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© M.K.Brazi l Cost Management in Challenging Times : The Tax Aspects Waterford City Enterprise Board 26 March 2009 The Tower Hotel, Waterford
© M.K.Brazi l
Overview: <> Avoid the Negative - Prevent Arrears => Sanctions - Dont pay unnecessary tax costs <> Embrace the Positive - Avail of Planning Opportunities - Maximum Tax Efficiency <> Questions & Answers
© M.K.Brazi l Prevention
© M.K.Brazi l 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
© M.K.Brazi l Costs & Cash-Flow
© M.K.Brazi l Costs & Cash-flow: VAT –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 Suppliers Invoices - Multiple v Composite –If Property Involved (e.g. lease) => Seek Advice
© M.K.Brazi l 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+
© M.K.Brazi l 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 New BIK-Free Bike Scheme
© M.K.Brazi l 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
© M.K.Brazi l Costs & Cash-flow continued... Owners - Directors –Directors 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)
© M.K.Brazi l 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
© M.K.Brazi l Cash Injection / Raising Funds
© M.K.Brazi l Cash Injection: Traditional –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
© M.K.Brazi l 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
© M.K.Brazi l Tax Planning
© M.K.Brazi l Tax Planning: Restructuring –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
© M.K.Brazi l 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
© M.K.Brazi l Miscellaneous & Summary
© M.K.Brazi l 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
© M.K.Brazi l 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. Directors Bonus, CCS Dividends, Retirement Plan, Gifts to Children, Extracting Property, Liquidation
© M.K.Brazi l 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
© M.K.Brazil OConnell Court, 64 OConnell Street, Waterford. Tel: / Fax: Thank you for your attention. QUESTIONS?
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