43 people earning €1m paid under 5% tax in 2002


#1

#2

breakingnews.ie/ireland/reve … 67587.html

Who exactly pays income tax? Is it just PAYE workers earning over 32K?
I’m trying to square this with the statistic here that the median earner on 25K pays only 4% Income tax. Those at the top and bottom of the earnings scale are not paying.

Is it a case that if you wish to get ahead and have a good income you shouldn’t even consider staying in the PAYE system or is there a non-sequitor in there somewhere.
Irrespective, there is something not right where effective taxation can be reduced to only 4% when the notional marginal rate of taxation is 40%


#3

That seems to be the case. In addition, many non-PAYE self-employed folks seem to be cooking their books, as far as I can see.

They tell you they are on the lower tax-rate, yet their lifestyles show that they are earning a lot more than their PAYE friends who, on paper, are by far the higher earners. And it’s not that they have borrowed the money or received legacies either.

A lot of school principals can tell you that they live beside (or are friends with) parents on medical cards who can nevertheless afford all the trappings of families on higher-than-average salaries: foreign holidays galore, top-of-the-range cars, kitchens and furnishing, expensive social lives, expensive clothes…

The tax system is not equal. It needs reform.


#4

Following on from that? Who exactly drives taxation ideology? Dept. of Revenue, Dept. of Finance who are short of qualified staff or Inner Cabinet comprise of a solicitor a barrister and a social worker.


#5

I’m guessing that in some or even many cases the investment loss associated with these reliefs now greatly outweighs the tax benefit (think hotels, Section 23 Property etc.)

I don’t know the details though - maybe some were a “shot to nothing” where the max you could lose was the amount you would have paid in tax anyway…
I’ve heard of some terrible BES schemes where the optimistic assumption was you wouldn’t lose too much money - say get 80% of your investment back but “sure, overall you’ll be up”. A lot of cowboy business which never should have seen the light of day survived because of this, the process of approving the schemes seems to have been rather ‘murky’.

A lot of what drives taxation policy was the benefit of getting "investment’ in TDs’ back yards - it doesn’t make commercial sense? - throw in some tax allowances, hey presto a load of apartments by/in the Shannon


#6

Done to death on many previous threads in the Central Bank, search them out if you wish to continue the discussion…


#7

Wan wonders about that 4% figure. I seem to recall that proprietary directors can put up to 96% of salary away in their pensions? (Up to the annual limits). Wan also wonders about the whacking losses on leveraged property bets that some proprietary directors might be sitting on in their self-directed pensions. Wan thinks of high-profile TV/radio persons, consultants with private practice, accountants and legals etc.

If wan is right, I’d rather they were paying back than NAMA’d…


#8

Merged into earlier topic on the subject…


#9

Having merged it and read the original article… plus ca change… why is nobody hopping on Mr. Cowen’s head:
“This combined with an effective cap on remaining tax-incentive schemes meant that all high earners would pay a minimum rate of 20 per cent.”


#10

Karl Whelan:
irisheconomy.ie/index.php/20 … x-reliefs/


#11

Courtesy of Mr. Whelan, the revenue document:
finance.gov.ie/documents/pub … eliefs.pdf

Table 3 has a list of the reliefs used. I’m too antsy to tot them up…

PS I think Mr. Whelan is wrong to suppose that the numbers refer just to those within the scope of the act. I think this is all the declared rich people in the country (423 earning over 250k, presumably after expenses and pension contributions…).

PPS I was wrong…


#12

If rich people are dodging tax, then what about the stat (much beloved of right wing types) that shows the lions share of the state’s income tax revenue coming from rich folks?


#13

Supposing I was earning 500k and instead of paying c. 250k in tax, levies and PRSI I wanted to pay 25k as is suggested in the above article. What would I have to do?

Well, first I suppose I put a big slice into my pension, say 100k, but I’ll pay tax on that when I draw it down are income during my retirement, so that is really just tax deferred rather than tax avoided.

Then, I suppose I put 330k into horses, hotels and golf courses and hope that this money comes back to me at some stage.

Then, I draw 70k and pay 25k in tax, giving me 50k to spend on my day to day, with the rest put off until if I hit 65 or until if the horses/hotels and golf courses pay off. Then I’ll pay tax on that income anyway. All the while, spending 1/10th of what I earn on day to day living, savings etc.

Or, I could draw down 250k, pay 250k tax and live like a king.

Are there any ways to avoid paying tax that are not shit?

By the way doubleglaze, the articles are about people who legitimately avoid taxes, not those who evade taxes. It’s wrong to tar all self employed as being assumed to be evading taxes.


#14

Yeah. Set up a company. Employ yourself and the missus. Pay yourselves 50k each. Stick the rest into an executive pension, except for the bit you use to buy an investment villa in Tuscany. Have to pay the minimum 20%…

When you have enough bung bunged up, transfer it to an ARF. Move to Tuscany. Two fingers to the taxman as long as you don’t spent more than 200 days in the country.

Deferred taxation? Not for the rich…


#15

Ah now lads, if we told yez all the ways to avoid paying tax sure there wouldnt be a job for a good advisor in this country now would there. :wink: 8DD


#16

You can also put a lot of things down as “business expenses”, such as cars, TV’s, computers and in some cases, even clothes.

Quite a few of my mates are contract engineers and one in particular, only pays himself enough that he pays the lower rate of tax but still has a great lifestyle because everything else is put down as “expenses”.


#17

Good luck getting an accountant to sign off on that. If your mates are audited they’ll have some 'splainin to do…

In general there are some misconceptions on what can legitimately be written off. For example the depreciation on a second hand car assumes a max valuation of E23,000 or so; computers are capital and written off using straight line depreciation over 5 years; there is an add back element for personal use of a vehicle. Not every self employed person is taking the pi$$. I’m not an accountant but my brother was freelancing and was sorely disappointed by what his accountant told him - if you don’t use a kosher accountant you’re a lot more likely to get audited.

Considering you lose the E1800 PAYE allowance and still get screwed on PRSI (i.e. pay more but still no free dental check up! You even pay PRSI on all your interest income!) you really need to have a car and decent office write off to make it more profitable to be a contractor assuming the same income.

BTW Revenue seem to be beefing up big time. I have heard of a a few well qualified accountants getting hired recently by Revenue for their Fraud Investigation Unit- Managers in Big 4 firms looking for a shift in life/work balance (the 4 my friend knows of personally are all females…)


#18

But then you have to pay corporation tax as well as personal income tax. Also, you have to move to Tuscany. Sure why not just move to St Kitts in the first place?

That’s just tax evasion, pure and simple. You should ask him to pay his taxes properly and if he doesn’t report him to the tax man for an auld audit.

Again, how would I legitimately reduce my tax bill from 250k to 25k without leaving the country or buying dodgy investments?
[/quote]


#19

There are limits on the about you can put into a pension as a company contribution relating to your income. That little shimmy has been dealt with.

You would pay income tax on 5% of the market value of the Tuscany property as a benefit in kind, which would of course remain the asset of the Irish company requiring a tax clearance cert if you didnt want 25% withheld on its sale.

You would pay Irish tax on drawing down the Irish pension.

I think its 183 days in any one year, or 280 average over 2.

Harder than you think Yogan. :smiley:

There are ways…