Business Taxes

1.7.Download and review the Form CT1 from ROS online

The vast majority of corporation tax returns are submitted via the ROS system. Under this system a CT1 return is downloaded and completed offline. A tax computation is then prepared and when the form is finalised it is uploaded to the ROS system and lodged with Revenue. You will learn more about the administration of corporation tax in Chapter 14 (Part 2).

Following on from the pro-forma layout earlier in this chapter, you should now download your own version of ROS using the notes below. As you go through the manual you will become familiar with the main entries that make up a typical CT1 return.

The steps are as follows:

1. Go to www.revenue.ie

2. On the homepage, click on the Online services icon;

3. On the next page that appears, in the Online services support section, click on Mobile & offline applications

4. Then select Revenue Online Service (ROS) offline application

5. Select Download the ROS offline application link and follow the instructions to download ROS offline.

6. Once installed, click on ROS Offline and click on the button “Download” – choose form CT1 to download.

7. To open a form once it has been downloaded, click on the “New” button and choose the form that they previously downloaded.

Task 1.8 requires the completion of a basic CT1 return.

Task 1.8

Complete an offline ROS CT1 for the below company. The computation does not require completion of every box in the return but you should review the entire return to become familiar with its completion. The company’s tax number is 1234567T.

Task 1.8

Corporation tax computation of Chocaloc Ltd for year ended 31 March 2018

Net loss before tax (126,730)
Addbacks
Depreciation 3,200
Motor lease restriction 767
Balancing charge 18,000
Christmas gifts to suppliers 1,000
Restrictive covenant to competitor 13,500
Rental interest 4,400
Patent royalties per accounts 11,000 51,867
Deductions
Rental income 6,000
Bank deposit interest 670
Gain on disposal of factory 16,000
Profit on disposal of motor vehicle 4,800
Employment grant 8,000
VHI 1,000
Finance lease payments 16,000
Capital allowances 2,125 (54,595)
(129,458)
Less trade charges paid (15,000)
Net Case I (144,458)
Schedule D Case IV 1,063
Schedule D Case V 2,700
Total income 3,763
Chargeable gain 42,240
Total profits/(losses) 46,003
Corporation tax as follows:
42,240 at 12.5% 5,280
3,836 × 25% 941
6,221
Section 243B (€15,000 @ 12.5%) (1,875)
Section 396B (4,346)
Net corporation tax liability 0
Add income tax withheld on medical insurance 1,000
Less DIRT (393)
Total tax due 607

Task Answers

Task 1.1

Under s. 23A(2) TCA 1997 (original section), Fried Ltd. is treated as an Irish resident company with effect from its date of incorporation. Assume that none of the exceptions in s. 23A(3) and (4) TCA 1997 apply.

Fried Ltd. is therefore liable to Irish corporation tax on its worldwide income and gains and must each year file full tax returns of its profits and file its accounts with the Irish Revenue.

Task 1.2

No. As the company is French incorporated s. 23A(1) TCA 1997 does not apply. Therefore, we look to the central management and control test established in the De Beers case. The central management and control of the company is in France and, therefore, the company is not Irish resident. As the company is not managed and controlled in the state, s. 23A(3) will not apply.

The profits attributable to the Naas factory will, however, be liable to Irish corporation tax as it constitutes a branch of the French resident company.

Task 1.3

This production workshop in Galway constitutes a branch of the German company and so the profits attributable to the Irish branch are chargeable to Irish corporation tax.

Task 1.4

As Alpha Ltd is UK incorporated, s. 23A(1) TCA 1997 does not apply. Therefore, the central management and control rule as set down by the De Beers case applies.

The controlling body of the company and its management are situated in Ireland, so the place of residence is Ireland. S.23A(3) TCA 1997 will also ensure that the company is treated as Irish tax resident unless the company is deemed tax resident in the UK by virtue of s.23A(2) TCA 1997.

Task 1.5

No. Although the incorporation test is met such that s. 23A(2) TCA 1997 (original section) applies, on the basis that the company is controlled by its directors who we can assume are Dutch tax resident, the exception in s. 23A(3) TCA 1997 applies and, therefore, we look to the central management and control test established in the De Beers case. The central-management and control of the company is in the Netherlands and, therefore, the company is not Irish resident. However if the company is not tax resident in Holland under Dutch law, s. 23A(5) TCA 1997 will deem it to be tax resident in Ireland.

The profits attributable to the Irish factory will, however, be liable to Irish corporation tax as it constitutes a branch of the Dutch resident company.

Task 1.6

(a) A company which is resident in Ireland is subject to corporation tax on its worldwide profits (including gains), regardless of where they arise.

(b) A non-resident company with a branch in Ireland is subject to Irish corporation tax on:

Any trading income arising from the branch or agency

Any income from property or rights used by, or held by, or for, the branch or agency, and

Chargeable gains arising from assets which are situated in Ireland and which are used in or for the purposes of the trade carried on through the branch or agency.

(c) A non-resident company which does not have a branch in Ireland will be subject to income tax on any income derived from sources in Ireland.

Task 1.7

Tax legislation sets down rules for triggering a commencement of an accounting period. They are as follows:

A company commencing to trade

A company becoming resident in Ireland

A company acquiring a source of income

For tax purposes an accounting period ceases on the occurrence of any of the following events:

Expiration of 12 months from the beginning of the accounting period (You will recall that this is the maximum length of an accounting period for tax purposes)

Accounting date of the company

A company ceasing to trade.