Income only 300 euro per week, will I have to pay tax

T

Teresa

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My fiance has a retail business and in order to survive the two partners only took an income of 300 euro each per week, will they have to pay tax on this amount at the rate of 20%, or is there any exemption for low drawings, very worried as we don't have the money,
Teresa
 
Hi Teresa,

Just to clarify, is the business structured as a partnership and not as a limited company?

For partnerships, tax is payable on the partnership profits. This is defined as sales income less expenses (not including the partners wages). So they are not taxed on the €300 per week. They are taxed on the partnership profits (if any). Has the business been making any profits?

If the business is set up as a limited company, the two business partners will pay tax on the actual wages they receive from the company i.e the €300 per week.

The amount of tax that each person pays depends on their tax credits. If for example, a person's only tax credit was the "single person tax credit" which is worth €1,830, they could earn €9,150 before becoming liable to income tax. However they would still be liable to pay the minimum PRSI payment for self employed persons which is €253 p.a.
 
thanks so much, how did you get to the figure of 9150, and then is it 20% on the balance. I have left everything with the accountant but am trying to have a rough idea so I am not completly shocked when he comes back with the figures, I did know about the 3% min prsi. Thanks T
 
does anyone know if there is a minimum you can earn that is tax exempt? T
 
Teresa said:
does anyone know if there is a minimum you can earn that is tax exempt? T
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The minimum you can earn without paying tax will depend on your tax credits and these are different for everybody.

You take your tax credits and divide that number by 20% to give you the salary you can earn without paying tax. For example, if you earned a gross salary of €9,150 in 2008 and you had the single person tax credit of €1,830 you would be taxed as follows:

Gross salary
€9,150

Tax at 20%
€1,830 (9,150 x 20%)

Minus single person tax credit of €1,830

Total tax payable ZERO

(9,150 x 20% tax rate minus tax credit of 1,830 = zero)
 
thats brillent, i am so stupid as I was just taking the tax free credit off the total and dividing that by 5, I have been searching about this all day and you and this site has been so useful for me. Its also nice to know that there are so many other businesses in the same boat and worse, its a nice support in a werid kind of way.
Thanks again T
 
I have all my returns filed and paid thank god, got good accountant, an expense I believe that can be well worth the money. I would just like to thank and praise this site for all its info. Teresa
 
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