income tax

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Income Tax Receipts Higher than Forecasted

As reported in the Irish Times, 03.03.2020, the latest exchequer returns show the Government received income tax of €3.97 billion for the months of January & February, 3.3% lower than forecasted but up over 14% based on previous years.

VAT income was up by 4%, generating over €3 billion, with Corporation Tax at €583 million from the start of the year, 117% above forecast.

In total, €9.2 billion in tax was collected, €285 million more than expected.

Revenue have stated that the total received in the last 2 months generally account for less than 2% of a full year of overall receipts.

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Short Term Rental & Airbnb Review

Revenue have issued a review in regard to short term leasing from January 2020. Revenue have now defined that;

Income for providing short term accommodation for occasional visitors such as through an online accommodation booking system is not considered rental income (Case V) and is taxable as “other income” (Case IV) if occasional income or as “trading income” (Case I) if operated as a trade such as a guesthouse.

Therefore, in summary, Airbnb rentals and similar short-term rentals are no longer considered rental income and are to be declared as ‘other or trade income’.

What does this mean for my return?

Capital allowances (expenses subject to wear and tear) are not allowable against the profits of income under Case IV. However, expenses incurred to provide such accommodation are an allowable deduction such as ; commission fees, cleaning fees, reasonable cost of light and heat. Annual costs such as insurance, tv licence and general repairs and maintenance are no longer an allowable expense against profits under Case IV.

VAT

Now that this income is considered ‘other income’, You must register for VAT if your income is likely to exceed €37,500 per year. The VAT rate for short term accommodation is at a reduced rate of 9% and applies to;

  • Letting of a room(s) in a hotel or guesthouse.
  • Short term lettings of all or part of a house, apartment or similar building.
  • Letting of a part of a caravan park or similar place.
  • Letting of a part of a camping site or similar place.
  • Provision of any other holiday accommodation.

However, the provision of student accommodation is exempt from VAT.

A VAT registered business providing taxable short-term accommodation may reclaim Value-Added Tax (VAT) incurred on their business costs under the normal VAT rules.

Should you have any queries on this issue, please contact us on 01 5397999 or request our application here

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Pay & File Deadline Extension for Self-Assessed

The deadline for all self-assessed individuals to file their Form 11 tax return & submit payment has been extended, Revenue have announced.

Clients that file their 2019 Form 11 return and pay the following;

  • Preliminary Tax due for 2020
  • Income Tax Balance for 2019

Will qualify for the extended due date of Thursday, 12th November 2020.

As with every year, as it is an extremely busy period, we would advise all our clients that in order to give enough time to review your tax year and to submit it on time, paperwork must be submitted as soon as possible for 2019.

Your tax return can be filed at any time between now and the deadline.

Here are 5 reasons why you should file your Tax Return early this year…

  1. Plan Ahead

If you file your return and are due to pay a liability, this is due by 31st October (or the extension deadline as per above). Therefore, if you’re liability is calculated in advance, it gives you time to prepare and budget.

  1. Less Stress

Submitting your paperwork to your accountant early means there is less pressure on both sides to complete and file your return on time. Giving your accountant more time to prepare and review your return. If your paperwork is received late or too near the deadline, your accountant may not be able to guarantee filing it on time.

  1. Avoid Surcharges

If your return is filed after the deadline of 31st October (or the extension deadline as per above), you will be subject to surcharges and interest owed. You also run a higher risk of being selected for an audit.

  1. More efficient

The longer you leave your return nearer the deadline, the busier Revenue will be. If you are due a refund, the sooner you apply for this the better as you may need to wait a lot longer once we approach 31st October deadline due to the volumes of returns Revenue need to process.

  1. Peace of mind

Being more organised and submitting your return early, gives you that peace of mind that you have completed your tax obligations and won’t have that rush in October.

Contact us today to begin preparing your 2019 return on 01 539 7999 or info@itasaccounting.ie

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