Don’t Lose Sleep over AirBnB Tax Returns

August 11, 2015

Unfortunately, confusion and panic have greeted this morning’s news that the AirBnB have notified Revenue of income earned by their Irish hosts who welcome paying guests into their homes.

Don't lose sleep over airbnb tax returns

Thousands of Irish homeowners are now registered with AirBnB and many of these people will now worry at the prospect of receiving large tax bills.

However, the situation for most is not nearly as serious as media reports suggest.

Revenue’s guidelines on the subject (updated in a March 2015 eBrief) confirm that providing accommodation to occasional visitors does not qualify for tax exemption, but is subject to Income Tax (along with PRSI & USC) as a trade.

The flipside of this is that it is only the trading profit, and not the gross income received, which is taxable.

This means that an AirBnB host must only pay tax on the profit they earn, after deduction of all expenses.

Such expenses will include the direct costs of each booking, eg

  • AirBnB booking fee,
  • breakfast and other meals provided,
  • cleaning, etc

and also a percentage of the many indirect household costs which relate to the accommodation, including

  • insurance,
  • electricity & phone
  • repairs & maintenance
  • mortgage interest
  • wear & tear on household furniture & fittings.

The extent to which a householder can claim these latter costs depends on how much of each cost relates to business (eg AirBnB accommodation) as opposed to personal use.

For example, in a typical property where the accommodation business is incidental to its use as a family home, I’d expect that the appropriate % of such indirect costs that can be claimed would be very small.

Still, every little counts, and when you deduct all appropriate costs from your gross AirBnB income, you will probably find that the net taxable element is a fraction of the gross sum.

This net amount will be subject to income tax of 20% or 41% (40% in 2015), in addition to 4% PRSI and USC (generally up to 7%).

In addition, the other minor comfort is that we are talking here about current, as opposed to historic, income.

The information given by AirBnB to Revenue relates to the period from May to December 2014.

This income is taxable in 2014 and the deadline for filing 2014 Form 11 & Form 12 tax returns is not until 31 October next, or 12 November if filed on ROS.

This means that AirBnB hosts have plenty of time to regularise their tax situation ahead of the October/November deadlines. Obviously this should also include any such income received before May 2014.

This is a stark contrast to the catch-22 dilemma faced in the past by others with historic undeclared income, where interest and penalties often combined to generate huge liabilities.

My advice to AirBnB hosts? –

  • Firstly, don’t lose any sleep amid the current hysteria.
  • Secondly, get your affairs in order, with professional assistance if you need it, and make sure you file your 2014 (and any earlier) returns by the forthcoming deadline.

Dont Lose Sleep over AirBnB Tax Returns


12 November 2015 is ROS Pay & File Tax Deadline

April 28, 2015

Revenue have today announced an extension to this year’s Pay & File deadline for online tax returns from 31 October to Thursday, 12th November 2015.

To qualify for the extended deadline, you must, by 12 November next

  1. file your 2014 Form 11 Income Tax return using the online ROS system.
  2. make your ‘Pay & File’ payment via ROS, to cover:
  • your Preliminary Tax for 2015;  and
  • any remaining balance of Income Tax owing for 2014.

Pay & File Deadline 12 November 2015 The extension only applies, if:

  • you file your Form 11 tax return on ROS; and
  • you use ROS to make the required Income Tax payment.

It is worth noting that the ROS filing deadline this year is one day earlier than last year’s 13 November deadline, and a full 5 days ahead of the 17 November deadline that applied ten years ago, in 2005.  This is unfortunate as the tax code becomes ever more complicated and cumbersome each year.

Capital Gains Tax

The Revenue eBrief doesn’t mention any extension to the Capital Gains Tax return filing deadline of 31 October 2015.  If you are are self-assessed for Income Tax, you must file your 2014 Capital Gains tax return as part of your 2014 Form 11 Income Tax Return.

As was the case in previous years, I expect that the deadline for such ROS-filed returns should now extend to 12 November. If this affects you, I advise you to double check this in advance of 31 October.

On the other hand, if you pay all your taxes under the PAYE system, and had a Capital Gain in 2014, you must file a Form CG1 Capital Gains Tax return by 31 October 2015. The later deadline does not apply to you.

Pension Payments

In earlier years, the later ROS filing deadline has also applied for backdated tax relief on RAC, AVC and PRSA pension payments.

Today’s Revenue eBrief does not mention this particular issue although I expect that the 12 November deadline will also extend to such payments, for anyone who pays & files via ROS by 12 November.

If you are considering making a pension payment next November and wish to claim the tax relief against your 2014 liability, you should first double-check that the extended deadline applies to pension payments.

Unless you are 100% certain, it is safer to work on the assumption that the previous 31 October deadline applies, and to make any your qualifying pension payment by 31 October.

Today’s Revenue eBrief containing this announcement is here.


2013 Income Tax Returns Now Online

March 3, 2014

The 2013 Form 11 & Form 11E Income Tax returns are now available on the Revenue website.

The deadline for filing these returns with Revenue is 31 October next.

The Form 11E return is a shorter and simpler version of the standard Form 11 Income Tax return.

2013 Form 11 Tax Return now online

The Revenue Helpsheets for Form 11 & for Form 11E are also online.

If filing a paper tax return, you should first ensure that you are not subject to Mandatory eFiling for Income Tax returns.

Of course, the smartest and easiest way to file an Income Tax return is via ROS, Revenue’s online system.

 


Chartered Accountants Rule Out Pay & File Changes

April 19, 2013

Chartered Accountants Ireland have today slammed as “simply impossible”, a proposal to bring forward the annual Income Tax pay & file deadline for self-assessed taxpayers.

This follows a report earlier this week that the annual 31 October deadline, for Form 11 tax returns, was to be changed from 31 October to a “much earlier” date.

Help - Self Assessment Tax Return

In a note to its members this afternoon, the accountants’ Institute states that it has received confirmation from the Department of Finance that the self-assessment Income Tax payment date of 31 October “will not be brought forward in 2015”.

The timing of the annual Pay & File tax deadline is now a live issue, as the terms of the EU Stability and Growth Pact now require Ireland to complete its annual exchequer Budget much earlier than the traditional first week of December.  For this reason, Budget 2014 is scheduled for 15 October next.

The level of self-assessment tax receipts is always a key factor in each year’s Budget and the Dept of Finance will now face additional difficulties in preparing annual Budgets before they can confirm the amount of self-assessment taxes receivable in late October/early November.

Chartered_Accountants_Ireland_low_res

However, Chartered Accountants Ireland have now reiterated to the Department of Finance, their belief that “it would be simply impossible for indigenous Irish business to comply with earlier Self Assessed Income Tax payment and filing arrangements“.

They have also highlighted “the disruption and administrative burden which would follow if the filing date was to be brought forward“.

The shelving of the earlier tax deadline would be a welcome relief for tens of thousands of business taxpayers and other individuals who are obliged to file self-assessment returns in respect of rental and other income.

It would also avert a threatened nightmare for workers in accounting and book-keeping  firms who already face considerable pressure and stress in managing the annual tax return deadline season.


Earlier Pay & File Tax Return Deadlines On The Way?

April 18, 2013

The annual self-assessment tax filing deadline is set to be brought forward to a “much earlier” date, according to a report by Brendan Keenan in Monday’s Irish Independent.

At present, self-employed individuals, company directors and others must file their annual Form 11 income tax return by 31 October. A later deadline of mid-November applies to online returns.

Pay & File Tax Deadline

Under new Eurozone financial monitoring rules, the Irish government will apparently be obliged to bring forward the annual Budget from December to October each year. Accordingly, the 2014 Budget has been scheduled for 15 October this year.

Self-assessment taxpayers will have a further month, until 14 November, to declare and pay their Income Tax liabilities for 2012 and Preliminary Tax payments for 2013.  This means the Dept of Finance will be framing the 2014 Budget without knowing the total amount of tax receipts for 2013.

In order to prevent this anomaly becoming an annual problem, it is now being suggested that the tax return deadline be moved forward next year.

If the tax deadline is brought forward by 7 weeks, in tandem with the change of date for Budget Day, this would suggest a new Pay & File deadline date in early-to-mid September. If the current online filing extension is continued, we can expect the final deadline in late September for online returns.

This would represent a major change, both for self-assessment taxpayers and for accounting and book-keeping firms who prepare tax returns for their clients.

It takes quite a leap of faith to expect that accounts staff will be happy to work crazy hours preparing tax returns throughout the month of August, when everyone else enjoys their summer holidays.

On that basis alone, I would have serious doubts over the feasibility of a September tax deadline.

Remember than two years ago, the 2011 Finance Bill included a proposal to bring forward the Pay & File deadline by one month t0 30 September.  This quickly attracted controversy and was later quietly dropped.

Sadly, with the EU now setting the agenda, its quite likely that the tax authorities will have no wriggle-room this time.

Interesting times ahead for us all…


Revenue confirm ROS Pay & File Tax Return Deadline is 14 November 2013

April 4, 2013

A Revenue eBrief today confirms that this year’s Pay & File deadline for 2012 tax returns is being extended for online returns from 31 October to Thursday 14 November 2013.

However, this is subject to some terms and conditions.

14 November 2013 Pay & File Tax Deadline

To avail of the extended deadline, you must, by 14 November next

  1. file your 2012 Form 11 Income Tax return using the online ROS system.
  2. make your ‘Pay & File’ payment via ROS, to cover:
  • your Preliminary Tax for 2013;  and
  • any remaining balance of Income Tax you owe for 2012.

The extended deadline only applies, if:

  • you file your Form 11 tax return on ROS; and
  • you use ROS to make the required Income Tax payment.

Capital Gains Tax

The Revenue eBrief makes no mention of any extension to the Capital Gains Tax return filing deadline of 31 October 2013.  If you pay Income  Tax under self-assessment, you must file your Capital Gains tax details as part of your 2012 Form 11 Income Tax Return.

The deadline for such ROS-filed returns may now extend to 14 November.

On the other hand, if you pay all your taxes under the PAYE system, and had a 2012 Capital Gain, you must file a Form CG1 Capital Gains Tax return by the earlier deadline of 31 October.

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 2013. Again,  return & tax payment must both be made through ROS.

Pension Payments

In previous years, the extended 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 14 November deadline will again extend to such payments, where the individual pays & files via ROS by 14 November.

If you are considering making a pension payment in November and wish to claim the tax relief against your 2012 liability, you should first double-check that the extended deadline applies to pension payments.

Unless you are 100% sure,  it is safer to work on the assumption that the previous 31 October deadline applies, and to make any your qualifying pension payment by the end of  October.


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.