INTRODUCTION
As per Revenue guidelines and due to the implementation of the Finance Act 2020 and amendment in the taxonomy, we have made of than 31 changes in Relate Personal Tax Version 12.0 Build 3 for the Tax Year 2020. The major and minor changes have been made to Relate Personal Tax to comply with Revenue.
MAJOR CHANGES IN TAX YEAR 2020
Major changes include several new tax fields and subsections to be filled in where applicable under
· PAYE/BIK/Pensions (1)
o Tax fields for the Director Remuneration where the source of income is Directorship.
o Option to enter the amount of Direct Temporary Wage Subsidy (DTWS) received for this employment
· Personal Tax Credit
o Subsection for EII-Shares issues in 2020 (undertaking made under 502(3)(B)) minimum for 7 years.
MINOR CHANGES IN TAX YEAR 2020
Minor changes have been made to the following areas for the Tax Year 2020:
New Tax Fields for:
· Personal Details
o Option to indicate to avail the force majeure COVID-19 circumstances for residency purposes.
o Option to enter the start date and the end date to availing the force majeure COVID-19 circumstances
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This document outlines the changes made in Relate Personal Tax Manager Version 12.0.3. Please take time to read the notes. If you have any queries, please contact support at support@relate-software.com or call +353 1 4597800 (ROI).
The following program changes have been introduced to fulfil the requirements of Revenue and requests from both users and internal quality control reviews.
If you have any further changes you would like to see in Personal Tax Manager, please send an email to enhancements@relate-software.com
Important
Please note, it is very important that before running any database update you perform a database backup. Relate Software always advise that your practice takes regular backups to minimise any loss of data.
PERSONAL DETAILS
OPTION TO INDICATE AVILAING FORCE MAJEURE COVID- 19 IN RESIDENCE AND DOMICILIE STATUS
Businesses and communities are dealing with many COVID-19 related issues that caused a severe business disruption. In response to COVID-19, Revenue has introduced new measures to mitigate the effects of COVID-19 in terms of tax measures.
The Revenue has carried that where a departure from Ireland is prevented due to COVID-19, Revenue will consider this force majeure to establish an individual tax residence. On the 21st of December 2020, Revenue confirmed that its concession will not apply in the Tax Year 2020 to the individual who entered Ireland on or after the 6th of May 2020. Revenue guidelines indicated that individuals must have left Ireland as soon as they reasonably could. This must have happened by the 1st of June 2020, unless the individual had contracted COVID-19 and was not able to leave.
To comply with the Revenue guidelines for the Residence Rules- Force Majeure Circumstances we have added a new option to indicate that the individual/partner availing the force majeure in Relate Personal Tax Manager for the Tax Year 2020. The new fields are as follows:
COVID-19 circumstances:
Ø Are you and/or your spouse or civil partner availing of the force majeure COVID-19 circumstances for residency purposes? [Tick Box]
This is in respect of days spent in the State during 2020 due to the force majeure COVID-19 circumstances. These days are to be disregarded for the purpose of statutory residence test where the conditions as set out in Revenue’s published guidance on this concession are satisfied. Enter the start date and end dates of the period that is to be disregarded for tax residence purpose which arises due to being unavoidably present in the State due to force majeure COVID-19 circumstances.
Ø Start Date for Self & Spouse/ Civil Partner
Ø End Date for Self & Spouse/ Civil Partner
| Note that, if you have entered the start date you must enter the end date, otherwise a validation message will appear on the screen. |
See Figure 1:
Figure 1: Option to tick the box for COVID-19 Circumstances and the entered start & end date
PAYE/ BIK/PENSIONS (1)
NEW FIELDS FOR DIRECTOR REMUNERATION FOR DIRECTORSHIP INCOME
Income received by a proprietary director in respect of that directorship is assessable on an earning basis. This eventually means the income is taxed in the period in which it is earned. Income received by a non-proprietary director is assessable on a receipt basis. It is a long-established principle of Irish tax law that a director (including a non-executive director and/or a non-resident director) of an Irish incorporated company holds, for taxation purposes, an Irish public office the remuneration arising from which is chargeable to income tax in the State under what is known as Schedule E. Such income is within the scope of deduction at the source of income tax under the Pay As You Earn (PAYE) system and deduction at the source of the Universal Social Charge (USC) under the USC system.
The relevant legislation is Section 19 of the Taxes Consolidation Act 1997.
To comply with the Revenue guidelines, we have added 8 tax fields under the Director Remuneration in Relate Personal Tax Manager for the Tax Year 2020.
Director Remuneration:
· In arriving at the “Gross amount of taxable income for this employment/ pension” and the “Net tax deducted/refunded” state:
1. The amount of taxable income paid in 2020 which was earned in the year 2019 and was brought back to that year
2. The amount of tax paid in respect of that amount of income brought back to 2019
3. The amount of gross income for USC purposes paid in 2020 which was earned in the year 2019 and was brought back to that year
4. The amount of USC paid in respect of that amount of income brought back to 2019
5. The amount of income paid in the year 2021 which was earned in the year 2020 and has been brought back to 2020 and included in the Gross amount of taxable income above
6. The amount of tax paid in respect of that amount of income brought back to 2020
7. The amount of gross income for USC purposes paid in the year 2021 which was earned in the year 2020 and has been brought back to 2020 and included in the Gross income for Universal Social Charge USC from this employment above
8. The amount of USC paid in respect of that amount of income brought back to 2020
See figure 2:
Figure 2: New Tax fields under Director Remuneration where the source of income is Directorship.
| Note that, the tax fields under Director Remuneration will only be enabled if the source of income is B. Directorship. |
OPTION TO ENTER THE AMOUNT OF DIRECT TEMPORARY WAGE OF SUBSIDY (DTWS)
Revenue previously advised that certain employees may not have received their full entitlement under the TWSS (Temporary Wage Subsidy Scheme) and are due additional payments. These payments are known as Direct Temporary Wage Subsidy (DTWS) refunds. Any employee who is due to receive a DTWS refund will have that amount offset against their TWSS liabilities The resulting balance, on their Statement of Liability, is the net amount due to Revenue. This is the amount that a person’s employer may wish to pay on their employee’s behalf to Revenue.
However, the Revenue expects that the calculation of DTWS amounts due will be finalised at the end of June 2021.
To comply with the Revenue guideline, we have added a tax field in Relate Personal Tax Manager for the Tax Year 2020.
The new tax field is as follows:
Ø Direct Temporary Wage Subsidy received for this employment
See figure 3:
Figure 3: Option to enter the amount of DTWS received for this employment
PERSONAL TAX CREDITS
SUBSECTION FOR EII-SHARES ISSUES IN 2020 (UNDERTAKING MADE UNDER 502(3)(B)) MINIMUM 7 YEARS
As per the new guideline from the Revenue, we have added a subsection for Employment and Investment Incentive – Shares issued in 2020 where an undertaking is made under 502(3)(b) – shares held for a minimum of seven years. This refers to an investment in eligible shares where the investor undertakes not to dispose of those shares of 7 years.
To comply with the Revenue we have added the following tax fields for Self and Spouse for the subsection in Relate Personal Tax Manager for the Tax Year 2020.
The new fields are as follows:
Ø (f)(i) Amount subscribed for eligible shares in 2020
Ø (f)(ii) Name of company in which investment was made
Ø (f) (iii) Tax reference number of company in which investment was made
Ø (f) (iv) Date of ‘EII5’ (Managers Cert) where the amount subscribed for eligible shares was through a designated fund
Ø (f) (v) Date of the “Statement of Qualification (EII)”
Ø (f) (vi) Amount of investment which qualifies for relief under Section 502(2A) (Max qualifying relief = € 500,000)
Ø (f) (vii) Deduction from total income under Section 502(2A)
Ø (f)(viii) Amount to be carried forward to future periods
See figure 4:
Figure 4: Subsection for EII-Shares issues in 2020 (undertaking made under 502(3)(b)) min 7 years
CHANGES IN MAXIMUM QUALIFYING RELIEF IN SCI AND EII SUBSECTIONS
As per the Revenue guideline, a major change has been made in terms of the maximum qualifying relief amount in the Employment and Investment Incentive and Start-up Capital incentive subsection in Relate Personal Tax Manager for the Tax Year 2020.
We have listed out the maximum qualifying relief amount for both self and spouse respectively.
| Changes in the maximum qualifying relief for Tax Year 2020: | ||
| Section | Subsection | Change Details |
| Personal Tax Credits | Start-up Capital Incentive | The maximum qualifying relief amount is €250,000 for Self and Spouse respectively. |
| Personal Tax Credits | Employment and Investment Incentive -Shares issued in 2020 (undertaking made under 502(3)(b)) minimum 7 years. | The maximum qualifying relief amount is €500,000 for Self and Spouse respectively. |
| Personal Tax Credits | Employment and Investment Incentive – Shares issued in 2020 (undertaking not made under 502(3)(b)) less than 7 years. | The maximum qualifying relief amount is €250,000 for Self and Spouse respectively. |
| Personal Tax Credits | Employment and Investment Incentive – Shared issued on or after 8 October 2019 and on or before 31 December 2019. | The maximum qualifying relief amount is €150,000 for Self and Spouse respectively. |
| Personal Tax Credits | Employment and Investment Incentive - Shares issued before 8 October 2019 | The maximum qualifying relief amount is €150,000 for Self and Spouse respectively. |
| Personal Tax Credits | Start-up Relief for Entrepreneurs (SURE) | The maximum qualifying relief amount is €100,000 for Self and Spouse respectively. |