While the Budget may dominate discussions on tax matters in December, the key tax event in December is the ending of the tax year on 31 December. December represents the last month available to avail of certain tax reliefs and tax planning opportunities. For those tax payers focused on reducing their tax burden, there are a number of possible methods of taking action in December.

Income Tax

Business Expansion Scheme

Tax relief is available for up to €150,000 invested either directly in a BES company or through one of the BES designated Funds. BES relief can be claimed by a husband and wife, if each has sufficient income. Relief is available at one's marginal tax rate. Shares need to be held for five years to avoid a clawback of the relief granted. The taxpayer needs to make the subscription for shares before 31 December 2007 to ensure tax relief is available for 2007.

Tax Incentive Property

Those seeking a shelter for their rental income through the purchase of a tax designated rented residential accommodation, student accommodation, cr?ches or nursing homes, need to ensure that the property is acquired and let before 31 December 2007.

Maximise 20% Income Tax Band

Currently, 25,000 of the low, (i.e. 20%) tax band is not transferable between spouses. If one spouse does not have sufficient income, it may be appropriate for the family business or company to pay a salary to the spouse. If the employment arrangement has not been finalised, it would be important to finalise it before 31 December 2007 and pay the relevant amount of PAYE/PRSI. In this regard, it may also be appropriate for the family business or company to pay a salary to a child of a taxpayer.

Charitable Donation

If the taxpayer intends to make a charitable donation, he should do so before 31 December 2007 in order to get tax relief for that year.

Maximising Capital Allowances

Generally, the accounts year end for companies and individuals carrying on a trade is 31 December. Consequently, if it is intended to acquire/incur capital expenditure on plant and machinery, industrial buildings or farm buildings, it is advisable to incur the expenditure and put the assets in use before year end in order to ensure that the allowances are available for the tax year 2007.

Christmas Vouchers

There is a yearly BIK exemption of one voucher up to a value of €250. If the employee is not in receipt of a voucher during the year, the employer may consider giving a Christmas voucher to avail of the exemption.

Specified Reliefs

High-income tax payers are restricted in the amount of specified tax reliefs that can be availed of each year. For this purpose, tax exempt income is regarded as a specified relief. Each tax payer is entitled to avail of specified tax reliefs up to an annual limit of €250,000 without restriction. Where the tax payer has not fully utilised his annual limit for unrestricted specified reliefs of €250K, he should do so before year end. For example, the taxpayer could arrange the payment of a tax exempt patent dividend to himself before year end to maximise his unrestricted specified reliefs.