Tax Exemption for New Start-Up Companies

Relief from corporation tax is available for the first 3 years of operation for new companies:

-that are incorporated on or after 14 October 2008,
-which commence a qualifying trade in 2009, and
-whose corporation tax liabilities do not exceed specified levels.

Full relief is available to a new company in any of its first 3 years of operation where its total corporation tax liability for a 12-month accounting period does not exceed E40,000.

Tax Reliefs for High Earners

Certain tax breaks available to high income earners are restricted with a tapering restriction applying to individuals with income in excess of €250,000. The amount of relief’s that an individual may claim in any year is limited to a greater of 50% of certain relief’s including all property incentive schemes or €250,000 whichever is greater. Any relief denied in a particular tax year may be carried forward. The impact of this is to ensure a minimum payment of tax at c.20%.

In the case of married couples each spouse is treated separately when calculating this relief and therefore the threshold of €250,000 applies to each spouse.

Rent-a-Room Scheme

Where a room in a persons’ principle private residence is let as residential accommodation and the gross annual rental income is less than €10,000 per annum this rental income is exempt from tax. Where it exceeds €10,000 the rent is taxable in full.

Qualifying room rentals will not affect entitlements to claim mortgage interest relief. It will also not effect CGT relief on Principle Private Residence on the disposal of the dwelling, and will not lead to a stamp duty claw-back. The relief will not apply where the letting is between connected parties and rent relief is being claimed.

Home Carer’s Credit

A Hone Carer's tax credit of €990 is available for married couples jointly assessed, where only one spouse is working and the other cares for children, individuals over the age of 65, or incapacitated individuals in their home. No credit is available where the income of the carer exceeds €6,620. A reduced credit applies if the carer’s income is between €5,080 and €6,620 for the tax year.

Childminding Relief

Childminding relief is, available where an individual minds up to three children (excluding their own children) in their own home. No tax will be payable on the childminding earnings received, provided the amount is not more than €15,000 per annum. If the childminding income exceeds this, the total amount will be taxable as normal under self-assessment.

Tax Exemptions & Reliefs

Relief for the Long Term Unemployed

Tax incentives were introduced to benefit employees and employers. The employee is entitled to two separate allowances, as follows:

Personal Tax
Allowance           Child Tax Allowance
€                         €
Year 1 3,810        1,270 for each qualifying child
Year 2 2,540        850 for each qualifying child
Year 3 1,270        425 for each qualifying child

The definition of a qualifying individual is an individual who have been continuously unemployed for a minimum period of twelve months. The employer is entitled to a double deduction for qualifying employees in respect of:

Emoluments paid to those employees in the first 36 months of employment and
PRSI contributions on those emoluments

Older people's tax credits and reliefs

If you are aged 65 or over and live in Ireland, you are liable to pay income tax in the normal way. However, the tax exemption limits are much higher for people aged 65 or over and there are some extra tax credits. It is possible to get tax relief for covenants to people aged 65 and over.

In certain circumstances, you may be able to reclaim any Deposit Interest Retention Tax paid. Annual exemption limits for 2009 and 2010

Status Aged 65 and over
- Single/Widowed person €20,000
- Married Couple €40,000

What Medical Expenses Can i Claim?

You may claim tax relief in respect of the cost of certain medical expenses paid by you. You cannot claim tax relief for any expenditure which has been, or will be, reimbursed by another body such as the VHI, Quinn Healthcare etc. Also be aware that claims can be made for the previous 4 tax years. Many people are not aware of certain appliances which can aslo be claimed for, for example; Wheelchair and/or Wheelchair Lift, Exercise bicycle and Computers. You may only claim relief based on the advice of a medical practitioner or where medical evidence indicates that an item is necessary.

Claims can be made via Revenue's PAYE anytime website, by completing form Med 1 or Form 11. There are many more medical expenses you can claim, further articles will be posted shortly.

If you have any comments or queries please use the comments or email link below or visit our website @ http://www.cops.ie/payrolltraining.html

Cycle to Work Scheme

From 1 January 2009, the provision of bicycles and associated safety equipment by employers to employees and directors who use the bicycles wholly or mainly for travelling to and from work or between work places will be treated as a tax-exempt benefit in-kind.

This tax exemption may only apply once in every 5-year period in respect of any one employee/director. The provision of bicycles/safety equipment must be generally available to all employees and directors. There will be a limit of €1,000 on the amount of expenditure an employer can incur in respect of any one employee/director. The scheme may also be implemented via salary sacrifice arrangements, whereby an employee agrees to forego part of her or her salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented they must be completed over a maximum period of 12 months and the maximum amount that can be forgone is €1,000.

Childcare Services Relief

Childcare Services relief is a scheme of tax relief for income arising from the provision of certain childcare services. When the gross annual income from the provision of childcare service does not exceed €15,000 in 2007, 2008 or 2009 the income is exempt from tax. The childcare service must be provided in the carer’s home, not the children’s home and no more than 3 children may be cared for at any time.

Tax relief for disabled drivers and disabled passengers

The Disabled Drivers and Disabled Passengers Scheme provides a range of tax reliefs linked to the purchase and use of vehicles by disabled drivers and disabled passengers in Ireland. Under the terms of the scheme, you can claim remission or repayment of vehicle registration tax (VRT), repayment of value-added tax (VAT) on the purchase of a vehicle and repayment of VAT on the cost of adapting a vehicle, up to a maximum of 9,525 euro for a disabled driver and 15,875 euro for a disabled passenger.

Relief is limited to a vehicle that has been specially constructed or adapted for use by a disabled person and that has an engine size of less than 2,000cc in the case of the driver and 4,000cc in the case of the passenger.

If you qualify for tax relief under the scheme, you can also claim repayment of excise duty on fuel used in your vehicle for the transport of a disabled person, up to a maximum of 600 gallons per year. In addition, if you qualify under the scheme, your vehicle may be exempt from the payment of annual road tax on application to a Motor Tax Office.