Dentists Feel Pain As Taxman Hits a Nerve

June 7, 2012

A new Revenue move could mean bigger tax bills for dentists and their workers.  

Following their previous focus on the tax status of locum doctors, Revenue have now turned their attention to the Dental sector. In recent weeks, they have written to the Irish Dental Association stating that Dental Associates and Dental Hygienists, “who in Revenue’s view are employees”, must have PAYE/PRSI operated on their earnings with effect from 1 January 2012.

The net effect of this move will be to prohibit many dental associates and hygienists from working as self-employed contractors for dental practices. They must instead be treated as employees, and have PAYE/PRSI deducted on their earnings.

This is in line with the Code of Practice for Determining Employment or Self-employment Status of Individuals, agreed by the Employment Status Group, under the Social Partnership process in 2007.

The biggest impact of this change will be the imposition of 10.75% employer PRSI on the earnings of affected workers.  This will represent a major additional cost for dental practices. Given the current state of the economy it will be difficult if not impossible for practices to pass on these cost increases to paying customers.

While the Irish Dental Association have asked Revenue to defer the implementation of the changes to 1 January 2013, it is clear that the new rules will take effect sooner or later.

Of course Revenue will be anxious to implement the changes as soon as possible in order to maximise their own Income Tax, USC & PRSI take from the dental sector, so it is difficult to see them agreeing to the dentists’ pleas.

The key message for dental practitioners, associates and hygienists is that they will need to take immediate action to review their current status, and ensure that they stay Revenue-compliant.

Their first step should be to review the recent Revenue letter to the Irish Dental Association, copies of which are presumably being circulated to dentists nationwide.  Chartered Accountants Ireland have published extracts from the letter online and these are also reproduced below:

Practices will also need to review their contracts with dental associates and hygienists as many of these workers may now be entitled to additional employee rights which did not arise while they worked as contractors, eg rights to annual leave, unpaid breaks, minimum notice, redundancy etc.

Whether or not individual practices and their dental associates and hygienists are affected by the new rules will depend on the existing contractual working arrangements in place in each case. Revenue have pledged “to consider each case on its own merits”. In cases of doubt, they are urging dentists and hygienists to make a submission to their local Revenue District, outlining the terms and conditions of the particular engagement(s) and asking for Revenue’s opinion on their correct status.

I recommend that affected dental practices, associates and hygienists should seek expert professional advice on their status and working arrangements before making any such submission to Revenue.

It may well transpire in individual cases that existing ‘independent contractor’ arrangements already conform with the self-employment criteria set out in the Code of Practice, and (more importantly) existing case law precedents. In such cases there may be no need to treat the workers in question as employees.

However given the stakes involved, and the risks attaching to non-compliance with any Revenue matter, it would be foolish to ignore this issue in the coming weeks and months.

Extract from Revenue correspondence to Irish Dental Association:

“Employment Status of Dental Associates and Dental Hygienists engaged by Dental Practices

Revenue have considered the circumstances surrounding the engagement of dental associates and dental hygienists in dental practices, having regard to the criteria set out in The Code of Practice for Determining Employment or Self Employment Status of Individuals and relevant case law. It is the Revenue view that generally speaking associates and hygienists engaged by dental practices are engaged under a contract of service (i.e. they are employees) and their remuneration comes within the scope of PAYE and that PAYE should be operated on all payments from 1st January 2012.

It is accepted that there may be exceptional cases where the terms of engagement differ from the norm and in these instances Revenue is prepared to look at these on a case-by-case basis. Revenue will consider each case on its own merits and in cases of doubt a submission, outlining the terms and conditions of the engagement should be submitted by the dentist or the hygienist to their local Revenue District for consideration.”


Revenue scrap ROS online Amend Tax Return facility

April 30, 2012

Revenue have withdrawn their ROS facility to amend an income tax return online.

Back in September 2010, Revenue added a useful feature to their ROS site which allowed a user to amend online a previously-filed Form 11 Income Tax return.  At the time, I heartily welcomed this move and hailed it as ‘an important innovation’. In the intervening 20 months or so, I used it on a number of occasions, most commonly as a particularly easy way of claiming a tax credit or allowance that had been omitted from an original tax return.  I found the facility to be both useful and straightforward to use.

This morning I was reviewing the tax records of a client who had reached 65 years of age in late 2010 but hadn’t previously notified either myself or Revenue of this fact. He was therefore entitled to an Age Credit for 2010, along with PRSI exemption and partial Income Levy exemption for that year.

I accessed ROS to amend his 2010 tax return accordingly but I could not find any links to access the ‘Amend Form 11’ facility. A quick google search yielded a blank apart from my own blog post of September 2010 which outlined the steps involved in amending a return on ROS and a link to the relevant Revenue eBrief which was issued around that time.  I was dismayed to find the eBrief link was dead, bringing me to a ‘Page not found’ page within the Revenue.ie site.

Increasingly puzzled, I tried the ROS help section of ROS.ie and its ROS FAQ – Form 11 page which told me:

“Can I avail of ROS to file an amended Form 11?     
Unfortunately at this time if you have previously filed a Form 11, on either paper or through ROS, you will not be presented with the option of filing an amended return.”

Finally admitting defeat, I then had to resort to writing a letter to Revenue asking them to (i) update and amend my client’s 2010 Form 11 accordingly; and (ii)  issue a new Income Tax assessment including the Age Credit and exemptions. My letter has just gone off in the post. I expect that it will reach Revenue in 1-2 days time and they will presumably deal with it in due course. No matter how efficiently they manually process it, the service cannot match the speed and efficiency of the automatic ROS service.

I am disappointed that Revenue have withdrawn the facility to amend returns online via ROS, and it seems to be a retrograde step for everyone concerned.

It is doubly disappointing that they didn’t alert accountants and taxpayers of the move, choosing instead to merely delete the eBrief that had previously explained the feature. Maybe I’m expecting too much, but a fresh eBrief announcing the change would at least have made ROS users aware that the feature no longer existed – saving both their own and their clients’ time. Hopefully Revenue will reintroduce the facility before too long.


15 Nov 2012 is ROS ‘Pay & File’ Tax Return Deadline

April 4, 2012

Revenue have confirmed this morning that the existing 31 October 2011 Pay & File deadline for 2011 Income Tax returns is being extended to Thursday 15 November 2012 for returns filed online via the ROS system.

To avail of the extended deadline, an individual must, by 15 November

  1. file their 2011 Form 11 Income Tax return by 15 November 2011 using the online ROS system.
  2. also use the Revenue ROS system to make their ‘Pay & File’ self-assessment tax liability, ie
  • Preliminary Tax for 2012;  and
  • Balance of Income Tax payable for 2011

The existing deadline of 31 October 2012 applies, unless:

  • the Form 11 tax return is filed on ROS; and
  • the required Income Tax payment is made using ROS.

Capital Gains Tax

The Revenue announcement makes no mention of any extension to the Capital Gains Tax return filing deadline of 31 October next. Individuals subject to self-assessment Income Tax are required to file their Capital Gains tax details as part of their 2011 Form 11 Income Tax Return. However, separate payment deadlines apply for Capital Gains Tax liabilities.

Capital Acquisitions Tax

The deadline extension also applies to Capital Acquisitions Tax (CAT) payments and IT38 returns for gifts or inheritances with valuation dates in the year ended 31 August 2012. Again it is conditional on the CAT IT38 return filing and tax liability payment both being made through ROS.

Online filing is now compulsory for almost all IT38 returns so the extended deadline will be especially useful here, as it will provide for more time for beneficiaries to sell assets or liquidate investments in order to meet the CAT payment deadline.

Pension Payments

In previous years, the extended 15 November deadline has also applied for the purposes of RAC, AVC and PRSA pension payments.   Today’s Revenue eBrief does not mention this particular issue although I expect that the 15 November deadline will also apply this year where the individual pays & files via ROS by 15 November.

This would enable qualifying pension payments, made by 15 November 2012, to attract backdated tax relief against 2011 tax liabilities. However Revenue have not yet confirmed that this concession will continue this year.

If you are considering making a pension payment in November and claiming the tax relief against your 2011 liability, please make sure to check for further Revenue updates between now and October. In the meantime, in case of doubt, it is safer to work on the assumption that the previous 31 October deadline applies, and make any such pension payment by the end of  October.


Medical Expenses – How to claim your Tax Relief

April 3, 2012

Did you know that you can claim tax relief on the cost of doctors bills, prescriptions, nursing home fees and other medical expenses?

This is one of the most valuable Income Tax reliefs around, and is easy and straightforward to claim. Yet, amazingly, each year many thousands of taxpayers never claim their refunds.

Contemporary Living magazine is an on-line lifestyle magazine for county Cavan

My new article for Contemporary Living magazine explains how you can avoid this expensive mistake.



Budget 2012 Live Updates

December 6, 2011

Michael Noonan, Minster for Finance is now delivering his Budget 2012 speech to Dáil Éireann.

Budget 2012 6 December 2011The Minister has announced the following Tax measures:

Corporation Tax

  • No change in the 12.5% Corporation Tax rate.
  • A special Assignee Relief Programme to attract multinationals’ executives to Ireland
  • New Foreign Earnings deductions for individuals developing markets abroad
  • International financial services sector boosted by measures to be announced in Finance Bill
  • First €100,000 of Research & Development expenditure to be allowed for R&D credit.
  • Corporation Tax exemption for new companies extended for a further 3 years.

Farming

  • Farm transfers to the next generation are to be incentivised
  • Significant fall in the rate of stamp duty for farmland and other commercial property
  • Retirement relief for CGT to be modified – no detail of this measure included in the Budget Speech.
  • Farm partnerships to be encouraged by 50% Stock relief for participating farmers and existing 100% Stock relief for young farmers
  • The 9% rate of VAT to apply to Open Farms

Air Travel Tax

  • Government are ‘prepared to negotiate’ with Aer Lingus and Ryanair to incentivise tourist routes into Ireland

Construction Sector

  • Stamp duty for commercial property to be cut to 2% overnight – the previous top rate was 6%
  • The current rates for residential property will apply
  • CGT exemption for properties bought between tonight and the end of 2013 – if they are held for 7 years.
  • Commercial properties – NAMA can now approve rent reductions in certain cases, even in cases where ‘upward only rent review’ clauses apply
  • Those who bought homes at the end of the property boom will gain by an increase in mortgage interest relief to 30% for those homeowners
  • First time buyers will get 25% mortgage interest relief for property purchases in 2012

Property Reliefs

  • Detailed policy measures to be made in Finance Bill
  • s.23 Reliefs to small scale investors will not be cut
  • Surcharge of 5% will apply to sheltered income where one’s income is over €100,000

Income Tax

  • No increase in Income Tax bands, rates or credits.
  • Universal Social Charge to be changed to help low paid seasonal & temporary workers – the exempt income level rises from €4,004 to €10,036
  • the USC will be collected on a cumulative basis in 2012

Value Added Tax

  • The Standard rate of VAT will rise by 2% to 23%
  • The other rates of VAT remain unchanged

Capital Taxes

  • Capital Acquisitions Tax & Capital Gains Tax go from 25% to 30%
  • Standard Exemption for Capital Acquisitions Tax (parent-child transfers) cut from €332,084 to €250,000

Investment Income

  • Deposit interest retention tax (DIRT) increased from 27% to 30%
  • PRSI will cover rental and investment income from 2013

Approved Retirement (ARF) Funds

  • ARF ‘imputed distribution’ charge increased to 6%
  • ARF tax on death of a child over 21 goes to 21%
  • Citizenship condition on domicile levy is scrapped
  • Carbon Tax goes up from €15 to €20 per tonne – a 33% increase. This increase does not apply to home heating oil or solid fuel.
  • Double income tax deduction for Carbon tax for farming
  • VAT Refunds on farm buildings will include wind turbines

Other

  • The income tax relief on pension contributions remains unchanged – tax relief will remain at the marginal rate of tax.
  • A household charge of €100 per household is being introduced. Certain limited waivers will apply.
  • Motor Tax increases to raise €47 million
  • A new export refund scheme will apply to exports of motor cars
  • The existing tax exemption for the first 26 days of disability benefit per annum is to be abolished. The Minister described this as ‘an incentive for absenteeism’

Excise Duty

  • Alcohol excise duty is unchanged.

 

 

 

 


Revenue extend Pay & File Tax Return Deadline

November 7, 2011

In a surprising move, Revenue have announced today that they have extended next week’s ROS online Pay & File Tax Deadline by 24 hours. The original deadline of Tuesday 15 November is now extended until midnight on Wednesday 16 November.

This new deadline covers the following

  • online filing of Form 11 Income Tax Returns on ROS
  • online payment of 2010 Income Tax liability
  • payment of Preliminary Tax for 2011.

Today’s Revenue statement does not mention any extension to the deadline for making Pension/AVC contributions which qualify on a back-dated basis for tax relief for 2010. If you are considering making such a contribution in the coming days in order to obtain 2010 tax relief, I suggest that you do so by the original deadline of next Monday – at least until and unless Revenue confirm in the meantime that the pension relief deadline is also extended.

I have no idea why Revenue have at this late stage opted to extend the deadline by a day. Perhaps it is compensation of sorts for last week’s 31 October deadline for paper-filed tax returns, which fell on Bank Holiday Monday when Revenue offices were closed and many accounting and tax firms found themselves having to open on the Bank Holiday.

Either way, the deadline extension is very welcome, although it would have been simpler and easier for everyone concerned had this change been made months ago.  Spare a thought for your accountant or tax advisor if they have already made holiday or ‘quality time’ plans for Wednesday 16 November!

The ROS Technical Helpdesk will now be open until midnight on 16 November 2011.