Session 1 Flashcards
What are the classes of income and explain the different incomes that relate to each class and schedule?
Schedule D (cases 1-5)
Case I - Trading Income
Case II - Professional Income
Case III - Investment income received gross and income from foreign employments and possessions
Case IV - Investment income received net or income not taxed under any other Case or schedule. (The bucket!)
Case V - Irish rental income
Schedule E
- Income from employment
Schedule F
-Irish Dividend Income
Classes of tax payer
individuals
partnerships
non resident companies
How is tax collected
self assessment system
Deducted at source
What Income falls into Schedule D case 3
- Government bonds
- Interest (provided it is not deducted at source)
- Foreign dividends
- Foreign Rent/trading profits
- Non EU deposit interest.
- EU deposit interest provided that the return is sent in late)
What type of interest is tax exempt
- Interest on overpayments of tax
- Interest or bonuses from certain savings schemes with An Post
- Interest on saving certs issued by the Minister for Finance
- Interest paid on certain government securities to non ordinatrily resident and/or non domiciled individuals
What Income falls into Schedule D case 4
Interest received from an Irish financial institution.
Interest from EU financial institutions.
Income that has been taxed at source like royalties patents etc
Refund of pension contributions
Special term accounts
i Medium term first 480 is tax free
ii Long term first 635 is tax free
The three steps to calculate DIRT
3 steps
1. Gross up Interest = net amount /0.67
- Tax interest at 33%
- Subtract DIRT as non refundable tax credit
- Calculate gross interest x 33%
How is EU Deposit Interest taxed and at what case and is there any clauses
Deposit Interest from EU bank etc. is only taxable at the Irish DIRT rate.
Same treatment as Irish deposit Interest.
Case IV.
Provided income tax return submitted on time
What does case 5 relate to?
Case 5 relates to Irish rental income such as rental income from letting a house, flat, apartment, office, building etc. - most common type
Income from easements, (advertising signs)
Certain leases that requires the payment of a premium by the tenant to the landlord
Where the lease granted is of less than 50 years, some of the premium charged will be treated as rent (see later slide)
Formula for amount of premium subject to income tax
premium x (51-Duration)/50
What is taxable under schedule F
- Dividend received from Irish resident company
- Including Shares in Lieu (except in non quoted companies) & redemption of bonus shares
- Dividends paid out of profits from exempt income are exempt in the hands of the recipient (woodlands)
Formula for grossing up DWT
gross up = net/0.8
