Finance Bill: PAYE Credit for Proprietary Directors: What does this statement mean?

[Hans]

'PAYE Credit for Proprietary Directors: The Bill provides that the credit can only be given to the extent that PAYE has been deducted.'

I was reading the main elements of the Business section of the Tax Bill.

I'm afraid the above statement has left me confused as I am aware as a Proprietary Director I'm not allowed any PAYE credit despite paying Tax under the PAYE system does this mean they are going to introduce it - something I doubt!!

 

[Brendan Burgess]

Re: Finance Bill: PAYE Credit for Proprietary Directors: What does this statement mea

Hi Hans

Where were you reading this?

I wonder if there is/was a loophole, whereby Proprietary Directors got a small amount of income from some other employment and then claimed the full PAYE Credit?

Brendan

 

[Graham_07]

Re: Finance Bill: PAYE Credit for Proprietary Directors: What does this statement mea

I was looking at this today in the Sunday Business Post. I may be corrected on this but I don't believe that this has anything to do with the PAYE credit being extended to proprietory directors but credit for PAYE paid.

The explanatory memorandum to the Finance Bill 2010 says:-

"Section 7 amends section 997A to ensure that, in the case of a
proprietary director, the credit for PAYE tax remitted cannot exceed
the PAYE tax actually deducted from his or her directorship
emoluments"​

Section 997A itself of the TCA 1997 says :-​

"997A Credit in respect of tax deducted from emoluments of certain directors
Summary
Certain directors of companies, that is, those with “material interest” in the company
will not be given credit for PAYE tax deducted from payments made to them by the
company unless there is documentary evidence that the tax has been remitted to the Collector-
General."​

I believe that what is intended is that a proprietory director cannot get credit for PAYE tax deducted from them unless the company, of which they are a proprietory director has actually paid the relevant tax over to Revenue.​

Take the case of a prop. dir. who has, say, €5,000 PAYE tax deducted on his P60. Say, he has overpaid €1,000 for the year through medical expenses or other claims. I think that what they are getting at is he will not get the refund of the €1,000 unless the actual PAYE of €5,000 has been paid over by his company to Revenue and is documented as paid. Otherwise he could get a refund on tax which has not yet been paid over by his company to Revenue. Very relevant in these challenging times.​

Separately on the matter of the PAYE credit itself, of course a prop. dir would be entitled to the PAYE credit if they had a non-proprietory position with sufficient income to justify granting it, e.g. another PAYE employment with an unconnected business or a state pension etc. and in that case the PAYE credit would be granted to it's full value or such lower amount as covers the relevant income.

I may be off on this but that's my reading of it.​

 

[Brendan Burgess]

Re: Finance Bill: PAYE Credit for Proprietary Directors: What does this statement mea

Hi Graham

That seems like a good explanation of it.

Brendan

 

[Hans]

Re: Finance Bill: PAYE Credit for Proprietary Directors: What does this statement mea

Thanks for that Graham that would expain it alright. I think it's the way the statement is related that makes it sound so complicated. I'm afraid to a lay person it was like 'urdu' to me. I read it in the business section of Times on Sunday and hoped there was a few bob in it for me. This forum has been such a help to me since I started up business a few years ago dont know what I'd do without all the help.