Financial Advice from Gerard Kirwan Chartered Accountant and Business Advisor

Financial planning advice from Gerard Kirwan, Chartered Accountant (ACA) & Business Adviser , Retirement Planning Adviser (RPA) Tel: 087-9228245 Dunkerrin, Birr Co Offaly

Income Tax Deadline and Financial Review Time

Gerard Kirwan, Chartered Accountant (ACA) & Business Adviser , Retirement Planning Adviser (RPA) Tel: 087-9228245 Dunkerrin, Birr Co OffalyIt’s that time of the year again and the filing dates for the 2015 Income Tax Returns are almost upon us. On the 31st October each year, a self-employed individual/company director and PAYE worker with untaxed non PAYE income is required to:

• File his/her Income Tax Return for the previous calendar year.
• Pay the Balance of tax for the previous calendar year.
• Make a Preliminary Tax payment for the current calendar year.

For customers who file the 2015 Form 11 return and make the appropriate payment through the Revenue Online Service (ROS) the due date is extended to Thursday the 10th November 2016.
PAYE customers who are required by Revenue to file a Form 12 for 2015 and who opt to use the ‘e’ version, the due date is also extended to 10th November 2016.

TAX AND FINANCIAL REVIEW POINTS

  1. Late filing issues
    • A surcharge (fine) of the tax due of up to 5% or €12,695 whichever is the lesser can arise if the return is filed within two months after the deadline.
    • If the return is filed more than two months after the deadline, a surcharge of 10% is imposed subject to a maximum of €63,485.
    • Interest of .0219% per day also arises on any liability not paid which approximates to about 8% a year.

2. Use all available reliefs and credits
The following are some of the more popular reliefs remaining:
• Health expenses are available for relief at the 20% standard tax rate. Not all medical and dental expenses are eligible. Keep evidence of the expenses claimed.
• Nursing Home fees and the costs of employing a person to care for an incapacitated person in their home are relieved at the taxpayers’ marginal rate of tax.
• Home Carers Tax Credit is a valuable credit available for certain married couples depending on their incomes.
• Tuition fees for third level courses will qualify for income tax relief at the standard rate of tax for approved courses in approved colleges. The relief is only available on the excess over €3,000 for full-time courses and €1,500 for part-time courses. Relief is not available in respect of administration, registration or examination fees.

3. Farmers and tax
Farmers are currently experiencing levels of income volatility across all farming sectors.
Availing of the following can help in reducing your tax bill:
• Get an actual or reliable estimate of your liability for 2016 to reduce this year’s preliminary tax payment.
• Claiming the correct stock relief.
• Payment of legitimate family wages.
• Offsetting entire 2015 super levy liability even when payment is spread over three years.
• Pension top-up.

• Carefully consider income averaging:

– New averaging rules for the 2015 tax year.
– For farmers previously in averaging the profits were averaged over three years but from the 2015 tax year this has changed to four and five years depending on the farmer.
– When profits are rising income averaging yields a benefit but where profits are falling averaging could be a cost.
– It is not a straight forward process opting in and out of income averaging as opting out can result in additional tax payable because Revenue has the right to review the previous years.
– Income averaging is not for everyone and all parties must understand how it operates.

4. Pension tax relief and pension review

– If cash flow allows one way of reducing your self-employed tax bill is to make a pension contribution. Tax relief up to 40% is available on pension contributions.
– A contribution to your Personal Retirement Savings Account (PRSA) or Retirement Annuity Contract (RAC) before the tax deadlines can be made by the self-employed.
– Employees who are already included in their company pension scheme can pay an Additional Voluntary Contribution (AVC) before this date and offset it against the contributor’s 2015 tax bill.
– Medical Professionals such as GPs who are members of the GMS scheme and Medical Consultants who are employees of the HSE can have two occupations with both the Private and Public Sectors. These professionals have the option of making both AVC contributions and contributions to their PRSA or RAC within Revenue maximum limits.
– Your pension should be reviewed with your adviser on a yearly basis at least. As you approach retirement you need to know exactly the asset mix of your pension funds i.e. equities (shares), bonds, property and cash etc. Your attitude to investment risk at this stage of your life is very important.
– You also need to consider what level of tax free lump sum you are likely to gain at retirement and how the rest of your fund will be drawn down during retirement i.e. Annuity drawdown, transfer to an Approved Retirement Fund (ARF)/Approved Minimum Retirement Fund (AMRF) or taken as taxable cash.
– Statistics are proving that people are living longer and funding for retirement is important for everyone to consider.

Everyone’s financial circumstances are different and it’s important to get independent tax and financial advice when reviewing your own financial matters.

I can be contacted at the details below in relation to the above information or any other financial and tax need.
Gerard Kirwan Chartered Accountant (ACA) & Business Adviser ,
Retirement Planning Adviser (RPA)
Tel: 087-9228245

Dunkerrin, Birr Co Offaly

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