Are you experiencing financial difficulties and worried about being able to pay your income tax bill?
Here is our advice on what you should do.
1. FILE YOUR TAX RETURN WITH REVENUE ANYWAY
This is extremely important. One of the worst things that anyone in financial difficulty can do is simply not file their tax return and plan to deal with it sometime in the future. If you do not file your tax return on time, you will automatically be charged a late filing fine. If you are less than 2 months late in filing your tax return, your total tax bill will be increased by 5% as a late filing penalty. If you are more than 2 months being late, your tax bill will be increased by 10% as a late filing penalty.
2. PAY AS MUCH OF YOUR 2017 TAX LIABILITY AS POSSIBLE
As you should be aware, when you file your tax return you are required to pay both the balance on your 2017 tax return and also preliminary tax for 2018. Many people this year are struggling to pay both. If you cannot meet both liabilities, then you should prioritise settling your 2017 tax liability before worrying about your 2018 preliminary tax.
3. CONTACT REVENUE REGARDING A PAYMENT PLAN FOR THE BALANCE OWED ON YOUR 2017 TAX BILL.
After you know how much you can pay towards your 2017 tax bill before the deadline and also what the remaining balance will be, the next step is to contact Revenue as soon as possible to try and arrange a payment plan for the remainder. This is known as an “installment arrangement”. In simple terms this is an agreement with Revenue to pay the balance to them in monthly installments over an agreed period of time. In order to agree an installment arrangement with Revenue they may request backup documentation to support your position, but generally they are willing to work with taxpayers who are in difficulty and who are pro-active in trying to deal with it by contacting Revenue.
4. PAYING 2018 PRELIMINARY TAX
Although it is a requirement to pay 2018 preliminary tax at this time, there are no late filing penalties for not doing so. Instead the worst-case scenario is that you will be charged interest for late payment of taxes. If cash flow is tight therefore the best thing to do is firstly pay your 2017 tax bill and then pay whatever amount, however small, that you can towards your 2018 preliminary tax. You can then make further payments towards your 2018 preliminary tax bill as you have monies available to do so.
HOW CAN KEARNEY NAUGHTON & CO HELP?
We can assist you with all of the above if you require advice, support or assistance so please do not hesitate to contact us.
It goes without saying that saving money is as important as earning it. We have put together a list of common personal tax saving tips that you can put in place today.
Contact us at Kearney Naughton & Co. to find out more ways to help you save tax!
With the income tax deadline coming up at the end of the month, we here at Kearney Naughton & co have decided to dedicate this week’s blog article to outlining some expenses can be claimed when filing your income tax return.
Have you or a family member been sick recently? If so you may be able claim relief on those expenses. You can claim relief on doctor fees or any drugs and medicines prescribed by a doctor. Relief may also be claimed on any surgeries you may have needed.
You can also claim relief on some dental procedures you may have had. You will be able claim relief on procedures that are classified as non-routine. Dental costs such as getting a crown or tip replacing are costs which you can claim tax relief on. Routine costs such as fillings and cleaning unfortunately cannot claim tax relief.
In a business it is vital to keep track of your expenses. When it comes to filing a tax return what expenses are allowable.
The following expenses are all allowable;
If you have expenses for a vehicle you drive for both personal and business use you can claim some of these as motor costs. Theses expenses include any fuel or maintenance of the vehicle.
With Christmas just around the corner it is important to keep in mind entertainment costs such as a Christmas party for staff will also be allowable if the costs are reasonable.
Also, Business can gift certain vouchers to employees up to €500 per Employee by way of a Christmas Bonus. The Employer or Employee do not need to pay tax on these vouchers.
When renting it is important to know what relief is available to you. Expenses that are considered allowable are listed below;
For example, if the owner of a rented house buys new furniture for the house for €1,000 they may claim €125 each year for the next eight years.
Following from a number of client enquiries abut bitcoin and other crypto currencies we decided to put together this information. As usual, the following information should not be taken as financial advice, and you should always speak to your accountant about your own specific circumstances.
The profits and losses of a non-incorporated business on cryptocurrency transactions must be reflected in their accounts and will be taxable on normal Income tax rules.
The profits and losses of a company entering into transactions involving cryptocurrency would be reflected in accounts and taxable under normal CT rules.
As cryptocurrencies are not a functional currency as defined, accounts, for tax purposes, cannot be prepared in cryptocurrencies: Euro or functional currency accounts must be prepared.
Capital Gains Tax and Corporation Tax on Chargeable gains
If a profit or loss on a currency contract is not within trading profits, it would normally be taxable as a chargeable gain or allowable as a loss for CT or CGT purposes. Gains and losses incurred on cryptocurrencies are chargeable or allowable for CGT if they accrue to an individual or, for CT on chargeable gains if they accrue to a company
VAT treatment of Bitcoin and similar cryptocurrencies
The Court of Justice of the European Union (CJEU) held in the Hedqvist case (C-264/14) that Bitcoin constitutes a currency for VAT purposes. It is Revenue’s view that Bitcoin and similar cryptocurrencies are regarded for VAT purposes as ‘negotiable instruments’ and exempt from VAT in accordance with Paragraph 6(1)(c) of the VAT Consolidation Act 2010.
Exchange of cryptocurrency
Financial services consisting of the exchange of bitcoins for traditional currency are exempt pursuant to Paragraph 6(1)(d) of the VAT Consolidation Act 2010, where the company performing the exchange acts as principal (i.e. buys and sells cryptocurrencies acting as the owner of the virtual currency).
Supplies of Goods or Services
VAT is due in the normal way from suppliers of any goods or services sold in exchange for bitcoin or other similar cryptocurrencies. The taxable amount for VAT purposes will be the Euro value of the cryptocurrency at the time of the supply.
Income received from cryptocurrency mining activities will generally be outside the scope of VAT on the basis that the activity does not constitute an economic activity for VAT purposes.
PAYE treatment of cryptocurrencies
Where emoluments payable to an employee are paid in a cryptocurrency, the value of the emoluments for the purposes of calculating payroll taxes is the Euro amount attaching to the cryptocurrency at the time the payment is made to the employee.
Returns to Revenue must be shown in Euro amounts and remittances made appropriately.
Valuation of cryptocurrencies
Many cryptocurrencies, such as Bitcoin, are traded on a number of exchanges. Unlike shares or commodities the value of the cryptocurrencies may vary between exchanges. Therefore, there is not always a single “exchange rate” for cryptocurrencies. A reasonable effort should be made to use an appropriate valuation for the transaction in question.
The rise of Airbnb in Ireland over the past number of years has resulted in Irish people having additional income from renting out their homes with the short-term letting company.
Revenue have clarified that income from these short-term letting sources is liable to tax.
Some landlords had believed that this income qualified for the rent a room relief (this relief entitles people to earn up to €14,000 tax free from renting out a room in their home), but Revenue have clarified the short-term lettings advertised through online accommodation sites does not qualify for this relief.
The homeowner will pay tax on the income received after deducting expenses. Therefore, it is important that they keep track of all expenses associated with the letting. These would include Laundry & cleaning, light & heat, food, Commissions paid to websites, Accounting fees etc.
This extra revenue will need to be included in your tax filing which is due by 31st of October each year. Your 2017 return will be due by 31st October 2018.
Revenue have confirmed that they have received details of residents in the Republic of Ireland who have used its site to let rooms, apartments or houses and that they have begun writing to hosts reminding them of their obligation to declare this income.
Come and talk to Kearney Naughton & Co for advice on how to reduce your liability. Any costs associated with the letting can be deducted from the income received.
Important changes from January 2019. Here’s what you need to know.
From January 2019 there are important changes being made to the Irish payroll system. The new system known as PAYE Modernisation will greatly change how employee’s taxes are reported to Revenue.
What are these changes?
From January 2019 employees Income Tax, PRSI and USC will be reported to Revenue on or before the date the employee is paid. This new system is a form of Real time reporting and will ensure that all your employees are assigned the correct tax credit and are in the correct tax bracket.
Currently, employees Income Tax, PRSI and USC is reported to Revenue after the year-end. The new process in Ireland will simplify the filing of payroll. The filings are done in real-time so it means that everything should be filed correctly before year-end.
The current filing forms, such as P60, P30, P35, P45, P46, will be replaced. Instead, each employee will have an Earning and Deductions Certificate. It will be updated in real-time and available on your 'MyAccount' on Revenue. Employers will also have access to a monthly statement to see their Pay As You Earn Liability.
How can employers prepare for the changes?
Update your employee list. Revenue will be sending notifications to your ROS inbox requesting up to date employee lists. Up to date lists should be sent back to Revenue and any discrepancies will be identified before the system goes live
Encourage all employees to set up an account on Revenue. They can then access their information in real time as opposed to waiting for a P60 after the year end.
Ensure your current payroll records are accurate and up to date. Revenue will be making more frequent visits to employers, so it is important to have your records up to date.
Reach out to your payroll software provider and get confirmation from them that their system will be compatible and compliant with PAYE modernisation.
Consider setting up a direct debit with revenue. Revenue are making available a variable direct debit option for employers. The monthly liability would be debited from your account monthly for the correct amount per your filings.
Seminars – There will be regional seminars in September/October 2018 where revenue will educate employers on the upcoming changes. Employers should register their interest in these and attend them once revenue confirm dates and venues. Employers should also watch the Revenue website for further information and guidance.
What will be required under the new system?
Employers have to notify Revenue on or before the pay date and identify what you are intending to pay to each employee. This will automatically update the employees Earning and Deductions Certificate.
Employees tax credits will be automatically allocated to the correct employee in the payroll software. Therefore it is vital to ensure your software provider is compatible with the new system. Most payroll software packages, are now updating their software in order to comply with the new filing system.
Employers will now need to know what they are paying each employee before they pay them and can no longer file payroll returns at the end of the year.
Employers who have been making manual returns will have to make changes to the way they fulfil their payroll duties because PAYE Modernisation is all done online.
Overall the new PAYE Modernisation system will be a positive change for most employees, especially those who are on top of their PAYE obligations.
For more information on how PAYE Modernisation will effect your business please give is a call or email us at firstname.lastname@example.org. Please see also a link to current guidance on the revenue website - https://www.revenue.ie/en/employing-people/paye-modernisation/seminars/index.asp.
One of the most frequently asked questions from our self employed clients is 'can I claim expenses for my business trip to Vegas?!'
The most important overriding rule is that you can only claim a deduction for expenses that have been incurred wholly and exclusively for the purpose of your business. You should always keep a record of your business mileage and expenses for each business trip separately so that these expenses can be clearly identified. These receipts should be kept for 6 years in the case of an audit.
An easy way to hold onto expenses is through 'Receipt-Bank' to save you from keeping stacks of paperwork at home. Receipt-Bank can be used as a mobile or desktop app and is Revenue approved so you can crumple up those receipts as soon as you've taken a snap on your phone! The app also has the ability to break your receipts into different categories to keep each trip separate.
What this means is where travel costs are incurred partly for business and partly for pleasure, as long as you are able to specifically identify your business journeys you will be able to claim a tax deduction for these costs.
Where you undertake a business trip which requires you to stay away from home, the hotel accommodation and reasonable overnight subsistence costs will be tax deductible.
However, where your business base is away from home and you pay for overnight accommodation and subsistence simply to allow you to be at or near where your business is situated this expenditure will not be tax deductible.
You can also claim bus and train fares incurred in the course of travelling for business.