Session 2 Flashcards
What schedule & case is the following examples taxed under?
1. rent from house in cork?
2. rent from a house in Belfast?
3. Part time job in the CAI?
4 Provided independent accounting advice to CAI?
5. Receive a dividend from AIB?
6. Interest from a bank in the Cayman islands?
7. Interest from a bank in Germany
- Schedule D Case 5
- Schedule D Case 3 (because it is uk rental income)
- Schedule E
- Schedule D case 2.
- Schedule F
- Schedule D case 3
- Schedule D case 4
What are the 3 steps to carry out when you receive interest that has been subjected to DIRT?
- Gross up the net interest (net interest/0.67)
- Tax interest @33%
- Make sure you claim credit for the DIRT that you have been paid
Which of the following expenses would be allowed as a deduction in computing taxable rental profit on an apt?
- Insurance
- New Pane of glass in a window
- Carpets
- LPT
- Interest on your mortgage
- Insurance is allowed as deductible provided that there is a tenant in there at the time. Generally you buy insurance as soon as you buy the house and you might not have a tenant at that time.
- Pain of glass is ok as it is a repair. However Capital expenditure would be if you improve the house like putting in double glazed windows in every room. Capital expenditure is not claimable as a deduction.
- Carpets are generally capital expenditure so therefore not allowed as a reduction on profit. However you are allowed incur 12.5% depreciation on the house each year for 8 years.
- No can not claim as it a once off.
- Yes but only 75% and provided its a residential property and you a registered with the PRTB. Commercial you can claim 100%
What are the steps to carry out when you receive Irish dividends
- Gross up Dividend (dividend/0.80). (they are taxed before you ever receive the dividend.
- Tax the dividend as part of Income. (depends on what tax bracket you fall into)
- Claim credit for DWT
Explain Domicile and name the types of domicile
Domicile is a legal concept but it generally means where your permanent home is.
- dad was always domiciled in Ireland despite being away for many years at ago.
- You can only be domicled at one place at a time but you can also change your domicile.
- There are three types
i. Domicile of origin
ii. Domicile of choice
iii. Domicile of dependence.
Explain Residenceand name the rules of residence
Residence is an annual concept and depending on certain laws you can be resident in more than one country at a time.
To be come resident in Ireland you have to satisfy at least one of the two criteria.
i. Spend 183 days in the tax year, or
You can also elect to be an irish resident:
-Can elect to be resident if satisfy Revenue that in Ireland with the intention that will be resident in the next tax year
-Might elect to get tax credits, treaty benefit or to be jointly assessed
Explain what an ordinary resident is?
An ordinary resident is a longer term concept than resident.
- Becomes ordinarily resident in Ireland for a tax year if resident in Ireland for the previous three consecutive tax years
- Ceases to be ordinarily resident if non resident for three consecutive years
What is a Split Year resident and what criteria do you need to fulfill to qualify as a split year resident?
A split year resident is where an individual can be treated as resident for only part of a year when computing Irish tax liability on employment income.
This applies to an individual who in the year that he arrives in Ireland:
- Is not resident in previous years (in Ireland)
- Is resident in Ireland in the year of arrival (i.e spent more than 183 days).
- And has the intention of being an Irish resident next year
The benefit is that if he came over at the beginning of July then it would only the income that he received after July that would be taxable.
-This however only applies to Employment Income only. All other would be taxable.
Year of departure
An individual who is:
-Resident in the year of departure
-Satisfies Revenue that leaving other than for a temporary purpose and will be non resident in following year
Then will be treated as resident only up to the date of departure as far as employment income concerned
What is SARP and who would meet the criteria to qualify for this relief?
SARP is the special Assignment Relief Programme. It was brought in to Ireland in 2012 to help encourage high rollers to come work in Ireland.
Conditions:
i. Is resident in Ireland.
ii. Performs duties of employment in Ireland with a relevant employer
iii. Had worked for that relevant employer for 12 months prior to arrival
iv. Has relevant income (base salary) which is not less than €75k in the tax year
v. Remains in Ireland to perform duties for at least 12 months
You apply to the reveue for SARP and you get a specified reduction called the specified amount
- which is 30 % of the income between 75k and 500k is income tax free but not USC or PRSI free.
What is FED and under what conditions does a body qualify for it?
FED is Foreign Earnings Deduction and it is for people who work in certain jurisdictions who get a benefit as they are promoting ireland.
Conditions:
- Has to be in one of these countries Brazil, Russia, India, China, South Africa, Algeria, Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal and Tanzania
- within a period of 12 months the employee has worked in one or more of the relevant states for a minimum period of 60 “qualifying days“
- “qualifying day” is a day on or after 1 January 2012 that is one of at least 4 consecutive days devoted substantially to carrying out the duties of the relevant employment where, throughout the whole of each such day, the individual is present in a “relevant state
The amount of the deduction is the lesser of
the “specified amount” or €35,000
The “specified amount” is calculated by using the formulaD x E / F
D = is the number of “qualifying days” worked in a “ relevant state” in the tax year
E = is all the income from the employment in the tax year
F = is the total number of days that the relevant employment is held in the tax year (365 days in a full tax year)
What is a Domicile Levy and who qualifies for it?
Levy for Irish domiciled individuals to ensure that they pay a minimum amount of tax (€200,000).
Applies to an individual
Domiciled in a year, and
Worldwide income greater than €1M, and
Irish tax liability €5m
Applies on an individual basis (i.e. each spouse treated separately)
Payable under the self-assessment system
