1. The Tax Aspects Cost Management in Challenging Times:
26 March 2009
The Tower Hotel, Waterford
Waterford City Enterprise Board
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2. © M.K.Brazil

3. - Prevent Arrears => Sanctions
Overview:
<> Avoid the Negative
- Prevent Arrears => Sanctions
- Don’t pay unnecessary tax costs
<> Embrace the Positive
- Avail of Planning Opportunities
- Maximum Tax Efficiency
<> Questions & Answers
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4. Prevention
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5. Avail of advice and help
Avoid Tax Problems:
Back to Basics
Keep Books & Records in Order
Financial Information = Resource (not a Cost)
Revenue not a Bank
Penalties 3% -> 100%
Annualised Interest 10% -> 12%
Statutory Fines - per offence
Other Consequences, e.g. no C2, no TCC, etc
Avail of advice and help
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6. Costs
&
Cash-Flow
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7. VAT Costs & Cash-flow: If Possible, Switch to Cash Receipts Basis
If Not - Payment Requests v Invoices
Monitor DD - Falling Sales / Permanent Refunds, etc
Switch back to Bi-Monthly if Refunds
W/O Bad Debts and seek Refund
Forfeited Deposits - Refund - Prior Years?
Monitor Supplier’s Invoices - Multiple v Composite
If Property Involved (e.g. lease) => Seek Advice
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8. Payroll / Staff Exploit Anomalies in Payroll System
Costs & Cash-flow continued…
Payroll / Staff
Flexible Remuneration Packages
Job insecurity, Childcare Costs, etc
=> part-time, reduced hours, work from home, etc
3-day week => DSW for remaining days?
Exploit Anomalies in Payroll System
e.g. < €352 no Income Levy, no PRSI, < €500pw = no 2% Levies, etc etc, for example switch 10 Employees from €505pw to €495pw
=> No net loss for Employees,
=> Employer Saves €5,600+
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9. Share Schemes Tax Efficient Remuneration Packages Medical Insurance
Costs & Cash-flow continued… Payroll / Staff cont...
Tax Efficient Remuneration Packages
Medical Insurance
Share Schemes
Travel Passes / Car Parking
Implement Expense Scheme
Training Courses / Exams
Phone / Lap-top
Pool Vehicles v BIK (Car v Van)
Exploit ‘Small BIK Exemption’ - €250
New BIK-Free Bike Scheme
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10. Revenue Job Assist Scheme
Costs & Cash-flow continued… Payroll / Staff cont...
Revenue Job Assist Scheme
New Employees only
May change in April Budget
Switch Bonuses from Turnover to Receipts
Temporary lay-off rather than Redundancy
If Redundancies - Get Advice and Do It Right
Employees can also provide funding - see below
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11. Owners - Directors Director’s Loan v Repayment of Loan Family Members
Costs & Cash-flow continued...
Owners - Directors
Director’s Loan v Repayment of Loan
Family Members
Must be Bona Fide
Use Tax Credits and/or SRCOP
Termination Payments
Mileage & Subsistence
Pension Position (payment without a plan)
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12. Various Other Considerations
Costs & Cash-flow continued...
Various Other Considerations
Complete Structural Review
Sole-trade v Company etc
Adjusting Accounting Year End
Rental Income
Sub-letting of Office Space
Pre-Letting v Between Letting
VAT implications
Green Tax Incentives
e.g. Electric Car = Lower BIK = Increased Allowances, etc
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13. Cash Injection / Raising Funds
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14. Traditional Owner - Directors Private Investors Cash Injection:
BES - Seed Capital - Grants etc
Owner - Directors
Loan Interest Deduction
Private Investors
Share Option Agreements - Complicated but possible
Private Loan Agreements - Standard-Rated Income etc
Exempt Patent Dividends
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15. Employees S.479 - Once Off Investment Loan Interest Deduction
Cash Injection cont...
Employees
S Once Off Investment
€6,350 per employee
Ord shares for minimum of 3 years
Loan Interest Deduction
Money to buy shares or to loan to employer company
Share Schemes - e.g. PSS in lieu of Bonus
BES - if Employer qualifies
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16. Tax Planning
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17. Restructuring Retirement Planning Succession Planning Tax Planning:
Expansion – Mergers – Rationalisation, etc
Tax Planning - Group – Trade Sale - etc
Retirement Planning
Fund Retirement
Facilitate Hand-over
Succession Planning
Family Company - Investment Assets – House
On-going financial assistance
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18. Routine / On-going Planning
Tax Planning cont…:
Event / Transaction Planning
Purchase / Sale of Property or Assets
Purchase / Sale of Business – Whole or Part
Inheritance - Gift
MBO, Bonuses, Retirement, Termination etc
Routine / On-going Planning
Rental Income – S.23, Loan Interest, etc
Property Development
BES, Remuneration Packages etc
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19. Miscellaneous & Summary
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20. Patents - Significant Tax Breaks
Sundry Other Considerations:
New Company Exemption
Restrictive Conditions, but...
R & D Credit
Complex but very valuable
Losses
Consider how best utilised
Cash Flow v Tax Efficiency
Patents - Significant Tax Breaks
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21. Class S v Class A Rental Losses Pre-Budget Planning
Sundry Considerations cont...
Class S v Class A
Take part-time role = PAYE Credit = Stamps
Rental Losses
Can they be utilised, e.g. Storage
Pre-Budget Planning
Income & Capital Taxes to Increase
Trigger Tax Charge pre-budget?
e.g. Director’s Bonus, CCS Dividends, Retirement Plan, Gifts to Children, Extracting Property, Liquidation
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22. Irish Tax system can help businesses Raise Funds, Cut Costs, etc
SUMMARY:
Irish Tax system can help businesses
Raise Funds, Cut Costs, etc
Watch Budget Changes
Tax Planning requires Time and Information
Tax is only part of the picture but often a critical part
Get Advice Regularly
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23. QUESTIONS? Thank you for your attention.
O’Connell Court, 64 O’Connell Street, Waterford.
Tel: / Fax:
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