I thought that if non-paye income was under €5k you could use cash basis or conventional.If the amounts are as insignificant as the figures you have given, then I would report the income when it is received.
A business or company would not normally operate on a cash basis but if you are earning a small extra amount, then yes cash basis would be appropriate IMHO
Read this https://www.revenue.ie/en/tax-profe...ains-tax-corporation-tax/part-04/04-07-01.pdf
With figures of that size I think you might have to use invoices amounts, but I'll leave any further advice to more experienced members of this forum to answer.Apologies all.
The figures I used above were to illustrate the example. The figures are well above €5,000 and are cash payments.
Example:
In 2020 I sent out invoices total €100,000 for work in 2020.
I receive payments total €80,000 euro. This is made up of invoice payments from 2019=€30,000 + invoice payments from 2020=€50,000
Do I pay tax for 2020 on the €80,000- money earned in 2020 or €100,000 amount invoiced in 2020.
I hope this clarifies the question.
If you were earning and billing €10m and weren't getting paid, you have bigger issue than tax.let's say you sent invoices for 10 million
and the tax liability sake of argument was 1million
And you paid 1 million in tax and then didn't get paid.. you now lost 11 million
So i would guess it's all based on monies received .. imho.. but then what do i know
As my accountant advised me when I became self-employed: you can choose the date on the invoice; you can't choose the date it gets paid.The standard way of accounting for income is on the date of invoice as advised by your accountant. ...........
Basically income tax is based on income when invoiced, you might find a work around.
I cannot believe that that you think you pay tax on revenue as opposed to profit.Thank you all for your replies.
From my point of view, I can not afford to pay tax on money I have not received.
Can I not just pay tax on the money that was paid to me in each year? These are non-cash payments and through a billing company with full traceability. There is no hidden cash/tax avoidance/undeclared income at all.
Can I make an arrangement with the revenue/accountant for this to happen?
If I pay tax on what I receive each year then there is no need to over-complicate things with impairment allowance/bad debt write and applying for rebates etc!
Pro forma invoicing has been illegal here for 20 years.The standard way of accounting for income is on the date of invoice as advised by your accountant.
You can account for VAT on a monies received basis by applying to Revenue for their approval, which may be granted if your turnover is below €2m .
I do not think that there is any possibility to account for Income tax on a monies received basis.
In the real world may small traders issue pro-forma invoices initially then issue the actual invoice on receipt of payment. Of course a picky supplier may refuse to pay on that bias.
Basically income tax is based on income when invoiced, you might find a work around.
Can you explain that please. (this is intended sarcastically)You do not pay Income Tax on the amount invoiced, you pay Income Tax on your Trading Profit.
This is not at all the same as your turnover or invoiced sales.
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