Capital Acquisitions Tax –Utilise your annual tax free gift exemption of €3,000
The rate of Capital Acquisitions Tax on gifts and inheritances has recently increased to 33 per cent. However an annual gift of €3,000 is exempt from capital acquisitions tax and does not eat into the recipient’s lifetime tax-free threshold. For example, a child could receive €3,000 from each parent and/or grandparent completely tax-free and this gift does not absorb the child’s tax-free threshold for the future. As this threshold was significantly reduced in the budget to €225,000, it makes sense to maximise this annual exemption.
Capital Gains Tax – Utilise your annual exemption of €1,270
An individual is entitled to an annual exemption of €1,270 (single person) for capital gains tax purposes, i.e. if your chargeable gains for 2012 do not exceed €1,270, no tax is payable. If your gains exceed €1,270, only the excess is subject to tax, again at the new increased rate of 33 per cent. Therefore, disposals could be timed before the end of the month to take advantage of your annual exemption for 2012.
Claim tax relief for the year ended 31 December 2008
There is a general four-year time limit on claims for repayment of tax. Therefore, if you feel that you may have overpaid tax in any of the previous four years or if you have unclaimed medical, dental expenses etc, there is still time to potentially obtain a refund of income tax paid. Claims for repayment for the year ended 31 December 2008 must be received by Revenue no later than 31 December 2012.
Consider a tax effective investment in an EII company
The Employment Investment Incentive (EII), which has replaced the Business Expansion Scheme (BES) is one of the last few tax shelters available to high rate tax payers today and should be given consideration as part of an investment portfolio. An individual can choose to invest in an individual company or a fund, which are advertising combined returns including tax relief of in excess of 50 per cent over a three-year period. An individual investor can obtain income tax relief on investments up to a maximum of €150,000 per annum in each tax year up to 2013. Although it offers attractive returns, like all equity-based investments, one should also consider the risks carefully and take the necessary advice in advance.
We would like to wish all our readers a happy Christmas and peaceful new year.
The above information should be treated as a guide only. If you would like assistance with your tax affairs, contact Coll & Co Chartered Accountants, Barna. Galway. They can be contacted by phone on 091-592080 or by email at email@example.com. Coll & Co specialises in personal tax and pensions advice. Coll & Co Chartered Accountants is regulated by the Institute of Chartered Accountants to provide investment advice.
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