.

 

CEO of the Irish Mortgage Holders Organisation, David Hall has largely welcomed these proposed changes stating that:

“This development will be of huge benefit to those debtors who are seeking a fresh start and want to rid themselves of debt.”

 

Certainly, these changes will somewhat change the face of business in Ireland and allow more opportunity for change and the ability to move on at a faster pace from a period of business which may have been unsustainable for a great many reasons. As we have seen in the UK and Northern Ireland models of dealing with bankruptcy, this has not caused a great many extra financial issues and should be a good fit for the Irish system.

 

Whilst these new rules will make the process of applying for bankruptcy in Ireland somewhat less painful, it is advisable to seek professional assistance when doing so. Should you require any professional advice or guidance in a matter such as this please do not hesitate to contact us at DCA Accountants where we will be happy to assist and to guide you in the best direction for you and the brighter future of your business.

REVENUE BRIEF ON CGT

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Following last month’s budget, and the recently planned clamp down on suspected tax evasion there has been some lingering confusion regarding what is required for various taxes. The main culprit of causing confusion is Capital Gains Tax (CGT). As a result, the revenue have recently released a brief which should clear up these lingering confusions and confirm for all when this tax and the associated documentation will be required.

The Revenue have stated that there were a number of requests for clarification from both tax practitioners and legal offices. It is hoped that this brief will shed some light on these lingering issues.

Please see the revenue brief below:

Clarification of circumstances where CGT clearance certificate not required

Arising from a number of requests for clarification from tax practitioners and legal offices, the purpose of this Brief is to set out particular circumstances in which the provisions of section 980 Taxes Consolidation Act 1997 (TCA) will not be applicable to disposals/sales of assets that are referred to in subsection (2) of that section.

Disposals of assets by bodies which carry an exemption from capital gains tax (CGT)

The section will not apply to a disposal of an asset by a person where any gain accruing on the disposal would not be a chargeable gain. Examples of such disposals in the TCA are:

  1. A disposal by a pension fund or arrangement carrying an exemption from CGT under section 608(2) or (2A).
  2. A disposal by an investment undertaking within section 739C.
  3. A disposal by a charity to which section 609(1) would be applicable.
  4. A disposal by the National Asset Management Agency (NAMA) or by any other body specified in Schedule 15.

Sales by financial institutions of loans secured on land in the State

The section will not apply to the sale by a financial institution of loans secured on land in the State where the sale arises in the ordinary course of the carrying out of its trading activities. In other words, the section will not apply to the sale of such a loan by a financial institution in circumstances where any profit on the sale would be treated as a trading receipt of its trade.

However, in regard to loans secured on land in the State, Revenue wishes to make clear its view that:

  1. In general, such loans are interests in land for the purposes of section 980, and
  2. In general, such loans are securities for the purposes of that section.

It follows, therefore, that the provisions of section 980 will have application where the sale of such a loan would be a disposal for CGT purposes.We hope that this will illuminate any grey areas of concern regarding the current rules of taxation, but should you require any further assistance, please don’t hesitate to get in touch with us here at DCA

NO MORE LOOPING THE LOOPHOLES

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As we have discussed previously, this year’s Finance Bill includes another massive clamp down on possible tax evasion by allowing the Revenue greater access to previously confidential information. In addition to this, there will now be greater measures in place to address current loopholes in Capital Gains Tax. These loopholes can result in major discrepancies which make it difficult to assess taxation in general and the consistent avoidance of payment creates larger financial issues.

 

Section 34 of this year’s Finance Bill is designed to tighten the definition of shares deriving their value from specified Irish assets for non-residents. The current loophole allows avoidance of Capital Gains Tax when cash is transferred to a company prior to disposal of shares. This means that when the time comes for shares to be disposed of, their value is derived mainly from cash rather than assets. In cases where the greater value lies in shares than assets, the company can avoid paying this tax.

 

Section 35 of the bill also limits the avoidance of paying Capital Gains Tax as it closes an existing loophole which allows for non-payment of this tax where a non-complete clause has been signed. Similarly, in section 36 of the bill, a provision has been made which prevents avoidance of the tax through transferring property to non-resident companies.

Another loophole which has previously resulted in the avoidance of paying Capital Gains Tax is a provision which defers the tax if companies are sold within a larger group. The new bill includes a section which puts an end to the misuse of this particular provision (section 38 of the Finance Bill).

 

These measures are designed to counter avoidance of this tax and others, and as our technology advances we are sure to see further measures put in place in future Finance Bills as the Government ramps up its efforts to counter tax evasion. Since the onset of the financial crisis, there has been a consistent effort to put an end to tax evasion, occasionally to the detriment of other seemingly more crucial issues such as the housing crisis. It is hoped that creating preventative measures such as these will be enough to stem the flow of current tax evasion and prevent future efforts at avoidance, rather than creating further loopholes which will need to be closed off. This will, in turn allow the financial focus to shift elsewhere.

 

If you are concerned about your status in paying Capital Gains Tax, or indeed any form of taxation and require some professional advice regarding your financial matters please don’t hesitate to drop us a line here at DCA Accountants

THE POWERS THAT BE…MORE POWERFUL

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It was announced in the recently published Finance Bill that tax officials would be granted a whole new level of powers. In a move which has been considered by some to be of questionable moral grounding, as of now, tax officials will be permitted to access private financial information about individuals without being forced to inform those involved that their finances are being looked into.

 

Once a court appeal is granted, these tax officials will be able to access previously secure information from banks or other financial institutions without the knowledge of those affected.

 

Revenue themselves have also been granted additional powers in relation to searching properties and belongings for information when engaged in an investigation. Revenue have also been given more powers to utilise when dealing with those attempting to avoid Capital Gains Tax.

 

These measures are all part of a previously announced plan to increase the power afforded to the Revenue Commissioners and increase the ease and effectiveness of an extra clamp down on tax defaulters.

 

Previously, it was required that the Revenue would both need to know the identity of the suspected defaulter and that they would be required to inform those affected that their finances are being looked into, particularly when accessing secure information from parties such as banks and building societies. Now, however, these measures will no longer be necessary, providing the Revenue with a greater ease of access to the information. This may cause some boot quaking for some defaulters, which indeed may be part of the hope.

 

The only requirement with these new measures is that there must be “reasonable grounds” to keeping the information from the suspected defaulter which, given the circumstances will rarely be difficult to provide.

 

If you require assistance with your own tax and financial matters, please don’t hesitate to contact us at DCA Accountants.

BUDGET 2016: WHAT DOES IT MEAN FOR SME’S AND THE SELF-EMPLOYED?

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It has been reported that SME’s now account for an enormous portion of all enterprise in Ireland. Unfortunately, SME’s and the self-employed rarely see their efforts being rewarded in any way when the time of the budget rolls around each year. Was the budget for 2016 any different? We have compiled some of the main changes that will affect both SME’s and the self-employed for your reference.

Self Employed Tax Credit               

 

It was announced in Budget 2016 that there would be a new earned income tax credit of €550 available for those who are self-employed, including farmers. Whilst this is still quite far behind the tax credits available to others, it is somewhat of a beginning for the process of not alienating the self-employed through taxation. It is suggested that this figure would be increased in future years.

Capital Gains Tax Reduction

 

There will also be a very welcome reduction in the Capital Gains Tax for 2016 for the self-employed and entrepreneurs. This reduction takes the tax from 33% to 20% on a gain up to €1 million, which could have significant positive consequences, despite still remaining quite far behind the UK and the North of Ireland in relation to this tax. The expenditure cap for Film Relief has also been increased to €70 million which is good news for this sector.

Farmers

 

Farming in particular was a sector which was more acknowledged in this budget than previous, as the general stock relief and the stamp duty exemption for young farmers was extended to 2018. It was also announced that a new succession transfer proposal would be put forward in order to increase certainty for the next generation of farmers and assist with a more long-term thinking that may not have been possible previously.

Microbreweries

 

Another sector of self-employment and SME’s that was newly acknowledged in Budget 2016 was the increasingly popular microbreweries. The excise relief for microbreweries will now be made available upfront. This is welcome news for the industry as it may help to free up some much needed cash flow which is always important for these SME’s.

In Conclusion

 

It is also hoped that the reintroduction of the Social Welfare Christmas Bonus of 75% will boost sales and income for SME’s, thus generating more revenue overall.

 

Unfortunately there have been few steps taken to support entrepreneurs in particular. Whilst these measures for the self-employed and SME’s in particular are small steps, at least these steps are finally being taken in the right direction and we would hope to see an end to the previous discrimination against these sector in future budgets, as SME’s begin to form the backbone of our modern economy.

KEY POINTS FROM BUDGET 2016

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As the country watched with baited breath for what was promised to be a more forgiving budget than the previous efforts, there has been some questions over how much these changes may change things on a personal and professional level. We have compiled some of the key points to note from Budget 2016 for your convenience.

  • USC entry point raised to €13,000
  • USC reductions:

2015                            2016

1.5%                            1%

3.5%                            3%

7%                               5.5%

  • All USC bands lowered on earnings up to €70,044 per annum.
  • Minimum Wage to be raised from €8.65 to €9.15.
  • There will now be an additional €550 tax credit available to all owners of SME’s (Small and Medium Enterprises).
  • Normal tax bands will remain unchanged.
  • Child Benefit will increase by €5 per month, taking the total to €140 per child.
  • State Pension to increase by €3 per week for pensioners and carers aged 66years and over.
  • There is to be an increase in the Inheritance Tax Band relating to transfers from parents to children. The tax band will now stand at €280,000.
  • Social Welfare Christmas Bonus restored to 75%.
  • Cost of a packet of 20 cigarettes to increase by 50cent (including VAT).
  • Free GP care for children is to be extended to all under 12’s.
  • Fathers to be entitled to 2 weeks paid paternity leave as of September next year.

If you have any queries or concerns about how budget 2016 will affect your finances, please don’t hesitate to contact us at DCA Accountants.

BUDGET 2016 TAX CHANGES BREAKDOWN

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Now that the highly anticipated and much talked about budget for 2016 has been announced, the one thing on everyone’s minds is “how will this affect me, am I really any better off now?” In the hope of clearing some of the most important topics of interest from the budget up for you, we have compiled a breakdown of the major changes in terms of tax.

Most changes are expected to come into effect on 1st January 2016.

Income Tax:

  • No changes in income tax announced for 2016.

PRSI for Employees:

  • There were some cuts to PRSI announced for lower paid workers announced in this budget. Employees earning between €19,552 and €21,355 can now access relief of up to €624 per year. There will also be some relief for those earning between €21,355 and €22,048.

PRSI for Employers:

  • Employers should also see a reduction in the cost PRSI as it was announced that the 8.5% rate would be made available to those who earn up to €19,552 which is an increase in threshold of over €1,000

Universal Social Charge (USC):

  • All bands reduced on all earnings up to €70,044.

2015                                        2016

1.5%                                        1%

3.5%                                        3%

7%                                           5.5%

  • Entry threshold for USC increased from €12,012 to €13,000.
  • Threshold for 3% rate widened to over €18,688 which is an increase of over €1000.
  • Threshold for 5.5% rate widened.

Tax Credit for the Self-Employed:

  • An earned income tax credit of €500 was introduced for those who are self-employed, farmers, and those business owners who are not eligible for a PAYE credit (which stands at €1,650) on their income.

Tax Credit for Home Carers:

  • The tax credit for home carers is to increase from €810 to €1,000.

Tax Increases on Products:

  • The only tax increase seen on products in Budget 2016 is a 50cent increase on a packet of 20 cigarettes. There was no sign of the proposed tax on sugar.

That’s it for our rundown of the main tax changes for Budget 2016, stay tuned for more updates and advice from us following on from these Budget announcements.

If you have any queries or concerns about how budget 2016 will affect your finances, please don’t hesitate tocontact us at DCA Accountants.

WHOSE HOUSE IS IT ANYWAY?

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It comes as no surprise these days that the world of buying your first home has become an increasingly difficult one to navigate. Gone are the days of being able to finance your first home, and also have overflow cash readily available for furnishing and renovations. This year’s introduction of the new mortgage rules has made the process somewhat more difficult for both first and second time buyers to gain access to the funds required. As a result of this, the average age at which couples are buying their first homes has increased greatly in recent years.

 

With these new mortgage rules making it increasingly difficult to save for your first and then subsequent second home, the issue then becomes saving that extra bit of cash to furnish and renovate any problematic areas of your new home. Thankfully, a new Bank of Ireland mortgage initiative promises to help you with this arduous task.

 

Bank of Ireland already promise customers the lowest available 3 year fixed term rate available and 12 month approval. Now, in addition to these promises, Bank of Ireland are offering customers who are first time buyers, movers, or those interested in switching an existing mortgage to Bank of Ireland, 2% cashback on their loan.

 

While 2% may seem an insignificant number at first glance on paper, this could be of great benefit when your savings have immediately gone into the new requirements for deposits. Where there was no real wiggle room to start work on your new home, there now is an unexpected sum available at your disposal. Get thee to a DIY store!

 

To put this figure into perspective, if you are to borrow €150,000 for your new home, Bank of Ireland will then lodge€3000 into the account used for the mortgage. Bank of Ireland state that this payment will be made within 45 days from the mortgage being drawn down. Just in time to start collecting tiles for that new bathroom you would like to put in.

 

This offer applies to mortgages drawn down between 3rd June 2015 and 31st December 2015, so this is a good time to do a check on those all-important savings and hopefully make a move towards your new home.

 

Buying a home is a very expensive yet rewarding endeavour and it is a relief to see some new initiatives announced to assist people on their way. Should you require any assistance with your own savings, finances, ormortgage arrangements, please do not hesitate to contact us here at DCA Accountants.

AIB TO THE RESCUE

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The only thing more stressful and daunting to new business owners than an unexpectedly large bill landing on your office doormat, is that time of year when the “I know it’s going to be large, but maybe if I pray really hard it won’t be” barrage of annual bills come flying in. This year, AIB have come up with two new solutions to this common problem that might leave you imagining the logo wearing a cape.

For most business owners, the worst evil of annual bills, is their size and the fact that they need to be paid all at once. Without an enormous stockpile of gold in your basement, these bills can often loom over you and cause an unwanted interruption in your cash flow and savings potential. This is where AIB can step in (cue the superhero soundtrack) with their new Prompt Pay and Insurance Premium finance options.

As part of AIB’s ‘Backing Brave’ initiative, Prompt Pay and Insurance Premium are two newly announced short-term financing products designed to take the sting out of annual bills. The Prompt Pay product covers all large one-off payments – apart from Insurance payments, a shortfall which is picked up by the Insurance Premium product to assist both AIB and non-AIB customers manage their monthly outgoings.

These Prompt Pay loans must be a minimum of €5000 and be paid off within 11 months. Prompt Pay can assist customers with outgoings such as:

  • Preliminary tax
  • Pension contributions
  • Commercial property rates
  • Subscription fees to professional/trade associations
  • Annual audit fees

The greatest bonus for business owners in undertaking these loans is that both are offered at a fixed interest rate. This offers the peace of mind of knowing the cost of your monthly repayments in advance. The ability to spread these usually all-in-one costs over a period of 11 months can assist you in budgeting for the year ahead and help you to manage your cash flow without these lump sum interruptions. The only extra cost incurred here is a documentation fee of €63.49 which will be charged with your first repayment.

Both Prompt Pay and Insurance Premium proclaim themselves as easy to set up through your local branch. Should you have any concerns or wish to gain advice on your eligibility and finances in general don’t hesitate to contact us here at DCA Accountants.

NOT TODAY, MR TAX-MAN!

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Tax credits are one of the most easily overlooked aspects of compiling your tax returns. Whilst they vary from person to person there are a number of additional tax credits you may be entitled to as a business owner without realising it. With the October 31st filing deadline rapidly approaching, your tax credits are not something you want to overlook, and knowing what you are entitled to could save you money. We have compiled a list of some of the tax credits you may not have considered but are entitled to.

 

Revenue Approved Permanent Health Benefit Scheme: If an employer deducts contributions from pay, no action is necessary to claim this relief. However, if an employer does not directly deduct contributions, this relief can be applied for in your annual tax return.

 

PAYE – Employee Tax Credit: Available to any employee whose pay is subject to the PAYE tax.

 

Health/Medical Expenses Relief: Available at a rate of 20% for certain medical expenses by completing the MED 1 form. If you have private health insurance, you will be unable to claim relief on any medical expenses which are due to be reimbursed.

 

PRSI: PRSI contributions can be directly queried through your local Department of Social Protection office.

 

Start Your Own Business Scheme: Available until 31st December 2016, this scheme provides tax relief for previously unemployed individuals who start a new business.

 

Start-up Refunds for Entrepreneurs (SURE) Scheme: Those interested in starting up their own company may be entitled to an income tax refund of up to 41% of the capital invested under this scheme. You may also be entitled to a refund of income tax paid over the 6 years prior to investment year.

 

Age Tax Credit: Available to anyone aged 65 or older during the tax year. This credit is doubled for married couples or civil partners if either is aged 65 during the tax year.

 

Single Person Tax Credit: Available to unmarried individuals living alone with the exception of married people who have chosen to be assessed as single people for tax purposed.

 

Married/Civil Partner Tax Credit: Available to an individual who is either married or in a civil partnership. One partner agrees to be the assessable spouse and is entitled to this tax credit as long as they are assessed through joint assessment.

 

Widowed/Surviving Civil Partner Tax Credit: This credit is dependent on when the spouse passed away and whether dependent children as involved. This tax credit will be higher during the bereavement year and is the equivalent of the above two credits.

 

As the deadline of October 31st approaches it would be advisable to submit your information in advance of this date if possible to ensure no unnecessary delays. Should you have any queries about your tax return filing, or if you are concerned that you may be entitled to claim some refunds that you may have overlooked, please don’t hesitate to contact us here at DCA Accountants.