Category: Income Tax

Preliminary Tax The taxpayer must pay preliminary tax for the current year together with the return of tax and balance for the previous year and making the tax return. Preliminary tax (including income tax PRSI and USC) must be paid on account payment during the current year for the current year liability. Because the final tax […]

Self Assessment Unless income is wholly dealt with through PAYE (deduction by employer) a  tax payer must self-assessed his tax liability and pay preliminary tax, file a return and pay final tax with it. Any balance of tax that is not covered by deduction at source, must be paid. Before 31st October in each year […]

Finance Act 2011 The Finance Act 2011 introduced significant changes to approved retirement funds and pensions.  The approved retirement option was extended to all defined contribution pension schemes.  It is also available to defined contribution occupational schemes who avail of the deferred annuity purchase initiative announced in 2008. Where the ARF option is availed of, […]

Blind person A person who is Blind is entitled to an additional tax credit of €1650. There is an additional relief expenses incurred in relation to a trained guide dog A tax credit is available to a person who is blind, or whose spouse is blind, during part or whole of the year.  This is […]

Tax  Deducted by Third Parties Credit is allowed for tax deducted at source by third-party. The principal example is in the case of PAYE payments by employers. Indeed, the objective of the PAYE system is to tax the employee’s income by deduction. An employee will generally not have to make a return, if all of […]

Business schemes The BES business expansion scheme relief allows a deduction form income, up to the maximum amount in a year of €31,750. The person must subscribe for shares in a qualifying company. The relief was  extended to the end of 2013, Detailed conditions apply to the investment and to the company in which it […]

Relief on Tuition fees There is tax relief on certain tuition fees. That does not apply to registration fees examination fees and administration fees for third level courses. Revenue publish lists of approved courses and educational institutions. The equivalent public institutions and universities in other EU states also qualify. Certain such institutions outside the EU […]

Widowed parent tax credit here.   A dependent relative tax credit of  €80 is available, provided that the person concerned does not have income which exceeds the maximum old age contributory pension (no dependents over 80 years rate) by more than €280.     The dependent person must reside with the married claimants, together or […]

Taxable Income Irish income calculates taxable income for each of the various categories of income. There are distinct rules for each category of income. Trading income, employment income, dividend income, rental income and other minor categories of income have their own rules in relation to what is or is not included in the calculation, what […]

Medical Expenses Relief is available at the standard rate on medical/health expenses. Nursing home expenses qualify for relief at the marginal rate. The person  who incurs the expenses may claim the relief. Relief is not available where the expense is covered by health insurance or another sources. Revenue published detailed guidelines as to what expenses […]

Heritage item There is a relief for the donation of a heritage item.  This is a cultural item, including an archaeological item, archive, a state record, manuscript, collection, or cultural items.  It must be determined that the item concerned is an outstanding example of the type involved, preeminent in its class and suitable for acquisition […]

Charges Charges are sums which are paid by a taxpayer by way of legal obligation. In many cases, the person paying the charge has to withhold tax at the standard rate and pay it to the Revenue. Where this occurs, the recipients obtains a credit for the sum paid to Revenue. Covenants of Income A […]

Mortgage Interest Relief Mortgage interest was available in respect of interest paid on a qualifying loan to an Irish financial institution, where the loan was taken out to purchase, repair or develop a residential house, which is the main or sole residence of the claimant, his spouse or former spouse or a dependent relative. It […]

Farming The taxation of farming is subject to special rules on account of the seasonal nature of the business.  Formerly, certain farmers were exempted from income tax entirely, when they rateable valuation of their land fell below a certain amount. Farming includes farming land in the State wholly or mainly for the purposes of husbandry, […]

Capital Allowances Capital allowances are generally allowed for plant, machinery cars and industrial buildings. In addition, capital allowances have also been allowed by way of incentives, for such expenditure as hotels, hospitals and nursing homes, buidings in urban and rural renewal areas, third level buildings and childcare facilities. There are different capital allowance rules for […]

PAYE PAYE is a method of tax deduction by which an employee’s income tax on remuneration is deducted and accounted for to the Revenue, by the employer. It also applies director’s fees, in which case, the company must deduct tax and account for it to the Revenue. PAYE also applies to pension payments and benefits […]

Home Renovation Scheme The home renovation incentive scheme provided a tax credit at 13.5% of expenditure incurred by home owners between 25 October 2013 and 31 December 2018 on the repair, renovation and improvement of a principal private residence. An individual could  claim a tax credit in respect of payments to a qualifying contractor of […]

General Expenses paid, which are not the reimbursement of deductible expenses are taxable under Schedule E. Payments that are a reimbursement of actual deductible expenses are not taxable. Where payments are received on account of expenses, they may be deductible, provided that they were incurred in carrying out of the employment. Vouchers and proof should […]

Funds Investment funds are usually understood to refer to vehicles owned collectively in which each unit holder has a portion of the net assets represented by those units. Most funds are closed in that purchases and redemptions increase or decrease the capital or total pool. Certain funds are subject to EU harmonisation rules which make […]

Termination Payments There has been generous tax treatment for different types of payments made on termination of employment. Subject to certain conditions, sums up to one half times final salary may be taken on retirement, from an approved pension scheme. See our guides on pensions. There is a complete exemption from tax in relation to […]

Employments Employment income is a separate category of income under tax law. The category covers income received from an employment and income received from an “office”. As with others categories of income dealt with in other chapters, there are special rules of computation and in relation to allowable deductions. Employment income is income from an […]

Split Year Relief Where an employee leaves for more than a year, he  may be resident in the year of departure and the year of return under normal rules. See the separate sections on split year relief. Where an employee is leaving Ireland for a temporary purpose and does not intend to be resident in […]

Foreign Employment Remuneration from a foreign employment, where the duties are carried out in Ireland is subject to Irish tax. Irish PAYE applies. Duties are not merely incidental, if they are a critical part of the office’s functions even though they are relatively brief (less than 30 days). PAYE applies to all employment income, attributable […]

Perks Employees are taxable on perquisites (perks) and benefits in kind received. They are treated in the same manner as other employment income and PAYE must be deducted. A perquisite is something provided by an employer that can be converted into monies relatively easily. This may include vouchers and such like. Its value must be […]

Exempt Benefits The following are exempt from the benefit in kind provisions for employees The provision of monthly or annual bus or train passes issued by an CIE company or other licensed operator; mobile phones where private use is incidental; high-speed Internet connections in the employee’s home for business use; computer equipment for business use […]

New Property Allowances At the turn of the century numerous property inventive allowances existed. See the separated chapters. Many were later criticised as unnecessary and contributed to the property boom 1994-2007. Most allowances are being phased out in the period to 2006. There are was pressure to allow approved projects to proceed. Most new property […]

Investment Income   Investment income is categorised differently to trade income. In computing trading income, investment income must be removed from the accounts. As with other categories of income, there are special rules in relation to the computation of tax on investment income. Generally, there are very limited write-offs and deductions against gross income. In […]

Capital Allowances Depreciation and other provision for capital expenditure, are not allowed as a deduction in calculating the profits of a for income or corporation tax purpose. The financial accounts must therefore be adjusted to add back amounts for depreciation, amortization and other write off  of capital expenditure over time Tax law allows for capital […]

Hotel and Holiday Cottages Capital allowances are granted for expenditure on hotels over 25 years at an annual 4% rate. Formerly, hotels qualified for accelerated capital allowances over seven years. This is now available, only provided that a certificate is given by the tourism authority (Tourism Ireland) in relation to the expenditure, certifying that it […]

Balancing Charges and Allowances A balancing charge or allowances arise where the an industrial property is sold within the write off period (usually 25 years from the date of expenditure). After this period has expired no balancing charge or balancing allowance arises. This is in contrast to the position with plant and machinery. Balancing charges […]

Charities There are a range of exemptions from income tax which exist because of various social, economic  and other policies.  Some exist for historical reasons. Charities are exempted from tax on most income. The exemption is available to the extent that the income is  applied for charitable purposes. Where the income derives from a trade […]