Posted by Jill Kerby on October 28 2009 @ 14:32
PAY YOUR TAX BY THE DEADLINE, BUT DON’T MISS OUT ON TAX RELIEFS
This could be the last tax year that any of us will be able to claim as varied – and valuable – collection of tax reliefs and allowances. The Minister for Finance may have made it clear that he has no intention of increasing income tax any further, but I don’t recall hearing him say the same about capital taxes or VAT or that the long list of tax allowances and reliefs will be preserved.
In fact, over 200 tax-breaks were listed by both the Taxation on Commission report and the McCarthy, ‘An Bord Snip’ report for cutting, and if it comes down to ‘no new income taxes’ at the expense of tax relief for service charges, trade union subs, the Rent-a-Room scheme, benefit-in-kind, tax relief on pension contributions and any tax reliefs to do with property, other than an outright tax on our houses, we should probably prepare ourselves for the worse on Budget Day and be grateful for any tax breaks that are left untouched.
Since October 31st, the tax and file deadline, is a Saturday this year, anyone who is self-employed, has earnings outside of PAYE, own a rental property, has sold shares or another asset for a gain only has until the close of business this Friday if you are filing your returns by hard copy or until November 16th if you are filing by the Revenue’s excellent on-line service ROS (see www.ros.ie). Since it can take eight working days to get registered with ROS, you should do so now if you are not able to file by this Friday.
Many of us know people who run their own business as sole traders or self-employed agents or who own a buy-to-let property. But I also have a friend, a primary school teacher, who for many years has given cookery lessons in her home two nights a week during about six months of the year, an in a good year earns another €6,000 from this job.
Another person I know, who is a kitchen fitter (or was), has a small, part-time business repairing furniture and making beautiful willow Moses baskets that he sells on-line. He too must fill out their return for 2008 and pay their balance of tax for 2008, then pay preliminary tax for 2009. If you are unable to work out your tax liability yourself – the ROS site is very helpful in providing step-by-step on how to fill in the form. Or you can contact a tax advisor to help you do the paperwork. Late filing is subject to steep penalties – up to 10% of your tax bill if you are late by two months plus a monthly interest penalty of 8% thereafter. “You are also more likely to trigger an audit if you are late in filing or paying your tax,” says tax advisor Sandra Gannon of TAB Taxation Advisors (www.tab.ie) and co-author of the TAB Guide to Pensions Money and Tax (with yours truly.) “This is especially the case if you have always filed on time before.”
Aside from paying your tax on October 31st (or November 16th) this is also the deadline for claiming your tax reliefs, whether you are a PAYE earner or are self-employed.
The biggest tax breaks continue to be for the contributions you’ve made into business expansion schemes, any remaining property investment schemes you are already invested in, and of course, personal pension plans or PRSAs and AVC top ups to occupational pensions.
Anyone who is not on course to achieve a pension worth two thirds of final income at retirement (up to a new income limit of €150,000) can make contributions that can attract either standard or marginal rate of tax and PRSI contributions. Age limits apply – the older you are the greater percentage of your salary you can make into your pension or AVC, but this is a hugely valuable tax break for higher rate taxpayers: instead of paying €100 into the retirement fund, the tax relief means it will cost just €54 when PRSI is factored in.
Since time is running out, you will need to move quickly to choose which approved pension fund or PRSA that best suits your needs and risk profile. Advisors and life companies admit that those workers who are buying or topping up their pensions are opting this year for safer cash or bond funds which are more secure but younger workers should be investing for the long term – in growth areas like alternative energy, commodities, emerging markets as well as strong consumer durable shares like food companies, pharmaceuticals and new technology sectors.
While they last, we should also be claiming for exemptions and allowances such as those that are available to qualifying artists, ex-spouses paying maintenance, workers with foreign earnings, working students (or their parents) paying third level fees, charity donors, tenants paying private accommodation and any of us who have incurred dental and medical expenses not covered by private health insurance, have made charitable donations, etc. The full list of exemptions and allowances are also listed on the Revenue’s website at www.revenue.ie .
Finally, if you haven’t been collecting your tax breaks you can only go back four years for a refund. But don’t procrastinate another year…they may be gone if the worse happens next December.