What is preliminary tax – Accountants Galway

Preliminary Tax is an estimate of your total tax bill for the year which you pay on the 31st of October every tax year. Its important to remember that preliminary tax also includes PRSI, Health Levy and Income Levy

The amount of Preliminary Tax paid for any year is not less than the lower of:

90% of the final liability for the current tax year
The final liability to tax for the immediately previous year (100% Rule) or
105% of the final liability for the pre-preceding year where the Collector- General is authorised to collect tax by direct debit.

Tax flow can be improved by choosing which preliminary tax to pay. For example if your sales have increased dramatically in the current tax year it is cashflow advantageous to pay 100% of the last years tax bill

Rent a room relief – Tax Saving Tip

Rent a Room Relief – where a room (or rooms) in a person’s principal private residence is let as residential accommodation, gross annual rental income of up to €10,000 (€7,620 in 2007) is exempt from tax. This does not affect an individual’s entitlement to mortgage interest relief or CGT exemption for a principal private residence.

To get rent a room relief:

The total (gross) rent you get from your tenant (or tenants), which includes sums the tenant pays for food, laundry or similar goods and services, cannot exceed €10,000. If you get rental income over and above this amount, you are not entitled to the relief
Your home must be in Ireland and must be occupied by you during the year of assessment as your principal private residence.
You cannot deduct expenses from your rental income to qualify for rent a room relief. If you qualify for rent a room relief, the income you get from renting a room in your home is not liable to PRSI, the health levy, the income levy or income tax. However, it must be included on your annual income tax return.

If you require any further information please do not hesitate to contact Ralph on
tax@domybooks.ie or 0863336665

Remember to check if you are due a tax refund on www.brownenvelope.ie

RCT – Relevant Contracts Tax

If you are a principal contractor, You must deduct Relevant Contracts Tax at 35% from payments made by you to an unauthoriesed subcontracted you have engaged to carry out relevant contract for example: meat processing, construction operations or meat processing on your behalf.

You do not need to deduct RCT payments from a subcontractor who produces a C2 (Subcontractors certificate)

If you are an unauthorised subcontractor, you can claim credit for RCT paid by you against your tax liability. You may also claim an interim refund of RCT paid if the tax payable for the likely period exceeds the proportionate liability for the entire tax year.

Distinguishing employee’s from contractors is very topical at the moment. Principal contractors should be extremely careful in this area as they would be liable for the PAYE, interest and penalties IF it was found that their contractors were actually employees.

If you require any assistance or advice with RCT please do not hesitate to contact

tax@domybooks.ie
or phone Ralph on 086- 3336665