Wednesday, 27 April 2016

Growing older to reduce taxation

Your Age and Irish Taxation






Some people are old at forty and some eighty year olds are as young as the grandchildren they babysit.

We all grow old it is the basis of life in the universe. From the time of the Big Bang forward the universe has been steadily aging, cooling, and converting its energy from ordered into unordered forms in order to eventually over billions of years to come to an end. If that didn’t depress you then the good news is that in Ireland your age can offer some tax benefits

(1)    Pension Contributions: the amount of money which qualifies for tax relief that you can invest in a pension as a percentage of your income increases as you get older:
Age
Amount which qualifies for tax relief
Under 30 years
15% of net relevant earnings
30 to 39 years
20%
40 to 49 years
25%
50 to 54 years:
30%
55 to 59 years
35%
60 and over
40%



This is subject to a limit of €115,000 of income which can be taken into account and the fund can only be €2 Million before any amount drawn from it is taxed at the high rate of tax (2016 Levels)

(2)    If you are over 65 then then the first €18000 of annual income is exempt from income tax and €36000 for a married couple (increased by 575 for first and second dependent child and 830 for each subsequent child) Perhaps when you are 65 it would be a good time for them to be leaving home but if they do stay then at least your tax is lower.
(3)    If you are over 65You get an extra tax credit called the Age allowance which is worth €245 if you are single or widowed and €490 if married or in a civil partnership.
(4)    Retirement Relief is available on the sale of your business once you reach 55 and over
(5)    You are exempt from DIRT if you are over 65 and your income is below the exemption limits above. (If you are over 65 and have been charged DIRT then get on to us and we can help you reclaim it.)
(6)    Young trained farmers, there are a number of tax breaks and stamp duty concessions available for young trained farmers. These are farmers who are under 35 and who have completed certain farm related qualifications.

Like everything in the tax code your treatment depends of very specific details. Taxation is based on detailed laws and regulations and not on fairness (even though it is meant to attempt to attain fairness which is hard to see in the current system with a 12.5% tax rates for the biggest of companies). It’s important not to miss out on any tax breaks you might have coming to you due to your age.


© Frank McGivney, Frank McGivney & Co. Chartered Management Accountants, 0469293891 27/04/2016

Friday, 22 April 2016

How to Save €5360 in income tax

How to Save €5360 in income tax


Reducing your tax liability using Standard Rate Cut off Point
Figures used are the 2016 ones.
In Ireland you pay tax at the lower rate of income tax (currently 20%) up to point you exceed your standard rate cut off point after this you pay the higher rate.
Examples
(1)    Single Person their first €33800 of income is taxed at 20% and the balance (anything from €33801 and above) is taxed at 40%.
(2)    Single parent the first €37800 is taxed at lower rate then rest at 40%
(3)    Married couple one income the first €42800 is taxed at 20% then balance at higher 40%
(4)    Married Person two incomes the €42800 is increased by a max of the lower income or €24800. So the maximum at lower rate is €65600 (€37800*2)

Implications and Tax planning to maximise the amount of Income taxed at 20%

(1)    If you are a PAYE worker then there isn’t a whole lot you can do in relation to tax cut off points because you generally can’t split your wages between yourself and our spouse.
(2)    If you are a PAYE worker with the joyous position of having your choice of jobs at different wages rates then the ideal situation to minimise tax is to have one income at €42800 or less and the other at whatever adds up to a balance of €65600. So wife on €40000 then husband on €25600. This allows for all your tax to be at 20%.
(3)     If you are self-employed and earn more than €42800 per year then there are two scenarios
a.       Your spouse works. If he/she is on less than €24800 then you should set up a partnership or employ her in your company and bring her/his income up to €24800 and therefore reduce your taxable income by the same amount.
b.      Your spouse doesn’t work and has no other source of income then you should have him/her as a business partner or company employee. Then split the profits so at least one earns €24800 and the other earns the balance (or indeed any split as long as one is above €24800).
(4)    The Maximum benefit from 3b is for someone earning €65600 or more. If the €65600 is all in one spouses hands then the tax is €42800x20%+€24800x40%= €18480 (less their tax credits). If the income is spread then the full €65600 is taxed at 20% so €65600*.2=€13120. This equates to a saving of €5360 (€18480-€13120). There are also saving in Universal Service Charge which I will analysis in a different article. However there is one bite in the tail in that you lose the Home Carers allowance of €1000 (but still well worth it). It also may not be suitable for some people in certain circumstances such as those on social welfare.

The above is for general information purposes. Each individual case is different and you should get advice from your accountant on all tax planning issues.

© Frank McGivney & Co Ltd (046)9293891  Date written: 22.04.16 

Thursday, 21 April 2016

Tax Planning Exempt Income




Exempt income








Life is full of decisions one of the ones you can decide to make is whether you try to minimize the amount of tax you pay. This leads to a further decision of whether you do this legally or illegally.



Legally this is called tax avoidance or tax planning depending on the scale of how you organize your affairs. Both are perfectly valid means of minimizing your tax



Illegally this is called tax evasion, the shadow economy or sponging of the rest of society. It has high penalties for detection including hefty fines and prison sentences. Each time you evade tax then you end up driving the amount taken by other people to higher levels as they have to compensate for the amount you are not paying.



One of the ways to avoid income tax is through exemptions.



Within the Irish tax code there are various exemptions to income tax.



(1)   Exemption Limits:

Once you reach the grand age of 65 then any income you earn below €18000 is exempt from income tax. Once you reach 66 then you also avoid PRSI. If you are over 70 then you are charged a reduced rate of Universal Service Charge

 (2) Personal injury settlements (s 189), payments from the Haemophilia HIV Trust (s 190), Hepatitis C compensation (s 191), and payments in respect of thalidomide victims (s 192).

(3) Income of artists, writers and composers, subject to an overall annual limit of €50,000 (s 195).

(4) Interest on savings certificates (s 42) and instalment savings schemes (s 197).

(5) Income of recognised charities (s 207, 208).

(6) Income of amateur sports bodies (s 235).

(7) Rent from letting farm land (s 664). A claimant must be aged 55 or over, or unable through physical or mental incapacity to carry on farming. Exemption is given for the lower of:

(i) the farm rental income surplus, or

(ii) €40,000 where the lease is for more than 14 years, €30,000 where the lease is for 10 to 14 years, €22,500 where the lease is for seven to 10 years, or €18,000 in any other case.

(9) Rent-a-room relief (s 216A). Income from lodgers is exempt provided your gross income from such letting does not exceed €12,000 in the tax year.

(10) Home childcare earnings of up to €15,000 in the tax year (s 216C).

(11) Earnings of special assignees (s 825C). 30% of income above €75,000 in the case of employees assigned from a tax treaty country to work in their employer’s Irish operation.

(12) Start Your Own Business relief (s 472AA). Where a person previously long-term unemployed sets up a business, the first €40,000 of profits in a tax year are exempt. Expires 31.12.2016.
Frank McGivney www.meathaccountants.com 0469293891


Thursday, 12 December 2013

€250 tax free for employees and directors



Small Benefit Exclusion- how to give your employees or yourself if you are a director a bonus to the value of €250 tax free

An employer can give an employee a once off voucher to the value of €250 each year without it been taxed or subject to benefit in kind regulations. This also applies to directors. The voucher has to be bought by the employer and given to the employee. The employee can’t buy the voucher themselves and then just get the cash to reimburse them or the employer can’t just simply give the employee the cash, it has to be a voucher.
It only applies to  one voucher per year. So if you give a voucher for €100 during the year and another one for €150 later in the year then only the first one is not taxable and the second €150 will be taxable. In other words in order to avail of the full €250 it has to be given in one go with one voucher.
This is a very tax efficient way to pay employees and also for directors to extract money from the company. It can be availed of once every year to the value of €250.

Thursday, 28 November 2013

Motor Expenses and Subsistence for contractors (Computer consultants, engineers, etc)

Motor Expenses and Subsistence for contractors (Computer consultants, engineers, etc)

The Revenue have a special project running at the moment which is looking at the tax compliance of contractors who use company structures to provide their labour only services to mainly one customer. Examples of this may be computer consultants or engineers who provide services to bigger firms. rather than been hired as employees they are hired as subcontractors and put in place a company to provide the services. This is a perfectly legtimate structure to have in place. However the Revenue has decided that they are not willing to allow motor expenses from the home to the place of work as been deductible for tax purposes and also alot of subcontractors would have claimed subsistence and the revenue is also not allowing this (dependent on the individual case). This is based on the basic maxim that all costs must be wholly and exclusively for the business in order to be claimable for tax purposes.
They are been reasonable with people who come forward to amend previous returns and pay any outstanding tax. If you are in this situation you can ring me on 0469293891 to discuss what you need to do.

 

Revenue’s Contractors Project

Background

Revenue’s National Contractors Project is aimed at addressing very specific problems that emerged through audit activity. A succession of tax audits had revealed that individuals were providing their services to clients ("end-users") via intermediaries - often, but not exclusively, personal service companies. The intermediary treats the individual as an employee and operates PAYE on the remuneration which it pays to the individual. An assumption underlying these arrangements is that the individual is not an employee of the end-user. While this may be true in the generality of cases, the facts will determine whether or not there is an implied contract of employment between the individual and the end-user.
The tax audits have revealed that in some instances the use of intermediaries has resulted in evasion, which arose when intermediaries paid tax-free "expenses" in circumstances where the expenditure had not actually been incurred. In other circumstances, the expenses had no relation to the business. It was clear that some contractors were using the device of an intermediary company (which they usually owned or controlled) to contend that they are compliant PAYE taxpayers, while actually extracting a large part of the company’s contract income from the company free of tax in circumstances where such income should have been taxed. In some of the worst cases encountered, up to 70% of income was extracted in this manner.
While the project was intended to be narrowly focused, there are many different circumstances arising, which give rise to requests for clarification. The purpose of this article is to address the treatment of expenses and the procedures which Revenue is adopting for this project.

Revenue’s Approach

Revenue’s Contractors Project is designed to deal quickly and cleanly with the particular problem. Contractors whose accounts show unusually high proportions of expenses are being identified for compliance intervention.
To facilitate disclosure, we adopted the practice of providing assistance to those who were experiencing difficulty, and where a genuine effort is being made, we accept amendment of disclosures following discussion. At the same time, tax agents have been invited through their professional organisations to encourage their clients to consider whether they should make an unprompted qualifying disclosure.
We are also ready to discuss methods of paying the disclosed amounts where there is an inability to pay in one sum. Within the disclosure itself, we undertook to accept disclosures that dealt with the four specified years provided the resulting level of expenses was within industry norms, and provided we had no specific knowledge that the declaration was likely to be false. This is a considerable concession, because Revenue routinely checks disclosures in some detail. Finally, for the purposes of this project we advised that Revenue would not seek to "re-gross" expenses in calculating the tax underpayment. We have adopted this approach on the understanding that the parties concerned will comply strictly with the law in future. In the event of a future re-audit discovering this not to be the case, then Revenue will not feel bound by the approach adopted to date in relation to re-grossing, and future tax underpayments, and associated interest and penalties will be pursued.

Treatment of expenses of travel and subsistence where the services of an individual are provided through an intermediary to an end-user

The publicity attracted by the National Contractors Project has caused some questions to be raised about the application of tax rules, and has led to requests for general rulings from Revenue about hypothetical cases in a wide variety of situations.
The basic legal provisions are in the Taxes Consolidation Act, which provides in Section 81 that a business may not deduct expenses that are not "wholly and exclusively" incurred for business purposes. Section 117 provides that sums paid as expenses are assessable as emoluments of the office or employment, while Section 114 provides for a deduction in respect of expenses which an employee or office-holder is necessarily obliged to incur in travelling in the performance of the duties of the office or employment or other expenses wholly, exclusively and necessarily incurred in the performance of the duties of the office or employment.
The Act does not make specific provision for the payment of tax-free expenses. However, to avoid the operation of PAYE on expenses which would then lead to repayment claims on foot of deductions due under Section 114, Revenue has long accepted that expenses which meet certain conditions may be reimbursed tax free in certain circumstances. Revenue has given detailed guidance on the circumstances in which tax-free reimbursement of expenses may be made in its pdfStatement of Practice SP/IT/2/2007 (PDF, 157KB), in information leaflets IT51 and IT54, and in this year’s Tax Briefing 3 of 2013, all available at: www.revenue.ie.
The guidance given in Tax Briefing 3 of 2013, entitled "Reimbursement of Travel and Subsistence Expenses by Intermediaries", clarifies the Revenue position on the circumstances in which expenses of travel and subsistence may be reimbursed free of tax where the services of an individual are provided through an intermediary to an end-user, generally at the premises of the end-user. Services provided through an intermediary include services provided through a personal service company, a managed service company or an agency.
The key characteristic of the arrangements which are the subject of Tax Briefing 3 of 2013 is that the end-user is acquiring the services of a specific individual who will work under the general direction and control of the end-user. In some instances, the contract between the end-user and the intermediary will be explicit in identifying the individual whose services are being acquired by the end-user. In others, it will be apparent from the nature of the services, the manner in which they are provided and the conduct of the parties, that what is being provided is the services of a specific individual.
The main point which Tax Briefing 3 of 2013 sought to clarify is that, in applying previous Revenue guidance to the arrangements referred to in the Tax Briefing, home cannot be treated as a "normal place of work". Revenue does not accept that the fact that administrative work is carried out at home, or that home is the registered office of the intermediary alters this position. It follows that the cost of travel to and from home may not be reimbursed free of tax. As Tax Briefing 3 of 2013 points out, in most instances, the end-user premises is the normal place of work and expenses of travel and subsistence may be reimbursed free of tax in respect of necessary business absences from this normal place of work.
In referring to the "normal place of work", Tax Briefing 3 of 2013 was picking up the terminology of previous Revenue guidance. At the same time, it is important to bear in mind that "normal place of work" is not mentioned at all in statute. The true test of whether the cost of travel is allowable for Schedule E purposes is whether the journey was necessarily incurred in the performance of the duties of the office or employment. This is a test which has repeatedly been recognised in various judicial pronouncements as narrow and hard to meet.
Some of the scenarios in the examples in Tax Briefing 3 of 2013 would be rather unusual in the context of an intermediary which provides the services of an individual to an end-user. Nevertheless, they are intended to bring out the circumstances in which Revenue will accept that the cost of travel and subsistence may be paid tax free to an individual whose services are being provided via an intermediary.
Applying the foregoing test to the scenarios in Tax Briefing 3 of 2013, Revenue’s view is that a journey from the person’s home to a job is not a journey necessarily undertaken in the performance of the duties of the employment. The person is simply travelling from home. The length and cost of the journey is not imposed by the office or employment but is dictated by the choice of place of residence of the individual concerned. Similarly, an individual whose services are provided via an intermediary and who incurs expenses in living away from home cannot claim the cost of living away from home.
The fact that an intermediary may provide the individual’s service under a series of short-term contracts does not alter the position. Each location at which the individual provides services becomes a "normal place of work" while the services are being provided to that end-user. The expenses of travelling from home to each of these locations or the expenses of living at those locations cannot be reimbursed tax-free.

Treatment of Expenses of Travel and Subsistence in other Cases

The situations dealt with in Tax Briefing 3 of 2013 are to be distinguished from situations where a company provides goods or services, other than the services of a specific individual, to its customers or clients. There is no change in Revenue’s interpretation or application of the law in relation to such cases. Previous Revenue published practice as set out in Revenue leaflets IT51 and IT54 and Statement of Practice SP IT/02/2007 continues to apply.

Family Members as Employees

The question of whether any individual is an employee of an intermediary company can only be determined in the light of the particular facts. This applies equally to the engagement of family members of directors. Revenue has found that, in some of the cases examined in the course of the project, alleged employments of family members were not bona-fide. Revenue will continue to examine such arrangements to determine whether they have been put in place on an arm’s length basis. This means that the family member must be performing services or duties in the business and rates of pay must be similar to the rates paid to other employees doing the same type of work. If the pay is for technical work, the employee (payee) should have the skills, qualifications and experience necessary to carry out that work and to justify the rate of pay.

Penalties

As outlined in the Code of Practice for Revenue Audit, auditors will exercise care in considering whether penalties arise in any particular case, and in considering the appropriate category of tax default. Because of our experience with early cases encountered, Revenue’s view is that the type of activity being targeted in this project is in the deliberate behaviour category. Of course, the circumstances of each case will inform the level of penalties being proposed. The deliberate behaviour category is fully appropriate where the claimed expenses are not incurred, or not incurred in connection with the business. A lower penalty is appropriate where it is clear that the practice at issue resulted from a reasonable interpretation of the law or practice which turned out to be incorrect.
Where a taxpayer does not agree to the level of penalties being proposed, Revenue may seek to have the penalty determined by a relevant Court [Paragraph 4.5.3 of the Code of Practice contains more details]. Where the default is in the deliberate behaviour category, and if a "Notification of a Revenue Audit" has not issued, the penalty level proposed is 10%. A taxpayer who has received a "Notification of a Revenue Audit" still has an opportunity to make a prompted qualifying disclosure, and the penalty payable will be 50%, where the default is in the deliberate behaviour category. Where any default is shown to be due to careless behaviour or innocent error, much lesser penalties, if any, will apply. Finally, those who have a liability to additional tax, due to deliberate behaviour, and make no effort to make a disclosure (or make a false disclosure) are liable to penalties ranging from 75% to 100%, and to audit of several years if evidence of possible tax fraud is discovered. In particularly serious situations, consideration will be given to investigating with a view to prosecution.

Protocols in relation to the making of Disclosures

All matters in relation to qualifying disclosures are dealt with in accordance with legislation and the Code of Practice for Revenue Audit.

Who is being Audited?

In general the focus of the audit will be on the intermediary company and the individual. It may be necessary in some cases to extend the scope of the intervention to other directors to verify particular aspects of the matters under review. All taxpayers who are to be audited will receive a "Notification of a Revenue Audit".

How many years are being Audited?

In order to deal quickly with the problems identified Revenue decided not to launch an open-ended audit programme, but instead to focus on just four years – 2008 to 2011 - and to encourage tax agents to advise their contractor clients to review those years and make disclosures where appropriate.

Previously Audited

The fact that a case was previously audited [Comprehensive or PAYE (Employers)] and the matter of the tax-free reimbursement of expenses was not raised does not preclude Revenue from raising the matter in the course of an audit under the Contractors Project. The fact that deliberate default was not discovered on an earlier audit does not mean that Revenue has approved or excused the default. Where the treatment of expenses was specifically raised during an earlier audit, Revenue will consider accepting any subsequent adjustment as a Technical Adjustment, without penalty. For a technical adjustment not to attract a penalty, the auditor must be satisfied that due care has been taken by the taxpayer and that the treatment concerned was based on a mistaken interpretation of the law or practice, and did not involve deliberate behaviour. However, an exception to this treatment might be where the level of expenses which should have been taxed increased substantially in years subsequent to the audit.

Inability to Pay

Claims to Inability to Pay are dealt with in accordance with Paragraph 4.9 of the Code of Practice.

No Liability

Many individuals are satisfied that they have no need to make a disclosure because their affairs are in order. While we do our best not to trouble such people, some may receive audit notices, normally where the expenses appear high for the business in question. In that case, it will save a great deal of trouble if the contractor writes to Revenue stating why he/she believes there is no outstanding liability, and briefly explaining why the nature of the actual business generates unusually high expenses.

Review/Complaint

For those who feel they have been unfairly treated, the procedures for seeking a review are set out on Revenue’s website: www.revenue.ie

Progress to Date

Well over a thousand audit letters have been issued by Revenue, and the response has generally been engagement by the contractor to discuss the making of a disclosure (Revenue officials offer advice if required), or to explain why they have no need to do so. There is also a steady flow of disclosures from those who have not yet been selected for intervention. The small group who have decided not to engage have entered the audit process.
Revenue has met with companies, tax agents and representatives of both contractors and recruitment agencies to discuss the project, and to allay some ungrounded fears about Revenue’s intentions. Revenue has not changed its interpretation of tax law. It is focussed on dealing with tax evasion which, if left unchecked, will result in unfairness to other compliant taxpayers and a loss to the Exchequer.
The national project has identified a very wide range of structures and practices being used by contractors, and it has become clear that this project (or a successor) may need to continue for some time, to deal with issues specific to subsets of the contracting sector, and with connected issues.

Friday, 22 November 2013

Taxation of Artists



Irish Taxation of Artists

© Frank McGivney 22 November 2013


Ireland was once regarded as the land of saints and scholars, this also encompassed artists of all types. We have always had a rich history of artistic endeavour among our people. In Kells for instance we have one of the finest examples of Irish creativity, with the world famous, Book of Kells (located in Trinity College). This heritage has enriched the lives of our nation over the course of history and has helped to define our national identity. Irish people in all areas of the arts are recognized world wide as the best in their fields.
In 1969 the then finance minister Charles J Haughey introduced. in the Finance Bill, the artist’s exemption. This provided for qualifying artists to be exempt from income tax. This was a unique relief that applies to visual artists, composers of music and writers. It was seen as an extremely progressive measure especially in the context of that time in history.
The artist’s exemption has to be seen in the context of the type of work that is involved. Most artists in Ireland earn very little from their artistic works. In fact they would be below the poverty line and therefore most have to supplement their income with “normal” nine to five jobs in order to pursue their dreams of creating masterpieces. Works of art are created individually not like most other items, which are created in multiples. Therefore the amount of time that it can take to produce a book or paint a landscape is a lot longer than it would be to produce a set of iron gates or a mobile phone. The artist may in fact have to produce several versions of any one individual item in order to reach the level of perfection that he/she seeks. As a result the eventual income from the sale of  art may have no real bearing to the actual length of time it took to create the piece, also income can be very erratic as the time between works of art been sold is dependent on the creative process not on simple production runs and normal economics. This means realistically that if a nation wants to encourage an artistic heritage for future generations to appreciate then it has to give some help to artists.
The scheme has been modified over the years, currently it only applies to the first Euro40,000 of profit from creative works of art. If your income is substantial then you have to take account of the fact that any reliefs you claim will be also restricted by the high earnings restrictions.

The €40,000 limit was introduced in the tax year 2011.
Guidelines have been drawn up by the Arts Council and Minister for Arts Sport and Tourism, with the consent of the Minister for Finance, for determining for the purposes of Section 195 whether a work is an original and creative work and whether it has, or is generally recognized has having cultural or artistic merit. The Revenue Commissioners may consult with a person or body of persons, such as The Arts Council, which may be of assistance to them in reaching decisions in relation to Artists Exemption.
The scheme provides that the Revenue Commissioners can make determinations in respect of artistic works in the following categories only:
  1. a book or other writing
  2. a play
  3. a musical composition
  4. a painting or other like picture
  5. a sculpture
You have to be resident or ordinarily resident and domiciled in Ireland in order to avail of the relief. For foreign artists who intent to become ordinarily resident in Ireland in order to avail of the relief, they can fill out an application form to get advance approval from the Revenue.
You have to apply for the relief in the year that you earn the income, this is vital, if you apply after the year end then you won’t be approved for the previous year. If you are paid an advance royalty then you still have to meet these criteria and get your application into the revenue in that year.
Claims for Artists Exemption should be made on pdfClaim form Artist 2 (PDF, 356KB). A determination granted on the basis of this claim form will cover the particular work or works submitted with the claim as well as all future qualifying works in the same category, provided they fall within the guidelines.
Depending on the category in which artist’s exemption is being claimed the following items should be submitted in support of a claim
  1. a book or other writing - 3 published copies of the book
  2. a play - a copy of the script along with a signed production contract
  3. a musical composition - CDs or cassettes on which claimant must be accredited
  4. a painting or other like picture - 8-10 good quality photographs of work together with evidence of sale i.e invoices and a brief CV of artistic career to date
  5. a sculpture - as at (d) above.
The exemption only applies from income from the creative aspect of the work. Any other income is taxable. So for instance the income from the sale of your musical cd may be exempt but the income from concerts would be taxable.

Other taxes:
The exemption only applies to income tax. Your income is still liable for PRSI and Universal Service Charge. Also if your supply of goods exceeds 75000 or your supply services exceeds Euro37500 in a continuous 12 month period then you also will have to register for VAT. The vat on the sales of Paintings, sculptures, etc is 23% and the vat on work performed on land or building in Ireland is 13.5%.



Determinations of approval for Scheme:
  1. Section 195, Taxes Consolidation Act, 1997 provides that a work for the purpose of the Section is an original and creative work in one of the following categories:
    1. a book or other writing;
    2. a play;
    3. a musical composition;
    4. a painting or other picture;
    5. a sculpture.
Revenue may determine such a work to have, or to be generally recognized as having, cultural or artistic merit.
  1. In broad terms, therefore, in order to secure exemption under Section 195, a work has to be both original and creative and to have either cultural merit or artistic merit.
  2. In order to be granted a determination under Section 195, it is not necessary for a work to have both cultural and artistic merit - the presence of either quality is sufficient.
  3. In applying these guidelines, Revenue may, as provided for in Section 195, consult with such person or body of persons as may, in their opinion provide authoritative assistance to them in establishing whether a work is a qualifying work for the purposes of Section 195

Cultural or artistic merit
  1. A work has cultural merit if its contemplation enhances the quality of individual or social life by virtue of that work's intellectual, spiritual or aesthetic form and content.
  2. A work has artistic merit when its combined form and content enhances or intensifies the aesthetic apprehension of those who experience or contemplate it.
Original and Creative
  1. For the purpose of a determination under Section 195, Taxes Consolidation Act, 1997 the term "original and creative" encompasses any unique work which is brought into existence for the first time as an independent entity by the exercise of its creator's imagination.
  2. A non-fiction work in category (a), a book or other writing, will be considered original and creative only if,
    1. It comes within one of the categories cited in Appendix A, and
    2. The essence of the work is the presentation of the author's own ideas or insights in relation to the subject matter, and the ideas or insights are of such significance that the work would be regarded as a pioneering work casting new light on its subject matter or changing the generally accepted understanding of the subject matter.
  3. Exclusions from the compass of "original and creative"
    The following types of work in the categories set out in Section 195, Taxes Consolidation Act, 1997 will NOT be regarded as coming within the compass of "original and creative".
    1. A Book or other writing, notwithstanding paragraph 9, above
      1. A book or other writing published primarily for, or which is or will be used primarily by, students pursuing a course of study or persons engaged in any trade, profession, vocation or branch of learning as an aid to professional or other practice in connection with the trade, profession, vocation or branch of learning.
      2. An article or series of articles published in a newspaper, magazine, book or elsewhere - except a book consisting of a series of articles by the same author connected by a common theme and therefore capable of existing independently in its own right.
    2. A Play
      Types or kinds of plays written for advertising purposes which do not exist independently in their own right by reason of quality or duration.
    3. A Musical Composition
      Types or kinds of musical compositions written for advertising purposes which do not exist independently in their own right by reason of quality or duration. Arrangements, adaptations and versions of musical compositions by a person other than a bona fida composer who is also actively engaged in musical composition.
    4. A Painting or like picture
      Types or kinds of photographs or drawings (other than a set or sets of photographs or drawings that are collectively created for an artistic purpose) which are mainly of record, or which serve a utilitarian function, or which would not exist independently in their own right by reason of quality or by reference to their potentiality for inclusion as part of an art exhibition.
    5. A Sculpture
      Types or kinds of objects which are primarily functional in nature, objects produced by processes other than by hand, objects produced by hand by persons other than those actively engaged as bona fide artists in the field of visual arts.
Non Fiction works:
Non-fiction categories applicable to be considered as eligible for a determination under Section 195.
  1. The following categories of literature (and any combination thereof) coming fully within the terms of reference of the Arts Council encompassing the subjects of fiction writing, drama, music, film, dance, mime or visual arts, and related commentaries by bona fide artists:
    • arts criticism
    • arts history
    • arts subject works
    • arts diaries
    • autobiography
    • belles-letters essays
    • biography
    • cultural dictionaries
    • literary translation
    • literary criticism
    • literary history
    • literary diaries
  2. The following categories of works coming fully within the terms of reference of the Heritage Council including works which, in their entirety, comprise one or more of these categories:
    • archaeology
    • publications associated with items or areas of significant heritage value
  3. The following category of works coming fully within the terms of reference of the National Archives Advisory Council:
    • Publications which relate to the archives which are more than 30 years old concerning Ireland, and are based largely on research from such archives.
  4. Categories of works which in their entirety comprise one or more of the categories cited in paragraph 1 to 3 above



The current list of people who have availed of this relief is available at (from 2002 onwards):

If you are embarking on the long and rewarding trail of artistic Endeavour then contact Frank on 0469293891 to put in place the best structures of tax planning to minimize the tax you will pay on your hard earned creations. Remember planning is forward thinking, it is more difficult to minimize tax looking backwards.
© Frank McGivney 22 November 2013

All parts are protected by copyright and can only be reproduced if mention of the author is made on such reproductions.

Frank McGivney BA ACMA CGMA

Frank McGivney & Co. Ltd,
Chartered Management Accountants, 38 Cherryhill court Kells, Co Meath Tel 0469293891 Email fmcgivney@live.com