ROS Filing Date

Capital Gains Tax (CGT). Allowable Capital Losses. Form 11 Tax Returns. CG1 Returns. Revenue Guidance.

Revenue have confirmed in today’s guidance, ebrief No. 124/20, that there is no requirement for a person to include a capital loss in a tax return (Form 11 or Form CG1) for the chargeable period in which the loss arises in such circumstances where there is no chargeable gain, arising in the same chargeable period, against which it may be offset.

Revenue’s Tax and Duty manual Part 19-02-05, which deals with the treatment of allowable Capital Gains Tax (CGT) Losses, has been updated.

Paragraph 5.1 clarifies Revenue’s position that, where an allowable loss arises in a chargeable period and there is no chargeable gain arising in the same chargeable period against which it may be offset, then there is no obligation for a person to include the loss in a tax return for the chargeable period in which the loss arises.

For further information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-02-05.pdf

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Irish Employment Taxes. Payroll Taxes. Employees and Employers Taxes

It’s very difficult to keep up to date with all the amendments to the Irish tax system so here is a summary of some of the employment tax changes to be mindful of in 2018:

1. Annual Membership Fees paid to a professional body (Revenue eBrief 04/18 published on 9^th January 2018)

The updated Revenue guidance notes allow an employee to claim a deduction for professional membership fees only in circumstances where:

1. There is a statutory requirement for that employee to be a member of a specific professional organisation or body or to hold a practicing certificate in order to carry out the duties of his/her employment or
2. In the absence of that professional membership or practicing certificate the individual cannot legally fulfill the full duties of his/her employment.

Where the employer pays the membership fee on the employee’s behalf and either of the above two conditions apply then no Benefit-in-Kind is deemed to have arisen.  Subsequently no payroll taxes will arise.

We would advise all employers to ensure the payment of professional membership fees on behalf of employees can be supported in the event of a Revenue Audit.

For further information, please follow the link: https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-0042018.aspx

2. Increase in Employer’s Pay Related Social Insurance from 10.75% to 10.85% from 1^st January 2018.

 3. Benefit-in-Kind Exemption of Electric Vehicles for 2018. 

Finance Act 2017 introduced this exemption for electric vehicles which were available for private use for employees during the 2018 tax year.  It is not clear whether or not this scheme will be extended into 2019 which may result in a low uptake in purchasing electric vehicles by employers.

The exemption applies to cars and vans deriving their power from an electric motor.

It does not apply to hybrid vehicles.

4. PAYE Modernisation or Real Time Reporting

From 1^st January 2019 all employers will be required to accurately provide PAYE data to Revenue on a Real Time basis.

This effectively means:

• Revenue will be able to automatically review employees’ payroll information and immediately identify any discrepancies and errors.
• The PAYE information submitted to Revenue must be 100% correct.  In other words, the opportunity to amend errors at the end of the year has been eliminated.

For further information, please follow the link:

https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-892017.aspx

We would advise all employers to take the time, sooner rather than later, to ensure their payroll processes will be adequate to handle the increased obligations of the Real Time Reporting.

Here is a list of other relevant Revenue eBriefs:

Home Carer Tax Credit – Revenue eBrief No. 009/18 (29th January 2018) https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-0092018.aspx

Change in Basis of Assessment – Schedule E – Revenue eBrief No. 127/17 (29th December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1272017.aspx

Taxation of payments to craft apprentices by Education and Training Boards –Revenue eBrief No. 126/17 (29 December 2017)

Benefit-in-Kind on use of Company Vans – Revenue eBrief No. 124/17 (28^th December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1242017.aspx

Exemption from Income Tax in respect of certain payments made under employment law – Revenue eBrief No. 118/17 (20th December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1182017.aspx

PAYE Services: Tax and Duty Manual Updates – Revenue eBrief No. 111/17 (01 December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1112017.aspx

Amendments to the Employment and Investment Incentive on 2^nd November 2017 – Revenue eBrief No. 99/17 (02 November 2017)
 https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-992017.aspx

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Tax Advisors. Capital Acquisitions Tax. Agricultural Relief. Tax Relief for Farmers. Succession and Estate Planning

As Tax Advisers, we’re frequently asked to advise business owners stepping down from running their businesses; individuals passing the farm or business to one or more family members or providing for the next generation with assets other than business assets.  To provide the most accurate, relevant and comprehensive succession and estate planning advice possible, it is essential that we understand not just the basic conditions of the main Reliefs and Exemptions but that we have an in-depth knowledge of these rules including exceptions, anti-avoidance provisions, etc.  Agricultural Relief is one of the most significant Reliefs from Capital Acquisitions Tax i.e. the tax that affects recipients of gifts and inheritances.

As you’re probably aware, Agricultural Relief takes the form of a 90% reduction in the market value of the agricultural property which means that only 10% of the market value is liable to Capital Acquisitions Tax.

The relevant piece of legislation is Section 89 CATCA 2003 which provides tax Relief as follows:

1. To recipients who meet the “Farmer Test”
2. In respect of gifts and/or inheritances of “Agricultural Property”
3. On the “Valuation Date”

 Who is a “Farmer”?

To qualify for Agricultural Relief from Capital Acquisitions Tax, the individual receiving the gift or inheritance must be deemed to be a “Farmer” on the Valuation Date.

For the purposes of Agricultural Relief, a “Farmer” is defined as an individual in respect of whom at least 80% of the market value of his or her assets, after taking the gift or inheritance, consists of agricultural property on the valuation date of the gift or the inheritance.  This is calculated as follows:

                         Agricultural Property                         x 100% = 80% at least

Agricultural Property + Non-Agricultural Property

Finance Act 2014 Changes

The following conditions were introduced for gifts or inheritances taken on/after 1st January 2015 where the “Valuation Date” is also on/after 1st January 2015:

The beneficiary must:

1. Farm the agricultural property for a period of at least 6 years starting on the valuation date or lease the agricultural property for a period of at least 6 years beginning on the valuation date.
2. Have an agricultural qualification i.e. a qualification as listed in Schedule 2, 2A or 2B of the Stamp Duties Consolidation Act 1999 or farm the agricultural property for not less than 50% of his or her normal working time.
3. Farm the agricultural property on a commercial basis with a view to making a profit although the timeframe isn’t specified.

The individual may lease the agricultural property to a number of lessees as long as each lease and lessee satisfies the conditions of the relief.

If the beneficiary farms the agricultural property but then decides to lease it within the six year period, then NO clawback of Agricultural Relief will arise providing the lessee and the lease meet the relevant conditions for the remainder of the six year period.

If, following the gift or inheritance the beneficiary leases the agricultural property and within the six year period decides to farm it him/herself, NO clawback of Agricultural Relief will arise.

There is one exception to the “Farmer Test” requirement. To qualify for Agricultural Relief from Capital Acquisitions Tax, the beneficiary doesn’t need to meet the conditions of the “farmer test” where the agricultural property consists of trees or underwood.

This concession does not apply to the lands on which the trees or underwood grow.  To be eligible for Agricultural Relief on the lands, the beneficiary must meet the “farmer” criteria.

What’s included in the Farmer Test?

When carrying out the Farmer Test, the following must be included:

1. The gross value of any assets taken under the gift or inheritance and
2. The gross value of any existing assets held by the beneficiary prior to the gift or inheritance including cars, bank accounts, property, agricultural property, etc.

As you have seen, the liabilities of the beneficiary are not taken into account when carrying out the Farmer Test.  There is, however, one exception and that is any mortgage on the main or principal private residence of the individual, providing it is not deemed to be agricultural property.  Therefore, if the beneficiary’s dwelling house is not a farmhouse then he/she can deduct the amount of the mortgage from its value thereby reducing the value of this non-agricultural asset in the Farmer Test calculation. It is important to remember that the mortgage can only relate to borrowings used for the purchase, repair or improvement of that property.

This is known as the Farmer Test and only by meeting this test will the done or successor be eligible for the 90% Agricultural Relief.

The Farmer Test isn’t quite as straight forward as it seems.  If the individual is taking a life interest in agricultural property or some other limited interest, the gross market value of that interest should be included in the Farmer Test i.e. the value before the age/gender factor is applied.  This point can often be overlooked when carrying out the all too important calculations.

Another point to be aware of is where a benefit is taken subject to a condition in a Will or Deed of Gift that the benefit must be invested in agricultural property. If that condition is fulfilled within two years from the date of the benefit, then Agricultural Relief will apply providing the beneficiary passes the Farmer’s Test because the benefit is considered to be agricultural property both at the date of the benefit and at the valuation date.

The beneficiary cannot claim Agricultural Relief in respect of this benefit unless it was subject to the condition to invest in agricultural property. It is also important to remember that if the benefit is not invested in agricultural property then it will fail.  However, if the client inserts a “gift over” clause in the Will or Deed of Gift then even if the beneficiary doesn’t invest in agricultural property within two years as per the condition, he/she can still receive the benefit.

Anti-Avoidance Provisions 

If the individual is beneficially entitled in possession to (a) an interest in expectancy (e.g. a future interest) and/or (b) property contained in a discretionary trust which was set up by and for the benefit of the done/successor then these amounts should be included in the 80% Farmer Test Calculation.

This is to prevent the donee/successor from using artificial means to reduce his/her non-agricultural property in an attempt to meet the 80% Farmers Test and qualify for the 90% Agricultural Relief.

A future interest is taken into account whether it is vested or contingent i.e. it’s taken into account even where there is only a possibility that the beneficiary may actually receive the benefit.

In the event of a remainder interest, its value is arrived at by deducting the value of the life interest from the market value.

Shares in a company carrying on a farming trade

“Agricultural property” does not include shares in a company carrying on a farming trade.

Agricultural property and other assets used in a farming business carried on by a company may, if conditions are met, qualify for Business Relief.

Where both business relief and agricultural relief can be claimed by a beneficiary, Agricultural Relief must be claimed.

 Agricultural Relief and Dwelling House Exemption

In circumstances where the agricultural property includes a farmhouse on which Agricultural Relief is available, you should also check to see if the Dwelling House Relief also applies.

Where both Reliefs apply you should:

1. Include the value of the farmhouse in the Farmer Test Calculation
2. Then Claim Dwelling House Exemption
3. Apportion the costs and expenses between the farmhouse and the agricultural property in your computation.

Clawback

A clawback of Agricultural Relief arises if the agricultural property, contained in the gift or inheritance, is disposed of within a six year period commencing on the date of the gift or inheritance and is not replaced by other agricultural property.

For benefits received on or after 1st January 2015, a clawback of agricultural relief will also arise where the farmer or lessee ceases to farm all or part of the agricultural property, except for crops, trees or underwood, for at least 50% of that person’s working week within a six year period beginning on the valuation date of the gift/inheritance.

This clawback applies in all cases except where the farmer dies prior to the cessation of the farming activity.

In circumstances where there a clawback of agricultural relief arises, the CAT on the gift/inheritance is recalculated as if Agricultural Relief never applied in the first place.

There will be a clawback of Agricultural Relief if the agricultural property is sold, otherwise disposed of or compulsorily acquired within six years beginning on the date of the gift/inheritance and the full proceeds are not reinvested in replacement agricultural property within one year of the sale/disposal or six years of the compulsory acquisition.

If the disposal or compulsory acquisition takes place after the beneficiary dies the Agricultural Relief will not be clawed back.  Equally the Relief will not be withdrawn on the death of a life tenant within six years of taking the benefit or where the beneficiary receives an interest in agricultural property for a period certain which is less than six years.

If only a portion of the proceeds is re-invested in agricultural property, then only a portion of the relief can be clawed back. For example, if a Farmer disposes of 100% of the land he inherited but only reinvests 75% of the proceeds back into agricultural property then CAT will be calculated as if 25% of the value of that farm had not ever qualified as agricultural property.

If the beneficiary disposes of agricultural property that qualified for Agricultural Relief, he/she cannot use the proceeds from that sale to buy “replacement” agricultural property from his/her spouse/civil partner.

We referred above to a situation where an individual didn’t need to qualify as a Farmer to be eligible for Retirement Relief.  Where that beneficiary, in relation to trees or underwood, disposes of these assets within six years of the date of the gift or inheritance there will be no clawback of the relief.

For Development Land, the Clawback period is extended from six to ten years in the following circumstances where:

1. a gift or inheritance of agricultural property is taken on or after 2nd February 2006 and Agricultural Relief was claimed and
2. the agricultural property is “development land” which is disposed of in the period beginning on the sixth anniversary of the date of the gift or inheritance and ending four years after that date.

“Development land” is defined as land in Ireland where the market value at the date of a gift or inheritance exceeds the current use value of that land on that same date.  It also includes shares which derive their value, wholly or mainly, from such land.

As you are aware, when calculating agricultural relief, the relief is based on the market value. Where the market value is comprised of both development value and current use value and Section 102A CATCA 2003 applies, then only the relief relating to the development land will be clawed back.  This relief will be clawed back even if the sales proceeds were used to purchase replacement agricultural property.

In Summary

Therefore to fulfill the criteria of being a “Farmer” means:

• At least 80% of the individual’s assets must be agricultural as the date of transfer and he/she must farm or lease the land for a minimum of six years
• He/she must have an Agricultural qualification including the Green Cert or an Agricultural Science Degree or must secure that qualification within four years from the date on which the farm was transferred.
• He/she must farm that land on a commercial basis with a view to making a profit.
• If he/she doesn’t hold an agricultural qualification that individual must spend at least 50% of his/her normal working time farming (i.e. at least twenty hours a week farming)
• Even if the individual doesn’t meet these criteria, he/she may still be eligible for Agricultural Relief if he/she leases out the agricultural property transferred to him/her to a Farmer for six years, providing that individual meets the “Farmer” criteria as listed above.

For further information on Capital Acquisitions Tax, please click: https://www.revenue.ie/en/tax-professionals/tdm/capital-acquisitions-tax/cat-part11-20180131153037.pdf

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Capital Gains Tax. Self assessment. Tax Deadline. Income Tax Returns.

As you’re aware, Capital Gains Tax is a self- assessment tax.  Even if you have already filed your 2014 Income Tax Return by 31st October 2015, please keep in mind that there are still a number of key deadlines before the end of the year.  One such date is 15th December 2015, which is the payment date for Capital Gains Tax (CGT) on assets disposed between 1st January 2015 and 30th November 2015.The due dates for the payment of your Capital Gains Tax liability arising in the tax year 2015 are as follows:

1. 15^th December 2015 if you made any disposals or transfer of assets in the period 1^st January 2015 to 30th November 2015 inclusive.
2. 31^st January 2016 for all asset disposals and transfers made between 1^st and 31^st December 2015 inclusive.

In Summary

If an asset was disposed of or transferred between 1^st January to 30^th November 2015 giving rise to a chargeable gain then any liability to CGT is due and payable by 15^th December 2015. If, on the other hand, it was disposed of or transferred in the month of December 2015 then any liability arising will be due for payment on or before 31^st January 2016.

Other Points

1. If you have made a disposal under an unconditional contract, the date of disposal is deemed to be the date the contract is signed.
2. If the contract is subject to a condition, then the date of disposal is deemed to be the date the condition is satisfied.

What about CGT Refunds?

Please be aware that there is a 4 year time limit or Statute of Limitations for claiming tax refunds. If, for example, you are entitled to a refund from the tax year 2011, then you must ensure that you complete and send your refund claim to the Revenue Commissioners before 31st December 2015 otherwise you will forfeit this refund.

For further information, please click: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/capital-taxes/cgt/index.aspx

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Capital Gains Tax (CGT) Payments, Disposal of an asset, Investment, Shares, Property, Business Sales.

If you’ve already made or about to make a disposal of a capital asset (e.g. if you have sold certain shares, an investment property, a business, etc.) anytime  between 1^st January and 30^th November 2014 you will be obliged to pay your Capital Gains Tax by 15^th December 2014.  If you decide to wait and dispose of your asset between 1^st December and 31^st December 2014 then your Capital Gains Tax (CGT) payment will be due by 31^st January 2015.

 What happens if you miss these deadlines?

 Interest of 0.0219% per day will be applied to all late payments of Capital Gains Tax.

 What happens if you make a gain in the first part of the year and a loss in the second part?

 Even if you’ve made an overall loss for the year, you will be obliged to pay the Capital Gains Tax arising on any gain you’ve made in the first part of 2014 by the specific payment date being 15^th December 2014.

 You can then submit your claim for a tax refund in January 2015 if a loss arises in the second part of the year.

 Any tax saving tips?

 Plan the timing of your disposals so that capital gains and capital losses arise in the same period thereby enabling you to offset the losses against the gains and effectively reduce any potential tax liability.

 This can be very useful from a cash flow point of view.

 What about filing obligations?

 You must include details of all your capital acquisitions and/or disposals made in 2013 in your 2013 Income Tax Return. 

 This Return must be filed with Revenue by 31^st October 2014.

 There is an extension to 13^th November 2014 if you are using the Revenue Online System (ROS).

 What happens to individuals who are not obliged to file an Income Tax Return?

 You may file a CG1 Form which can be downloaded from the Irish Revenue website www.revenue.ie

 As with the Income Tax Return, the due date for filing is 31^st October 2014.

 Please be aware, there is no facility to file this Form online which means the 13^th November 2014 extension does not apply to the CG1 Form.

Are there any penalties for late filing?

 If you are late filing your Tax Return but manage to do before 31^st December 2014 there will be a 5% surcharge of the amount of tax payable up to a maximum of €12,695.00.

 If you file your Return after 31^st December 2014 a 10% surcharge will be levied up to a maximum amount of €63,485.00.

For further information, please click: https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

For all your Capital Gains Tax advisory or compliance issues, please contact us on queries@accountsadvicecentre.ie.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Stamp Duty Changes Ireland – New eStamping Regime

Introduction

Finance Act 2012 introduced a number of important changes to the Stamp Duty filing regime.  The changes apply to all instruments or deeds executed on or after 7^th July 2012.  Essentially the act provides for the removal of adjudication and instead a new eStamping system will treat all Stamp Duty Returns on a self assessed basis.

Key Changes in Stamp Duty Filing Regime

Where the execution date of an instrument or deed is on or after 7^th July 2012:

1. Adjudication of the stamp duty liability will not be necessary or possible.
2. A late filing surcharge (5% or 10%) will apply where returns are filed late.
3. There are new criteria for making a valid “expression of doubt.”

What these changes mean

1. Instruments executed on or after 7^th July 2012 will no longer be subject to adjudication.
2. Stamp duty must be self-assessed in all such cases.
3. Where unclear about the stamp duty treatment of a particular matter in the return then there is an option to make “an expression of doubt” on the ROS form.
4. The criteria for making a valid expression of doubt are stricter.
5. Revenue can reject an expression of doubt as not being genuine.
6. If Revenue believes the expression of doubt is not genuine, they will issue a notice of rejection outlining the reasons.
7. To obtain a Stamp Certificate the filer must immediately lodge an amended return and pay the related liability.
8. The taxpayer will have the right to appeal to the Appeals Commissioner.
9. An expression of doubt will not be accepted where the Stamp Duty Return is filed late.
10. It is also possible to address technical tax queries to Revenue’s Technical Service (RTS).
11. Late Returns will be subject to a surcharge.
12. Revenue will continue to accept returns as being filed on time where filed up to forty four days after execution. (This is a Revenue Concession.)
13. A 5% or 10% surcharge will apply depending on the lateness of the Return.

For full and complete information, please click: Stamp Duty

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.