Recovery remains uneven – KBC survey

A new survey suggests that business sentiment has continued to stabilise during the first three months of 2011.

A new survey suggests that business sentiment has continued to stabilise across the economy during the first three months of 2011.
The KBC Bank/Chartered Accountants Ireland business sentiment survey indicates that the economy is ‘bouncing along the bottom’. It says this has been the case for some time and could continue because the broadly based positive momentum typically found in a recovery phase is missing.
The Spring survey shows that conditions continue to vary widely between sectors. It says that the manufacturing industry saw the strongest activity trends. Firms in the food sector also reported a strongly positive balance, but there were slightly fewer firms reporting gains and slightly more companies reporting weakness compared to the previous three month period.
The business services area also saw a smaller overall positive balance, while the negative balance in the construction sector was sharply lower compared to the last three months of 2010.
KBC said that 73% of Irish companies surveyed expect to be negatively impacted by higher European Central Bank rates due to weaker demand, higher financing costs and another hit to confidence.
Today’s survey reveals that employment levels continued to fall, but the number of firms which increased their headcount rose to the strongest level since the Winter 2007 survey with one in five firms reporting that they had added jobs in the past three months. One in four firms cut their workforce, but this is a somewhat lower figure than seen in recent surveys.
KBC said, however, that stronger expectations for future jobs growth are more prevalent in those sectors traditionally seen as less labour intensive. ‘As a result, it seems unlikely that any turnaround in Ireland’s job market will be a relatively slow and uneven process,’ the bank added.
Companies also said they regarded the new government programme as positive for Irish economic prospects, while they retained significant doubts that the 2015 deficit targets will be met

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Preliminary Tax for 2011 and Universal Social Charge (USC)

Normal rules

The amount of preliminary tax that an individual is required to pay to avoid a charge to interest is the lower of:

  • 90% of the final liability to tax for the current tax year, or
  • 100% of the liability to tax for the immediately previous year, or
  • 105% of the final liability to tax for the year preceding the immediately previous year where payment is made by direct debit.


Section 531AS(5) TCA 1997 (introduced by S 3 FA 2011) introduced changes to the 100% rule in calculating preliminary tax for 2011. Where an individual wishes to pay preliminary tax on the basis of 100% of the previous year’s liability, his or her preliminary tax payment for 2011 is to be based on the final liability for the year 2010 as if the USC had been payable and as if the income and health levies had not been payable for that year.

A systems development to the 2010 Notice of Assessment and the ROS 2010 Form 11, scheduled for completion in early July 2011, will show (in addition to the final Income Tax liability for 2010) the 2010 liability as adjusted for 2011 preliminary tax purposes. This will assist agents/customers in paying their preliminary tax liability for 2011. Revenue will issue a further eBrief when this development is completed.

The 90% rule remains unchanged. An individual calculating his or her preliminary tax for 2011 on the basis of 90% of the 2011 liability should incorporate the USC that will be payable for that year.

The 105% rule likewise remains unchanged. Where a direct debit is in place, the amount paid must equal 105% of the final liability for 2009.

GE to return $3.2 billion tax refund to US Treasury

Facing criticism over the amount of taxes it pays, General Electric announced it will repay its entire $3.2 billion tax refund to the US Treasury on April 18.

GE uses a series of foreign tax havens that the company says are legal and that led to an enormous refund for the 2010 tax year.

The company earned $11 billion in 2010 on revenue of $150 billion.

The company, based in Fairfield, Conn., plans to phase out tax havens over 5 years and said it will create one job in the US for each new job it creates overseas.

Incorporating a farm

Dublin Accountants

As personal tax rates continue to increase there is a growing number of advantages for certain farmers to incorporate. While not for every farmer there may be significant t

ax savings for larger higher earning farmers .

The largest advantage is capitalising the farmers own stock and machinery creating a directors loan inside the limited company which can be drawn down tax free by the farmer. This is a once off opportunity so timing is critical to maximise tax relief. Its also worth noting that buildings and land are generally not transferred inside the limited company as this could give rise to capital gains tax liabilities in the future.

Land , single farm payments and buildings may be leased to the limited company by the farmer.

Plant and machinery or Fixtures and Fittings do not normally give rise to capital gains tax as they usually transfer at Tax Written Down Value (TWDV)

Further advantages include

  • The availability of limited liability (Although less of an advantage in 2011 with large scale personal gurantee’s requested)
  • The ability to claim civil service rates of mileage and subsentence on business travel
  • Separation of personal assets from business assets

As the transfer from you to your company is treated as being at open market value between two separate legal entities, stamp duty will apply on the transfer.

Incorporation is not something to take lightly as it comes with increased compliance costs and cannot be undone. This post is not comprehensive and there is other matters to consider.

For further information please call us on Do My Books Dublin Accountants 01-4800531

Commencement Rules

Commencement Rules

When you start business as a sole trader / partnership there can be a significant period before you make your first tax return. It is important to remember that although you may not have to file a tax return you still must pay preliminary tax.

This is best explained with an example

New Business

You started in business on 1 July 2009 during the tax year 2009.
Payment and Return Filing dates will be as follows:

Preliminary Tax for 2009 due on or before 31 October 2009,
Preliminary Tax for 2010 due on or before 31 October 2010,

Balance of tax due for 2009 must be paid on or before 31 October 2010,
Tax returns for 2009 and 2010 to be submitted on or before 31 October 2011