All companies resident in the state or companies that carry on a trade in the state through a branch/agency are liable to corporation tax (subject to certain exemptions).
Liam Burns and Co guarantee that clients are compliant with the regulations and ensure companies are structured efficiently to avail of any corporation tax exemptions and reliefs available.
Some important factors to consider in relation to corporation tax returns
A Corporation Tax Return (Form CT1) Returns showing profits, chargeable gains, accounts extract and other relevant details and must be provided to Revenue Commissioners on or before the 21st day of the 9th month after the companies year end.
- Year end 31/12/2014 –> Due date is 21/09/2015
- Year end 31/03/2015 –> Due Date is 21/12/2016
Deadlines are extended to the 23rd day of the month when filed electronically (which is mandatory in most cases).
Late returns will attract a surcharge of 5% of liability, when filed less than 2 months’ late and 10% when filed greater than 2 months’ late – maximum surcharges of €12,695 and €63,485 respectively apply.
Late returns also lead to a restriction in use of losses if applicable.
It is therefore imperative that businesses file returns in a timely manner to mitigate any costs of surcharges and interest as well as the cost of wasted losses.
Liam Burns and Co guarantee that clients’ returns will be filed in a timely manner eliminating any unnecessary costs to your business.
- Preliminary Tax: on or before 23rd Day of Month preceding the Accounting Period End
- Final Payment: on or before the 21st day of the 9th Month after the Accounting Period End
- 12.5% – applies to Trading and/or Professional Services Income (Case I and II)
- 25 % – applies to Investment Income, Rental Income, Deposit Interest (Case III, IV, V)
- 80% – ‘Windfall Tax’ on land rezoning (Removed in Budget 2015, rate reverting back to standard rate of CGT)
Note: There are also additional surcharges (up to 20%) which apply to ‘Professional Services’ companies and ‘Close Companies’ in cases where profits are not distributed. This is a tax avoidance prevention method introduced to deter people setting up companies solely to avail of the lower tax rates.
The above can often be overlooked by businesses, and ill advice in this matter can cause major taxation liabilities, penalties and surcharges. As Chartered Tax Adviser and Chartered Certified Accountants, Liam Burns and Co can advise and ensure your company does not fall short of the compliance in relation to this, while ensuring your company is as tax-efficient as possible.
For example, take an accountancy practice set up as a limited company: Accountancy and taxation are regarded as professional services and undistributed profits would be liable to the surcharge. However, bookkeeping, payroll and company secretarial services are not regarded as professional services and therefore profits in this regard would not fall under the surcharge. This can be applied to many businesses and it is vital for your business and accounting element to be structured to minimise this potential liability.
Business Start-Up Relief
In order to encourage new business start-ups and employment, a 3 year tax relief is available to companies by allowing them to reduce their corporation tax liability by an amount up to the value of any employers’ PRSI contributions paid.
This relief is capped at €5,000 per employee and €40,000 in total for a year. It is available for companies whose corporation tax liability is less that €40,000, with marginal relief available for companies whose liability is between €40,000 and €60,000. The relief, provided for under Section 486C TCA 1997 was introduced in 2009 and has now been extended to 2018.
Utilising Losses to Reduce Tax
Many companies suffer losses at different stages of the company’s life, whether it be during start-up, growth and development, or in the closing stages of the business.
It is important, therefore that business and companies utilise the reliefs available for losses. Often company losses can be mismanaged and utilisation of losses is not maximised. At Liam Burns & Co we will ensure that your business is efficiently advised on the elements of each type of loss and how to optimise the options available.
Examples of using losses to offset tax
Trading Losses can be offset;
- against other profits (eg: rental, chargeable gains, deposit interest) before charges in the same accounting period
- against profits before charges of the prior period of same length if the company carried on a trade in that period
- against future profits – of the same trade
Other losses, including rental, investment and chargeable losses (CGT) can be used in the same period on a value basis against other income in the current year. For example, rental losses (@25%) of €5,000 can be used against trading profits (@12.5%) of up to €10,000.
Terminal losses are losses that occur in the last 12 months trading of a company.* These losses can be carried back against income from the same trade in the preceding 36 months – the company can therefore get tax back from amounts paid in profitable years.
*Note – all other loss reliefs must be used in priority to this.
In a company restructuring, subject to certain conditions, the successor company can take over the losses of the original company.
In general, all of the above are included as part of the Accounts Preparation Fees for clients – from €100 per month. Liam Burns and Co is an accountancy and taxation practice and both usually come hand-in-hand. As part of our general services to clients, we ensure all of the above measures are utilised and implemented efficiently.
In cases where a corporation tax return is required based on already completed and finalised accounts, fees start from €400 (ex VAT).