Have you set up a new company and started trading in the last four years? If so, Corporation Tax Relief may be available to you.
What tax relief is available for start-up companies?
In 2009, tax relief was introduced for start-up companies to encourage the growth of new business in Ireland. Where a newly established company started trading on or after 1 January 2009, and meets certain conditions, for example one of which is that the trade was not previously carried out by another person, an exemption from corporation tax may be availed of, where the amount of corporation tax payable by the company did not exceed €40,000.
A reduced relief may be available where the corporation tax liability is between €40,000 and €60,000 for the accounting period in question. Where the amount exceeds €60,000, no relief is available.
Is this relief linked to any other tax apart from Corporation Tax?
Yes, Finance Act 2011 amended the operation of the relief available so that the value of the relief is now linked to the amount of employers’ PRSI paid by a company in that accounting period. Relief is available in respect of a maximum of €5,000 for each employee, with a total limit of €40,000 overall for the company. The link to employers’ PRSI is to ensure the focus remains on the relief’s main focus, which is job creation.
How can my company claim the relief?
Where the conditions for the relief are fulfilled, the company may specify its claim to the relief in the corporation tax return (Form CT1) for the accounting period in question. This return must be filed using Revenue’s Online Service (‘ROS’) within nine months of the end of the company’s accounting period.
How has the Finance Act 2013 changed the available relief?
Two main provisions of the relief have been amended. Firstly, the relief has now been extended to companies, who have fulfilled the conditions relating to the relief, which commence to trade by 31 December 2014. Secondly, given the fact that many new companies incur losses in the first few years, unused relief may now be carried forward to be offset against corporation tax profits in future periods, subject to certain conditions, in respect of the trade in subsequent years.
My company is loss making, can I still avail of the relief later on?
For accounting periods ending before 1 January 2013, the relief is operated on a ‘use it or lose it’ basis. Where the relief has not utilised, it cannot be brought forward to later periods.
For accounting periods ending on or after 1 January 2013, relief may be available for unrelieved amounts within the three year start up period. Unrelieved amounts of employers’ PRSI may be available to carry forward and offset against future corporation tax liabilities relating to the qualifying trade in accounting periods following the initial three year start up period.
If you would like assistance with your tax affairs, please contact Coll & Co Chartered Accountants, Barna Galway by phone on 091-592080 or by email at firstname.lastname@example.org. Coll & Co specialises in personal tax and pensions advice. Coll & Co, Chartered Accountants is regulated by ‘Chartered Accountants Ireland’ to provide investment advice.
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