Am a bit puzzled by the consequences of the following from the Revenue guidance on such matters as a result of some conversations/suggestions with "others":
The section counters this method of tax avoidance by imposing a surcharge of 15 per cent on 50 per cent of the company‘s undistributed professional and service income and a surcharge of 20 per cent on the company‘s undistributed investment and estate income.
The case in point is a close company with just consultancy income so its all professional income.
Year 1 Say, after expenses 20,000
so if this is not distributed within 18 months of the year end:
15% of 50%(20,000) has to be paid by way of the surcharge.
The suggestions:
1:
The 15% is an ongoing hit on undistributed income so
Year 1: Surcharge is 1,500
Year 2: Surcharge is 1.275
and so on until its all paid in tax.
2:
The second suggestion that was made was that if the 18,500 was distributed in full in the 19th month after the relevant year end that the recipient is taxed on 20,000, i.e. no credit given for the 1,500
Thanks as always
The section counters this method of tax avoidance by imposing a surcharge of 15 per cent on 50 per cent of the company‘s undistributed professional and service income and a surcharge of 20 per cent on the company‘s undistributed investment and estate income.
The case in point is a close company with just consultancy income so its all professional income.
Year 1 Say, after expenses 20,000
so if this is not distributed within 18 months of the year end:
15% of 50%(20,000) has to be paid by way of the surcharge.
The suggestions:
1:
The 15% is an ongoing hit on undistributed income so
Year 1: Surcharge is 1,500
Year 2: Surcharge is 1.275
and so on until its all paid in tax.
2:
The second suggestion that was made was that if the 18,500 was distributed in full in the 19th month after the relevant year end that the recipient is taxed on 20,000, i.e. no credit given for the 1,500
Thanks as always