That can absolutely happen when investing in individual companies, once they have your money there isn’t anything extra in it for them to process the paperwork, other than keeping you happy for future funding rounds. Even with the best of intentions these are small companies where things like this may not get priority. Investing directly in micro cap companies is not for the causal investor, EII or otherwise!Isn't there some on going issue regarding the paperwork each company needs to complete with the tax man, before you can get your tax rebate?
Open to correction but I recall hearing there were people waiting a long time for their rebate, which can be compounded when there are multiple companies involved in a fund?
But these are extremely restrictive, and very limited circumstances, in practice, since the rules , totally changed in the ‘90’s.Deed of covenant
In most cases direct investments in companies like these are because others have said no, but I think it’s a little unfair to put this down to the companies being ‘dogs dinners’, that the owners are completely incompetent or out to steal your money.A wise man once said to me re EIIS/BES:
1) These are companies to whom everyone else has said “No”.
2) When you invest a hundred grand in one of these dogs’ dinners, get forty grand back in tax relief, and then lose the other sixty grand when these desperate fools to whom everyone else has said ‘No’ either run the business into the ground or steal your money, you’ve just lost sixty grand.
Absolutely! To be clear I’m in no way suggesting that anybody should have micro Irish companies in their portfolio for diversification. It’s for high net worth individuals who have money to spare and would like to support the growth of Irish businesses.Proper diversification doesn’t need to involve EIIS or small Irish businesses.
Are my sums correct?But these are extremely restrictive, and very limited circumstances, in practice, since the rules , totally changed in the ‘90’s.
Also limited to 5% of your gross income to an adult over 65,
And that amount, is further limited to a 20% refund, of that restricted amount.
The only real circumstance, where there is meaningful benefit of a covenant, is in the case of helping out, incapacitated minors.
Not possible unless the beneficiary is an incapacitated minor.Are my sums correct?
Gross salary of say 100k
5% is 5k
Tax refund is 20% to both you and the covenantee so 1k each?
If those sums are correct then its worth doing in my book.
This is not correct. A covenant can be made to any person over age 65.Not possible unless the beneficiary is an incapacitated minor.
Hasn't been for almost 30 years.
Thanks for clarifying. You make a good point.This is not correct. A covenant can be made to any person over age 65.
It is very beneficial to any person taxed at 40% with a parent on income of state pension only. The parent has scope to have extra earnings tax free up to the tax exemption level of 18000 euro. For every 1000 euro made by covenant the parent gains 200 euro in tax refund and the covenantor makes a saving of 200 euro in income tax savings and also saves USC at their marginal rate (if they are on 8% this is an extra saving of 80 euro).
This is a viable tax saving measure for many people.
As an accountant, im surprise that you thought this tommy.Not possible unless the beneficiary is an incapacitated minor.
Hasn't been for almost 30 years.
A very viable tax saving measure and one which I avail of.This is not correct. A covenant can be made to any person over age 65.
It is very beneficial to any person taxed at 40% with a parent on income of state pension only. The parent has scope to have extra earnings tax free up to the tax exemption level of 18000 euro. For every 1000 euro made by covenant the parent gains 200 euro in tax refund and the covenantor makes a saving of 200 euro in income tax savings and also saves USC at their marginal rate (if they are on 8% this is an extra saving of 80 euro).
This is a viable tax saving measure for many people.
Yes, I have availed of this for about 15 years. The parent can gain extra tax free income and still remain below the means tested level for the receipt of fuel allowance.A very viable tax saving measure and one which I avail of.
I haven't seen it done in 30 years Arthur. I'm not that sure that many OAP recipients need the additional money while in most cases their working-age children certainly do.As an accountant, im surprise that you thought this tommy.
Many threads on AAM related to providing a DOC to an elderly parent, for example.
In many other cases the parents do indeed need extra income and their offspring have very large incomes taxed and USCed at rates of 48% and more. In many cases these offspring have paid off their mortgage and have working age children themselves.I haven't seen it done in 30 years Arthur. I'm not that sure that many OAP recipients need the additional money while in most cases their working-age children certainly do.
You'd be surprisedI'm not that sure that many OAP recipients need the additional money while in most cases their working-age children certainly do.
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