In any year in which you open a foreign bank account you are a ‘chargeable person’. This means that you are required to file a tax return in which you must declare, among other things, the name and address of the financial institution where the account is located, the date on which the account was opened, the lodgement made to open the account and details of any intermediary (individual or company) in Ireland who assisted you in opening the account.
The pay and file deadline is fast approaching. Revenue have announced that Thursday the 15th of November 2012 will be the deadline for customers filing using ROS. The October 31st deadline remains for paper filers.
If your filing yourself or using an accountant / tax consultant the following tips should help you out
1. Sole traders – understand your allowable expenses: There are a number of misunderstandings in relation to sole traders tax deductable expenses. For example unlike company directors sole traders do not claim mileage at a fixed amount, They claim a portion of motoring expenses instead. More information on sole trader expeses
2. Get rid of the shoe box: You can often reduce your accountants fee by sending in your information in an electronic format for example an excel sheet as opposed to a shoe box (Or worse carrier bag!) full of paperwork. There are a number of tools to assist with converting paper information to an electronic format including plendi and receipt bank which has a xero integration.
3. Use a checklist : The simplest way to organise your information for your income tax return is to use a checklist. This will save you time and highlight whats missing.
4. Understand your tax credits: Its not unusual for tax payers to miss out on claiming all of their tax credits. A full listing is available on the revenue website here . Understand what your entitled to and ensure you are claiming them
5. Landlords ensure you have your interest certificates: This is often the largest taxable deduction from your rental income. Ensure you have the certificates for all mortgages relating to your rental properties.
6. Check your income tax return: If you hire an accountant or tax advisor to complete your income tax return, ensure to read it and query anything you don’t understand before signing it . Income tax in Ireland is self assessment, so its your responsibility to ensure you are filing the correct information.
7. Do it now: Don’t procrastinate on your tax return, as the deadline nears accountants, tax advisor’s and the revenue will be a lot busier. This mean’s you may have to wait longer to have your queries answered.
8. Civil partners: On the 27th of July 2011 legislation was enacted so civil partners are now treated in a similar fashion to married couples. This can lead to tax savings in certain situations. Further details are available on the revenue website here
9. Surcharge on late returns: Here’s a little motivation for you to get your return in on time . If your return is late the surcharge, which is added on to your tax due, is:
♦ 5% of the tax due or €12,695, whichever is the lesser, where the Return is submitted after 31 October 2012 (15th of Nov for ROS fileres) and on or before 31 December 2012,
♦ 10% of the tax due or €63,485, whichever is the lesser, where the Return is submitted after 31 December 2012
10. Universal social charge: The health levy and income levy ceased on the 1st of January 2011. The universal social charge took over. There are limited exemptions to the universal social charge
The Universal Social Charge (USC) came into effect on 1 January 2011. It replaced both the Income Levy and the Health Contribution. It is a tax payable on gross income, including notional pay, after relief for certain capital allowances,but before pension contributions.
There is an annual exemption threshold of €4,004 up to 31 December 2011. This threshold increases to €10,036 with effect from 1 January 2012 and where this amount is exceeded, all of an individual’s income is chargeable.
The rates of USC are:
♦ 2% on the first €10,036
♦ 4% on the next €5,980
♦ 7% on the balance.
However, these standard rates are modified in certain circumstances. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 4% rate applies to all income over €10,036.
There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year, regardless of age. Thus, where such individuals are under 70 years and do not hold a full medical card, a rate of 10% applies to such income and where such individuals are aged over 70 years or hold a full medical card, a rate of 7% applies.
There are a very limited number of exempt categories.
The more important of these include:
♦ All Department of Social Protection payments and similar payments received from other countries,
♦ Department of Social Protection-type payments received from State Bodies such as the HSE and FAS,
♦ Income already subjected to DIRT