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Welcome to the FMB Chartered Accountants Blog. We answer all of your financial and accountancy questions, as well as keep you up-to-date with the latest news from FMB.

Mandatory Filing of iXBRL has Commenced

David McArdle - Wednesday, March 19, 2014

Since November 2012, Revenue Corporation Tax and Income Tax filers have had the option to file financial statements in iXBRL format via ROS (Revenue On-line Service). iXBRL (inline eXtensible Business Reporting Language) is a language which allows financial information to be communicated and presented in a format that may be recognised and read by both people and computers.



In line with the approach taken with e-filing on ROS, Revenue is rolling out mandatory filing of iXBRL Financial Statements for Corporation Tax Payers in phases:


Phase 1

Mandatory iXBRL Filing commenced with cases dealt with in Revenue's Large Cases Division (LCD) for Corporation Tax Returns filed on or after 1 October 2013, in respect of Accounting Periods ending on or after 31 December 2012.


Phase 2

Extended mandatory iXBRL filing to all Corporation Tax Payers other than those meeting the three criteria below. This will apply to Corporation Tax returns submitted on or after 1st October 2014, in respect of accounting periods ending on or after 31st December, 2013. The three criteria for exclusion from this phase are:

  1. The balance sheet value of the company does not exceed €4.4 million;

  2. The amount of the turnover of the company does not exceed €8.8 million; and

  3. The average number of persons employed by the company does not exceed 50.


Each of the 3 criteria must be met - otherwise the company must file the financial statements in iXBRL format.


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Reduced Filing Requirements

David McArdle - Friday, March 14, 2014

From 1st, January, 2014, reductions in the filing and payment frequencies for VAT, PAYE/PRSI and RCT by smaller businesses are being extended as summarised below:


  • Businesses making total annual VAT payments of less than €3,000 are eligible to file VAT returns and make payments on a 6 monthly basis;

  • Businesses making total annual VAT payments of between €3,000 and €14,400 are eligible to file VAT returns and make payments on a 4 monthly basis;

  • Businesses making total annual PAYE/PRSI payments of up to €28,800 are eligible to make payments on a 3 monthly basis;

  • Businesses making total annual RCT payments of up to €28,800 are eligible to file RCT returns and make payments n a 3 monthly basis.


Reduced filing and payment requirements should result in improved cash flow as the business will have an extended period before payment of taxes are due and business’ should benefit from reduced administration costs through less frequent filing of tax returns.


Revenue will shortly write to each eligible business confirming that reduced frequency of tax returns and tax payments is applicable.


Pay and File Summary

The following is a summary of upcoming pay and file dates:


Corporate Tax

  • Filing date for Corporation Tax returns for accounting periods ending in June 2013 - 21, March, 2014
  • Balance payment of Corporation Tax for accounting periods ending in June 2013 - 21, March, 2014

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Local Property Tax Surcharge

David McArdle - Friday, March 07, 2014

Chargeable Persons for Income Tax, Corporation Tax or Capital Gains Tax who have not fulfilled their obligations with regard to Local Property Taxes (LPT) may fall foul of the LPT Surcharge of 10% of their Income Tax, Corporation Tax, or Capital Gains Tax liability, where their LPT Return is outstanding or an agreed payment arrangement is not being met at the date of filing the Income Tax, Corporation Tax, or Capital Gains Tax return. 


Given that the surcharge is 10% of the tax liability, it often can be significantly greater that the LPT liability outstanding and can create a significant cash flow issue. To that end it is imperative to comply with the LPT legislation.


Revenue had set a deadline of November last for a householder to nominate a method of paying the LPT, and had warned of penalties for those who failed to meet the deadline.


There is now a small window where interest and penalties will not apply, but on March 31st next, that window closes.


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Is Your Business Prepared For The SEPA Deadline?

David McArdle - Monday, November 11, 2013

An EU regulation set 1, February, 2014, as the date by which all users of electronic payments in the Single Euro Payments Area (SEPA) must migrate from ‘domestic only’ payment systems to a pan-European equivalent. All businesses must conform to the new SEPA standards before the stated end-date of 1 February.

This means big changes for our banks, many software providers and approximately 50,000 businesses that make payroll or creditor payments, or collect direct debits electronically.

As quoted from readyforsepa.ie, ‘The Single Euro Payments Area (SEPA) will simplify financial transactions and make doing business easier. It will apply across 33 European countries, including Ireland, and will make it easier for you to transfer or receive funds.’

Ireland’s national payment system for credit transfers (payroll, creditor payments) and direct debits will close for business on the 31 January 2014 and be replaced by two pan-European schemes:

  • the SEPA credit transfer scheme (SCT) and

  • the SEPA direct debit scheme (SDD).

Payment file formats will need to change from the current domestic ‘Standard 18’ to the new SEPA ‘ISO 20022 XML’ formats.

In addition our National sorting codes and bank account numbers will be replaced by BICs (Bank identifier codes) and IBANs (International bank account numbers).

These technical changes will help standardise payment messaging across SEPA and lead to more efficient payment processing.

A benefit of SEPA is that next-day value is guaranteed for funds transferred between accounts in SEPA.

How to prepare for the change over

  • You need to contact your bank and software provider.

  • Your software provider will advise you when their software updates will be completed.

  • Your bank will be able to advise you on any actions that you need to take to make sure that you are fully SEPA-compliant in good time for the 1 February 2014 deadline.

If you haven’t conformed to the new SCT and SDD technical standards by the 31 January 2014, your bank will not be able to process your transactions. This will cause disruption for your business so early planning and migration to the new schemes is highly recommended.

For more SEPA information visit www.readyforsepa.ie

For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.




Finance Bill 2013

David McArdle - Wednesday, November 06, 2013

As stated by Chartered Accountants Ireland, The Finance Bill includes details on the main new income tax reliefs; the Home Renovation Incentive and the Start Your Own Business Relief. The Bill gives legislative effect to these reliefs and the other tax measures announced in the Budget.

A number of further tax measures are included in the Bill. The Minister of Finance, Michael Noonan said: “Budget 2014 was carefully calibrated to support economic growth and job creation, to reduce our deficit to 4.8% and to secure Ireland’s exit from the EU/IMF programme. Finance (No.2) Bill 2013 give effect to the tax measures that underpin this strategy.

Twenty five pro-business and pro-jobs measures were introduced in Budget 2014, including the retention of the 9% rate of VAT for the tourism sector, the reduction of the air travel tax to €0, the introduction of a home renovation tax incentive scheme, enhancements to a number of agricultural incentives and a package of measures to encourage innovation, entrepreneurship and investment.

In addition, I have decided to bring forward the commencement date for the home renovation incentive to include works that commence on or after the 25 October 2013. This will act as a timely boost to this key sector and will ensure that works starting from tomorrow will be eligible for this incentive.

The full cost of the pro-jobs measures is in excess of €500m in a full year and as I set out on Budget day close to €700m of new tax measures are required to funds the jobs package and reduce the deficit in the public finance. This Bill sets out further details on these revenue raising measures.”

Here are some measures not in Budget 2014 but are included in the Bill:

  • The Bill will enhance double taxation relief in respect of leasing income by providing for the carry-forward of unrelieved foreign tax against future taxable profits from the same source of income. This measure will be of particular benefit to the aircraft leasing industry;
  • The Bill provides for the removal of the 50% restriction on the amount of prior year trading losses a NAMA participating institution (PI) can set off against trading profits. The remaining PIs comprise AIB and Bank of Ireland, of which the State owns 99.8% and15% respectively. This amendment will protect the accounting carrying value of deferred tax assets at the banks, improving capital ratios under the new Basel III rules and enhancing the valuation of the State’s equity holdings in the two banks. It also reduces the risk of future capital injections by the State arising from upcoming stress tests.
  • Section 627 of the Taxes Consolidation Act (TCA) provides for an ‘exit tax’ on certain companies that cease to be resident for tax purposes in Ireland. Such companies are deemed to have disposed of their capital assets at market value (other than assets which are used for the purposes of a continuing trade in Ireland). In response to recent decisions of the Court of Justice of the European Union in relation to the ‘exit tax’ regimes of other Member States, the Bill amends Ireland’s regime. The amendments provide for an optional scheme of deferred payment of the ‘exit tax’ in cases where a liability arises on unrealised gains on the migration of a company from Ireland to another EU or EEA Member State
  • As the legislation relating to benefit-in-kind is still determined in miles it has been necessary for employers and payroll providers, in correctly calculating the notional pay associated with the use of a company car, to carry out additional calculations to convert distances and usage into miles. An amendment is proposed to rectify this

For full information, see FMB’s Finance Bill announcement

FMB Chartered Accountants are experts in Taxation and can assist you in the minimisation of taxation arising on your income. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.


The Taxation of Irish Rental Income

David McArdle - Friday, November 01, 2013

All PRTB affairs must be in order to secure an interest deduction for residential rental properties. 


As stated in the Citizens Information, The Private Residential Tenancies Board (PRTB) is an organisation set up by the Government of Ireland. Its main role is to provide a dispute resolution service for landlords and tenants. The PRTB is also responsible for tenancy registration and from September 2004 all landlords must register new tenancies with the board.

Rental Income arising in Ireland is always liable to Irish Tax In most cases, the taxable amount

Gross Rental Income

less

Allowable Expenses

less

Capital Allowances

equals

Taxable Rental Income.


The following are examples of the type of expenses that may be claimed for:

  • Water rates, Ground rent, Service charges, Waste Collection charges etc
  • Management & rent collection costs,
  • Legal fees relating to drawing up of leases of collection of unpaid rent
  • Accountancy fees relating to drawing up of leases or collection of unpaid rent
  • Accountancy fees relating to the computation of rental income
  • Mortgage interest paid ‘on monies borrowed for the purchase, improvement or repair of the property (Only 75% of interest allowable where the property concerned is residential)
  • Repairs, decorating and General Maintenance
  • Cleaning & related costs
  • Local Authority Property Registration Fees
  • Cost of any unreimbursed services or goods provided to tenants by the landlord i.e. electricity,

FMB Chartered Accountants are experts in Taxation and can assist you in the minimisation of taxation arising on your rental income. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.



CAT Planning

David McArdle - Wednesday, October 30, 2013

Thresholds may change in the Finance Act – consider gifting to children.


If you receive a gift, you may have to pay Gift Tax on it. If you receive an inheritance following a death, it may be liable to Inheritance Tax. Both these taxes are types of Capital Acquisitions. The benefit (the gift or inheritance) is taxed if its value is over a certain limit or threshold.

Different tax-free thresholds apply depending on the relationship between the disponer (the person giving the benefit) and the beneficiary (the person receiving the benefit). There are also a number of exemptions and relief’s that depend on the type of the gift or inheritance. At FMB we have successfully advised many individuals in relation to utilising relief’s and exemptions from CAT which has allowed a significant reduction or complete avoidance of tax on certain capital transactions.

If you receive a gift or inheritance from your spouse or civil partner, you are exempt from Capital Acquisitions Tax. The tax applies to all property that is located in Ireland. It also applies where the property is not located in Ireland but either the person giving the benefit or the person receiving it are resident or ordinarily resident in Ireland for tax purposes.

Groups Thresholds

Gifts and inheritances can be received tax-free up to a certain amount. The tax-free amount, or threshold, varies depending on your relationship to the person giving the benefit.

Group A: This applies where the person receiving the benefit is a child of the person giving it. This includes a stepchild or an adopted child.

Group B: This applies where the beneficiary is the:

  • Parent
  • Grandparent
  • Grandchild or great-grandchild
  • Brother or sister
  • Nephew or niece of the giver

If a grandchild is a minor (under 18 years of age) and takes a gift or inheritance from his or her grandparent Group A may apply if the grandchild's parent is deceased.

FMB Chartered Accountants are experts in Taxation. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.


Taxation of Pensions

David McArdle - Monday, October 28, 2013
The closing date for relief on personal pension contributions for the 2012 tax year is 14th, November, 2013.

The relief available on contributions is linked to the age of the contributor and an overall income threshold. The relevant information is as follows:

 Age
% of Net Relevant Earnings

 Up to 30 years  15%  
 30 but less than 40  20%  
 40 but less than 50  25%  
 50 but less than 55  30%  
 55 but less than 60  35%  
 60 years or older  40%  

Individuals who are engaged in specified occupations and professions – primarily sports professionals – qualify for a minimum 30% deduction irrespective of age.

There is an earnings cap of €115,000 per annum for each individual. Therefore, for example, an individual aged 42 years who earns €200,000 per year can make a maximum tax allowable pension contribution of €28,750 per annum i.e. €115,000 x 25%

Budget 2014 Information

There is no change in tax relief on pension contributions this year, but from 2014 relief will be limited to a fund which will provide a final annual pension of €60,000. How this is to be calculated is not yet clear, but we would expect this to equate to retirement fund value of approximately €1.5m. In the meantime, the Standard Fund Threshold has also been reduced from €2.3m to €2m.

There will be a once-off option to withdraw up to 30% of the value of funded Additional Voluntary Contributions (AVCs) made to supplement retirement benefits. Withdrawals will be liable to tax at an individual’s marginal rate. The option to withdraw will be available for 3 years from the passing of Finance Bill 2013.

FMB Chartered Accountants are experts in Taxation. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.




R & D Tax Credits

David McArdle - Friday, October 25, 2013

Is your company carrying out R&D work? You have the potential for a Tax refund.

The R&D Tax Credit scheme has been a strong motivation in attracting foreign direct investment to Ireland, as well as encouraging domestic R&D activity since 2004.

The R&D Tax Credit claim process requires clear and precise identification and documentation of qualifying R&D activities and expenditure, specialist knowledge of eligibility rules, and an in-depth understanding of Revenue’s process. Companies must also be prepared to support the claim in the event of a Revenue inquiry.

A 25% R&D tax credit is available for companies carrying out qualifying R&D activities in Ireland. This is in addition to the normal tax deduction.

To qualify for the R&D Tax Credit:

  • The applicant must be a company.

  • The company must be within the charge to Irish tax.

  • The company must undertake research and development activities within the European Economic Area (EEA).

  • In the case of an Irish tax resident the expenditure must not qualify for a tax deduction under the law of another territory.


We understand that not all companies have the time to research and develop their claim, which is where we come in. At FMB, we have retained International Experts to identify instances where a company is carrying out qualifying R&D activities and will assist in quantifying the amount concerned to ensure that any claim is maximised. Even where the company concerned is not profitable it may still be possible to avail of cash refunds. Furthermore it is possible in certain circumstances to surrender the R&D credits to key employees.. We can effectively and sufficiently coordinate and research your claim for your company’s R&D Tax Credit.


FMB Chartered Accountants are experts in Taxation. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.


Omnipro - Credit Union Conference 2013

David McArdle - Friday, October 18, 2013

The Omnipro Credit Union Conference was held in the Crowne Plaza in Dublin, September of this year.

David McArdle and Patrick Loughnane of FMB were part of the course facilitators as they discussed the Loan Book Reviews and PRISM Visits of the Credit Union and Central Bank.


The areas covered for the Loan Book Review were:

  • Types of request

  • Central Bank

  • Credit Union

  • Types of request made by Central Bank

  • Template to be completed and reviewed by auditor

  • Independent Loan Book Review

  • Auditor to carry out loan book and asset review as part of year end work.


The Guidance and Legislation of the Loan Book Review

As stated in Section 35 of the Regulatory Requirements for Credit Unions, November 2010

  1. CU must ensure they review their total loan portfolio on a quarterly basis to verify the adequacy of the BDP and incorporate resulting adjustment in monthly management accounts and Prudential Returns. (4.3)

  2. A full review of the BDP must be undertaken as part of the year end annual accounts preparation and audit process. (4.4)

  3. A full review of the BDP must be undertaken as part of the year end annual accounts preparation and audit process. (4.4)

The Engagement Letter

Is a separate engagement letter required? In most cases, YES.

If reviewing Credit Union prepared Loan Book Review and template then perhaps no as part of audit work. 


The Central Bank Template Request

  1. Complete 'Asset review findings summery template'
  2. Must be discussed with auditor prior to accounts being finalised
  3. Board to confirm in writing to CB that they will comply with the request and that they have discussed with the auditor
  4. Must be uploaded via secure file upload with the draft accounts
  5. Does not state who must complete the work (Internally/League/Auditor?)
  6. May have an impact on proposed AGM dates
Note CB will state that CU should not set an AGM date.

Sign up for the full Loan Book and PRISM review here, including the Central Bank Template. 

 










  
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