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Changes to Rules for Subsistence Cost Claims
While many people were enjoying their summer holidays blissfully unaware, Revenue introduced changes to the rules covering tax-free reimbursement of subsistence costs. From July 1st, 2015, you can only claim an overnight allowance if the location you must traveltoforworkpurposesisatleast 100 km away from both your home and your usual place of work.
Furthermore, the standard day allowance payable for absences of at least five hours will not be paid if the employee is working somewhere that is less than 8km away from both their home and their normal place of work.
Implications
The first change means that if you live and work in Castleisland and have to catch a 6AM flight from Cork Airport, you cannot claim an overnight allowance for a hotel stay at Cork Airport because the locations are only 99.5km apart.
The second one means that if you are attending a work-related course in Ranelagh, and your office is based in Drumcondra, you cannot claim the standard day allowance because the two Dublin suburbs are just 7km apart.
Capital Gains
Tax Concessions
for Small
Businesses
Budget 2014 introduced Capital Gains Tax (CGT) relief for entrepreneurs, in an effort to encourage jobs and growth. The new relief applies to anyone who has already paid CGT in Ireland on the disposal of assets, and afterwards invested a minimum of €10,000inanewbusinessinthe period from 1 January 2014 to 31 December 2018. You receive the relief if you dispose of the new asset no earlier than three years after making the investment.
The level of CGT reduction payable on the sale of the new asset will be reduced by the lower of the following:
• the amount of CGT paid by the entrepreneur on a previous disposal of assets on or after 1 January 2010
• 50% of the CGT due on the disposal of the new investment
The capital must be either assets used entirely for the purposes of a new business conducted by an individual, or new ordinary shares issued on or after January 1st, 2014, over which the investor exercises control and in which he or she is a full-time working director. The company must also conduct a new business. If the investment is made in company shares, the company must be a micro, small or medium-sized enterprise.
Avoid
CGT on
Inherited
Property
Planning in advance is the only way to limit your liability in relation to CGT on inherited property, or at least to generate funds in a tax-efficient way to cover future liabilities. Here are five useful tips:
1. Ifyoumakegiftswhileyouare alive, you can reduce the value of your estate, and hence the liabilities relating to inheritance tax. When you make a gift, however, it is treated as asset disposal for Capital Gains Tax purposes, so you will need to compare the Capital Gains Tax liability with the Gift Tax liability. Indeed, both taxes can apply in both cases, as can Stamp Duty.
2. There is special relief available for residential property transferred to children (but not children-in-law).
3. If you include children at an early stage of buying investments, they share in the growth of the asset’s value and limit their future benefit. The tax-free threshold is thus exhausted during your lifetime, ensuring that future equity growth accrues to your offspring.
4. Defer tax liabilities for longer by bequeathing all your assets to your spouse, who then leaves the entire estate to your family, thus capitalising on the tax exemption for transfers between spouses.
5. Take out life assurance policies that pay out at your death to cover any applicable inheritance tax liabilities. Their value is not considered part of your estate.
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