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Diploma in Tax Volume 1

MODULE 1: Understanding Irish tax law Revenue Powers, Audits & Interventions

Chapter 1 The Nature and History of Law in Ireland

1.1 Describe the historical development of the Irish legal system

1.2 Describe the nature of the European Union and how membership has impacted on Irish Law

Chapter 2 Sources of Law

2.1 Identify the hierarchy of sources of law

2.2 Describe common law as a source of law

2.3 Describe Irish domestic legislation as a source of law

2.4 Explain the role of the Constitution as a source of law

2.5 Describe the various sources of European law

2.6 Assess the interaction of the Constitution with European law

2.7 Assess the interaction of legislation with the Constitution and European law

2.8 Describe other sources of law

Chapter 3 The Irish Courts in a Tax Context

3.1 Outline the legal basis of the Irish courts

3.2 Describe the role and purpose of the Appeal Commissioners

3.3 Describe the role and purpose of the District Court

3.4 Describe the role and purpose of the Circuit Court

3.5 Describe the role and purpose of the High Court

3.6 Describe the role and purpose of the Court of Appeal

3.7 Describe the role and purpose of the Supreme Court

3.8 Describe the roles of the Attorney General and the Director of Public Prosecutions

3.9 Outline the judicial review process

Chapter 4 The European Court of Justice

4.1 Explain the mission of the ECJ

4.2 Describe the ways in which a case can come before the ECJ

Chapter 5 Interpreting Legislation

5.1 Explain the presumptions that apply in interpreting legislation

5.2 Set out the rules of statutory interpretation

5.3 Identify other aids to the interpretation of legislation

Chapter 6 Interpreting Case Law

6.1 Explain judicial precedent as a source of law

6.2 Identify the different elements of a judgment

Chapter 7 Fiscal Theory and Tax Policy

7.1 Basic Concepts

7.2 Tax Policy Areas

7.3 Tax Expenditures (Incentives)

Chapter 8 Analyse and Advise on Revenue Compliance Interventions

8.1 Describe the penalty provisions and the action which can be taken to reduce penalties

8.2 Describe the Revenue Compliance Intervention Framework and the purpose of a Revenue compliance intervention

8.3 Describe what is involved in a Revenue audit

8.4 Outline key practical rules for the conduct of Revenue audits

8.5 Explain what records a taxpayer is obliged to retain

8.6 Describe Revenue’s powers

8.7 Apply the code of practice to a set of circumstances and advise the taxpayer of their rights and obligations

MODULE 2: Personal Taxes: Income Tax

Chapter 1 Introduction to Income Tax

1.1 An introduction to Income Tax and the Schedular System

1.2 The Schedular System

1.3 Tax rates, credits and bands

Chapter 2 Residence, ordinary residence and domicile

2.1 Establish the scope of an individual’s charge to Irish income tax and conclude on the extent of the charge to Irish income tax on a range of domestic and foreign income sources where the individual is resident, ordinarily resident or domiciled in Ireland

2.2 Describe how and when an individual can elect to be tax resident

2.3 Establish an individual’s charge to the domicile levy

Chapter 3 Taxation of business income – Schedule D Case I and II

3.1 Conclude on what constitutes a trade based on the Badges of Trade

3.2 Outline the general basis of assessment for Schedule D Case I and II

3.3 Identify allowable and disallowable expenditure for the purposes of arriving at Case I and Case II profits

3.4 Compute the taxable profit of a sole trader applying the above rules and reliefs

3.5 Trade – commencement and cessation rules

3.6 Outline the basis of assessment for Case I and II in relation to start-ups, cessations and changes in accounting date

Chapter 4 Computation of capital allowances for Schedule D Case I and Case II

4.1 Outline the basis period for capital allowances

4.2 Describe how grants received are treated for the purposes of capital allowances

4.3 Identify when expenditure qualifies as “plant” for capital allowance purposes

4.4 Summarise the conditions that must be fulfilled for capital allowances to be available on plant and machinery

4.5 Describe the tax implications of disposing of an asset on which capital allowances were claimed

4.6 Assess if capital allowances on plant and machinery are available in a practical situation and calculate any allowances available

4.7 Summarise the conditions that must be fulfilled for capital allowances to be available for motor cars

4.8 Assess if capital allowances on motor cars are available in a practical situation and calculate any allowances available

4.9 Identify what constitutes an industrial building

4.10 Summarise the conditions that must be fulfilled for industrial buildings allowances to be available

4.11 Describe the tax implications of disposing of an asset on which industrial buildings allowances were claimed

4.12 Assess if capital allowances on an industrial building are available in a practical situation and calculate any allowances available

Chapter 5 Taxation of Rental Income: Schedule D Case V

5.1 Identify what income is taxable under Schedule D Case V

5.2 Outline the basis of assessment for Schedule D Case V

5.3 Identify allowable and disallowable expenditure for the purposes of arriving at Case V profits

5.4 Explain the implications of claiming certain reliefs

5.5 Compute Case V profits applying the above rules and reliefs

Chapter 6 Taxation of Investment Income: Schedule D Case III

6.1 Identify what income is taxable under Schedule D Case III

6.2 Outline the basis of assessment for Schedule D Case III

6.3 Identify when withholding tax arises on investment income and show how it is treated in a tax computation

6.4 Compute Case III profits and any associated tax relief applying the above rules and reliefs

6.5 Describe how an individual who receives foreign dividends can be given credit for tax incurred by the company

6.6 Explain the rules and practice in determining when a remittance occurs including anti-avoidance measures

Chapter 7 Taxation of Other Income: Schedule D Case IV

7.1 Identify what income is taxable under Schedule D Case IV

7.2 Outline the basis of assessment for Schedule D Case IV

7.3 Explain the operation of the DIRT system to Irish and EU deposit income

7.4 Identify when DIRT arises and show how it is treated in a tax computation

7.5 Compute Case IV profits and any associated tax relief applying the above rules and reliefs

7.6 Categorise the statutory sources of income assessable under Case IV

7.7 Categorise the items taxable under the general Case IV charge

7.8 Explain how relief is granted for losses under Case IV

7.9 Compute any tax, PRSI or Universal Social Charge applicable to Case IV income

Chapter 8 Taxation of Irish Dividends: Schedule F

8.1 Identify what income is taxable under Schedule F

8.2 Outline the basis of assessment for Schedule F

8.3 Determine when and how dividend withholding tax should apply to dividends paid by Irish companies to Irish individual shareholders

8.4 Compute Schedule F income and any associated tax relief applying the above rules and reliefs

8.5 Apply the scope and basis of assessment of Schedule F to shares received in lieu of dividends (scrip dividends)

Chapter 9 Taxation of employment income: Schedule E

9.3 Distinguish between the terms “office” and “employment”

9.4 Define the terms “emoluments” and “perquisite”

9.5 Contrast the meaning of a perquisite and with a benefit-in-kind

9.6 Determine how non-cash benefits are subject to Schedule E

9.7 Determine the test of deductibility of expenses against Schedule E income

9.8 Determine when the reimbursement of expenses by an employer gives rise to a taxable benefit and when it does not

9.9 Explain the relief available for termination payments

9.10 Separate a termination payment into its taxable and non-taxable elements

9.11 Outline the administrative provisions surrounding any claim for relief from tax on termination payments

9.12 Distinguish between the terms “employee” and “self-employed” and outline the taxation implications of an individual’s employment status

9.13 Explain what considerations should be taken into account in determining the status of a worker

9.14 Interpret case law and use the principles to distinguish between the terms “employee” and “self-employed”

9.15 Apply the rules of Schedule E to determine the tax treatment of payments received by employees

9.16 Apply the rules of Schedule E to determine the tax treatment of salary sacrifice schemes

Chapter 10 Personal tax rates, charges, allowances, credits and exemptions

10.1 Outline the tax rates, credits and bands applicable

10.2 Describe the tax relief available for various payments made by an individual

10.3 Identify the personal tax credits and reliefs available to an individual by virtue of their personal circumstances

10.4 Identify the tax credits available for various payments made by an individual

10.5 Compute the personal tax charges, allowances and credits available to an individual

10.6 Identify the income tax exemptions that exist due to the personal circumstances of the taxpayer or the source of the income

10.7 Compute the taxable income of an individual after claiming all exemptions

10.8 Outline the tax credit entitlements of non-residents and compute the Irish tax liability of non-resident individuals in receipt of Irish source income

Chapter 11 Tax relief at source

11.1 Outline in principle how tax relief at source is granted

11.2 Identify qualifying medical insurance premiums and calculate the amount of relief due

11.3 Compare the relief on medical insurance premiums to the relief available for health expenses and permanent health insurance

11.4 Outline how the reliefs are claimed

Chapter 12 Exemptions and reliefs

12.1 Describe the statutory exemptions from income tax that are available and any claw-back provisions

12.2 Describe the key features of Reliefs for Investment in Corporate Trades (RICTS)

12.3 Calculate any tax, PRSI or Universal Social Charge payable by taxpayers who claim these exemptions and reliefs

Chapter 13 Taxation of married couples and civil partners

13.1 Explain the different ways married couples or civil partners may be assessed to income tax and prepare a tax computation based on each

13.2 Calculate the relief available to a couple in the year of marriage

13.3 Calculate the income tax liability arising for the surviving spouse/civil partner and the deceased spouse/civil partner in the year of death

13.4 Calculate the income tax liability arising for both the surviving spouse/civil partner and the deceased spouse/civil partner in the year of death where Revenue concessional applies

13.5 Explain how residency impacts on the taxation of married couples or civil partners and calculate any relief available

13.6 Explain the tax treatment of separated/divorced couples and the options available to a separated/divorced couple in relation to the taxation of maintenance payments

13.7 Outline the entitlement of a separated couple to claim certain tax credits, and contrast with the entitlement of a married couple or civil partners living together

13.8 Describe the tax issues surrounding the payment of a mortgage on a family home in the context of divorce/separation

13.9 Calculate the tax, PRSI and Universal Social Charge for a married couple or civil partners

Chapter 14 PRSI and Universal Social Charge (USC)

14.1 Define the key terms used in relation to PRSI

14.2 Explain how the Universal Social Charge is applied

14.3 Outline the relevant limits and exemptions that apply

14.4 Illustrate with an example how PRSI and Universal Social Charge are applied to employment income

14.5 Illustrate with an example how PRSI and Universal Social Charge are applied to self-employed income

Chapter 15 Local property tax

15.1 Explain when the Local Property Tax is due

Chapter 16 Administration of self-assessment for individuals

16.1 Outline the self-assessment system for the collection of tax and filing of returns for individuals

16.2 Outline which individuals are subject to this specific administration system, and apply the rules to conclude whether self-assessment obligations apply in particular cases

16.3 Detail the registration procedure for self-assessment

16.4 Detail any returns of third-party information that may be required under self-assessment

16.5 Explain an individual’s obligations under the Pay and File system

16.6 Describe and compute the consequences of failing to file a return or pay a tax liability in full and on time

16.7 Describe the appeals process as it applies to an individual within the self-assessment system

16.8 Prepare an income tax return

Chapter 17 Operation of the PAYE system

17.1 Overview of PAYE modernisation and real-time reporting

17.2 Explain how the PAYE real-time reporting collection system operates

17.3 Outline the penalties for non-compliance with PAYE real-time reporting

MODULE 3: Personal Taxes: Capital Gains Tax

Chapter 1 Introduction to Capital Gains Tax

1.1 Introduction

1.2 Outline the CGT implications of an individual’s residence, ordinary residence and domicile

1.3 Explain when non-residents can be charged to Irish CGT

Chapter 2 Assets

2.1 Define the meaning of “asset” for CGT purposes

2.2 Describe and apply the rules regarding the location of assets

Chapter 3 Disposal

3.1 Define the disposal of assets for CGT purposes

3.2 Apply the treatment of insurance and compensation monies

3.3 Apply the treatment of assets used as security

3.4 Apply the treatment of disposals by nominees and trustees

3.5 Identify when a disposal is made

Chapter 4 Valuation and Consideration

4.1 Explain how to deal with consideration that is partly capital and partly revenue in nature

4.2 Explain and apply the interaction of CGT with balancing charges

4.3 Explain and apply how and why market value is sometimes imposed and identify occasions when this will happen on disposals

4.4 Illustrate how consideration denominated in a foreign currency is treated for CGT purposes

Chapter 5 Cost of Acquisition

5.1 Define the cost of an asset

5.2 Explain and apply how incidental costs are treated for CGT purposes

5.3 Explain and apply the treatment of enhancement expenditure

5.4 Identify occasions when the market value rule is imposed on acquisitions

5.5 Explain and apply how the costs of acquisition are arrived at in the case of assets derived from other assets

5.6 Explain how the costs of acquisition are arrived at in the case of wasting assets

5.7 Illustrate how costs of acquisition denominated in a foreign currency are treated for CGT purposes

Chapter 6 Losses

6.1 Explain how loss relief is granted for CGT purposes

6.2 Outline how relief is granted for losses on chattels (both those that qualify for capital allowances and those for personal use)

6.3 Outline the timing of loss relief with respect to other reliefs and exemptions

6.4 Explain and apply how the market value rules on transactions between connected persons interact with loss relief

6.5 Explain the basis for negligible value claims

Chapter 7 Indexation Relief and the Annual Exemption

7.1 Describe indexation relief and how it applies to assets acquired both before and after 6 April 1974

7.2 Describe the restrictions on indexation relief

7.3 Outline an individual’s entitlement to the annual exemption

Chapter 8 Other Exemptions

8.1 Outline the main exemptions from CGT, comparing these to the equivalent exemption from income tax where relevant

8.2 Identify when an asset is a chattel and apply the relevant exemptions

Chapter 9 Reliefs

9.1 Explain Principal Private Residence (“PPR”) relief from CGT

9.2 Explain the interaction of PPR relief with rent-a-room relief

9.3 Explain the relief available on the disposal of a site to a child

9.4 Explain the seven-year/four-year CGT relief for certain disposals of land or buildings

9.5 Summarise the special rules that apply to transfers to or from personal insolvency practitioners who hold assets on trust for the benefit of creditors

9.6 Explain and apply revised Entrepreneur Relief from CGT and compute the relief available

9.7 Relief for investment in innovative enterprises (angel investor relief)

Chapter 10 Taxation of Married Couples and Civil Partnerships

10.1 Explain the methods of assessment to CGT for married couples/civil partners

10.2 Outline the specific reliefs available on the transfer of assets between spouses/civil partners

10.3 Compare this to the treatment of the transfer of assets between spouses/civil partners on separation

10.4 Compare this to the treatment of the transfer of assets between couples on divorce/dissolution of civil partnership

Chapter 11 Taxation on Death

11.1 Assess the CGT implications of the transfer of assets on death

11.2 Understand and outline how gains arising to the deceased up to the date of death are treated

11.3 Understand and outline how losses in the year of death are treated

11.4 Calculate any CGT implications of the transfer of assets on death

Chapter 12 Companies and their Shareholders

12.1 Outline the basic rules relating to the disposal of shares for CGT purposes

12.2 Applying first principles, determine the taxation implications of share transactions

12.3 Describe how share-for-share exchanges are treated for tax purposes, comparing the implications of the inclusion of cash to straight share-for-share exchanges

12.4 Explain the reason for the introduction of the “four-week rule” on share disposals

12.5 Explain the application of the “four-week rule”

Chapter 13 Shares and Share Options

13.1 Understand why share options and share awards are used in practice and distinguish between them

13.2 Describe the events that occur in the life of an option: grant; exercise; forfeiture; abandonment and sale

13.3 Explain the CGT implications of unapproved employment share options

13.4 Calculate any CGT liability arising on an unapproved share option

13.5 Review approved profit sharing schemes, restricted shares (“clogs”), forfeitable shares, convertible shares and shares issued under KEEP scheme as a means of rewarding employees. In relation to each, calculate any CGT liabilities

Chapter 14 Retirement Relief on the Disposal of Business or Farm Assets

14.1 Interpret the rules providing for “retirement relief” from CGT

14.2 Define key terms specific to retirement relief

14.3 Explain how the relief applies in the context of certain disposals

14.4 Explain if/when marginal relief is available

14.5 Outline the impact of change in ownership on the eligibility to claim the relief

14.6 Compute the CGT due on a disposal to which retirement relief applies

Chapter 15 Sale or succession of companies

15.1 Understand and calculate the CGT relief that applies on the incorporation of a business

15.2 Outline the income tax implications of the disposal of a business by a sole trader

Chapter 16 The CGT Treatment of Leases of Land and Property

16.1 Apply first principles of CGT to calculate the CGT arising on leases

16.2 Determine the CGT arising on granting a lease

16.3 Outline how the sale of a lease differs from its grant

Chapter 17 Development Land

17.1 Define development land for CGT purposes

17.2 Explain how disposals of development land are taxed

17.3 Judge whether a disposal involves development land and calculate any arising tax or restriction of reliefs

Chapter 18 Withholding Tax Provisions

18.1 Identify the occasions when withholding tax applies to CGT transactions

18.2 Outline the procedures the purchaser must follow to account for and return this withholding tax

18.3 Outline the procedure for gaining a CGT clearance certificate

18.4 Explain how withholding tax applies in situations where no cash changes hands

Chapter 19 Self Assessment

19.1 Outline the self-assessment system for the collection of tax and filing of returns for individuals

Appendix I Indexation Factors for Capital Gains Tax