Pay and File 2011 - Practitioners' Tips
On this webpage we provide a number of tips and reminders on matters such as:
1. Restricted reliefs calculations for 2010
2. Calculating preliminary tax
3. Calculating Case V income
4. Pensions tax relief
5. CGT – returns and negligible value claims
6. Dealing with clients with tax payment difficulties
We also include links to Revenue material relevant to the deadline including ROS contacts and recent eBriefs and statements from Revenue around practical issues for Pay and File.
We will be updating this page with new information over the coming months as the season progresses.
Latest News
ROS Pay & File Tips - Revenue eBrief No. 60/11 - 21 October
Some tips on accessing PAYE information for clients and on uploading returns is provided.
Tax Briefing - Retirement Annuity Contribution - ROS Issue - 5 October
The RAC mini-calculator is incorrectly calculating relief where contributions were made in 2010 and 2011 and the taxpayer's net relevant earnings exceeded €115,000. Revenue explain the issue and related work-around.
Revenue eBrief - ROS Calculation of Preliminary Tax Using the "100% Rule"
Revenue note the limitations with the facility on ROS that shows the 2011 preliminary tax liability under the "100% rule" i.e only the USC is adjusted for. Therefore further adjustments may be needed to the ROS figure.
ROS Pay & File Matters Special Bulletin – 23 September
The Instiute draws members' attention to an error in calcuating preliminary tax, and other pay and file issues brought to Revenue's attention.
ROS Helpdesk - Extended Opening Hours
Extended opening hours for the ROS Helpdesk are in place in the lead-up to the deadline.
1. Restricted Reliefs Calculations for 2010
Finance Act 2010 introduced changes to the restriction on “specified reliefs” for 2010. The income level from which the restriction applies has fallen to €125,000, where specified reliefs being claimed exceed €80,000. Taxpayers impacted by the restriction this year may face a significant unbudgeted tax bill.
A summary of the Finance Act 2010 changes featured in our TaxRelay publication last June, which is accessible here.
An online workshop on restricted relief calculations by Paul Nestor, Tax Partner in BDO Limerick may save you time and stress in working through your income tax computations this filing season. This is now available to purchase for €30
2. Calculating Preliminary Tax
This year’s calculation of preliminary tax has become more complicated due to the introduction of the new Universal Social Charge (USC). Under Section 531AS(5) TCA 1997 where a taxpayer wishes to pay preliminary tax on the basis of 100% of the previous year's liability, his or her preliminary tax payment for 2011 is to be based on the final liability for the year 2010 as if the USC had been payable and as if the income and health levies had not been payable for that year.
The “90% rule” is unchanged i.e. the calculation should incorporate the USC that will be payable for that year.
Revenue’s eBrief on calculating preliminary tax for 2011 is accessible here.
Computation of Amount for 2011 Preliminary Tax as shown on 2010 Notice of Assessment
3. Calculating Taxable Case V Income
Some key points to remember this year are:
1. The deduction that may be made for interest paid to purchase, improve or repair a rented residential property has been restricted to 75%.
Where interest relates to a property comprising of both commercial and residential aspects, the portion of the interest relating to the residential portion is determined on a ‘just and reasonable’ basis.
2. Revenue have noted that the NPPR charge is not one of the deductible expenses listed under Section 97(2) TCA 1997. We have made representations to Revenue and to the Department of Finance on this matter.
3. Clients may not be aware that while rental profits on Irish property are liable to tax under Case V, profits on foreign rental properties are liable to tax under Case III (as income arising from foreign possessions). Therefore a loss on an Irish rental property can not be used to offset profits from a foreign rental property or vice-versa.
4. Pensions Tax Relief
The earnings cap for pension contributions on which relief can be based has been reduced to €115,000 for 2010.
5. Capital Gains Tax
While capital gains tax on disposals which occurred in 2010 may already have been paid, details of the disposal need to be returned to Revenue. Clients may assume that nothing further needs to be done. For those filing Form 11 the details should be included on the form. For those who do not file a Form 11/Form 12 a Form CG1 should be filed.
Section 538 TCA 1997 provides for loss relief where the owner of an asset satisfies Revenue that its value has become negligible. The word negligible is not defined in legislation. A dramatic fall in value will not indicate that an asset, for example shares, are of negligible value. In such circumstances the Tax Inspector must be satisfied that the shares are in effect worthless. Tax Briefing 52 sets out Revenue’s approach to negligible value claims and what information should be provided. Tax Briefing 52 is available here.
6. Tax Payment Difficulties
Given the economic climate, many taxpayers may experience difficulty in paying their tax liabilities. We have collated various useful information, practical advice and Revenue guidance on dealing with these problems on our Collection and Enforcement webpage.
7. Practical Issues on Pay and File
Revenue Contact Details of particular relevance are listed below.