Tax Planning Tips

31st January 2011

• File your tax return early if you are due a refund of income tax or corporation tax.

• Review the carrying value of trading stock (including land where appropriate). Any write down will be tax deductible, reducing the liability for 2010. If a loss arises, companies may be able to claim a refund of corporation tax paid in 2009.

• Review debtors, specific bad debts are tax deductible. Traders accounting for VAT on an invoice basis can claim a VAT refund where it can be shown that the VAT is irrecoverable.

• Review VAT / PAYE direct debits to ensure you are not over or underpaying tax.

• Ensure company pension contributions are paid before your company’s accounting year end.

• Consider buying new plant and machinery before the year-end so as to get a full years capital allowances in 2010.

• Certain energy efficient equipment qualifies for 100% capital allowances in year 1, details are available at www.seai.ie or from JPA Brenson Lawlor.  

• If your company is subject to the 20% surcharge on deposit interest, consider reinvesting the funds in a Life Assurance Fund. Income accumulates tax free within these funds, and while a 28% tax applies on encashment they are exempt from the close company surcharge.

• The Employer (Job) PRSI Exemption Scheme has been extended to 2011. This scheme provides a 12 month exemption from employers PRSI (8.5% / 10.75%)  where a new job is created for an individual who was unemployed for 6 months or more.

• Tax-free non cash benefits (such as gift vouchers / hampers) of up to €250 can be made to employees each year, consider availing of this relief before 31 December.  

• BES relief of between €80k and €125k (depending on total income) can be claimed for qualifying investments made before the year end. Film relief of up to €50k can be claimed in respect of qualifying film investments. Both of these reliefs are subject to the €80k to €125k per person cap on tax incentives for 2010 so check with Brenson Lawlor that you have scope to avail of the relief before making an investment.  

• Consider paying (or increasing) salaries to all family members who work in the business so as to fully avail of their tax credits and lower rate tax band. Tax-free termination payments can be made to family members who no longer work for you or your company.

• Consider gifting assets to family members now to avail of low valuations and therefore reduced CGT / gift tax liabilities. It is expected that capital taxes rates will rise and relief’s will be restricted in the coming years.

• Small gifts of up to €3,000 can be made to an individual annually without triggering a gift tax liability, or eroding their tax free threshold amount.

• If you are experiencing difficulty in meeting mortgage repayments on investment properties, consider transferring the property to a company to avail of lower corporation tax rates.

Top of page