ay 319 course outline 2012 2013[1] - national … 11 – ay 319 sandra mcdonald | tax 11 | ay 319...

Taxation 11 – AY 319

Sandra McDonald | Tax 11 | AY 319 of 14

Taxation II AY 319

- Course Outline -

Objective

The objective of this course is to provide further insights and appreciation of the impact of taxation on business and business decisions and to provide students with the necessary knowledge and understanding to determine the taxable income of business entities. The course will provide perspectives from both the un-incorporated (sole trader/ self employed/ partnerships/ employee etc) and the incorporated (Company). The course builds on Taxation I.

Lecturer Name Office Ext E-mail Ms. Sandra McDonald

[email protected]

Times Day Time Venue Lectures: Thurs 10-11 IT 250 Thurs 15-16 ENG-G047

Tutorials: To be announced

Overall Learning

Outcomes

Upon completion of this course you will: • Have an overview and understanding of the Irish taxation system and

legislation. • Understand the system of ‘Self Assessment’ • Understand and apply the rules determining liability to Income Tax i.e.

computation of tax payable • Understand the basis of assessment for single persons, married

couples and partnerships • Understand and apply the rules relating to losses for individuals and

companies. • Have an understanding of the basic principles of Capital Gains Tax,

including in particular the treatment of development land and shares. • Understand the special rules which apply to ‘close’ companies • Understand the operation of the PAYE/PRSI system • Have an understanding of the basic principles of VAT

Format The course comprises of two one hour lectures each week, plus one weekly 1-hour tutorial across 8 weeks.

Programme(s) 2BCA1, 3BC1, 4BC2, 4BC3, 4BC4, 4BC5, 1EM1, 1OA1



Course Material Content is available at http://blackboard.nuigalway.ie/

Core Text Irish Taxation Law and Practice 2012/2013, Irish Taxation Institute (A two volume set available in University Bookshop). 10th Edition Note: Students need their own copy

Supplementary Texts

Income Tax: Finance Act 2012, McAteer, Reddin and Deegan, Irish Taxation Institute. Corporation Tax: Finance Act 2012, Irish Taxation Institute The Taxation of Capital Gains: Finance Act 2012, Irish Taxation Institute Irish Income Tax 2012, McAvoy & Associates, Bloomsberry Professional The Taxation of Companies 2012, Feeney, Bloomsberry Professional Taxation Summary Finance Act 2012, Martyn and Reck, Ed: Cooney, Irish Taxation Institute. Taxation Policy & Practice (15th or 16th Ed), A. Lymer and L. Oats, Published by: Fiscal Publications, ISBN 978-1-906201-036 Economics of Taxation (8th or 9th Ed), S. James and C. Nobes, Published by: Fiscal Publications, ISBN 978-1-906201-074 The Students Tax Handbook, T. Conlon, Published by: McKeon Murray Publications, ISSN 1648-1076 Note: Supplementary texts are available in the Library and do not need to be purchased. Further reference material is available through: Taxfind: NUIG library online database

Assessment End of Semester Examination 100%

Workload hours

Credit weighting: 5 ECT Lecture hours: 24 Tutorial hours: 8 Independent study: 80 Examination: 2.5 hours Total Student Effort: 114.5 hours Problem material is assigned for each topic. It is important to attempt these assigned problems to test your understanding of the course material, and to develop a facility for problem solving. Questions being covered in tutorials should be attempted in advance of the tutorial.

Prizes PWC (Aggregate of Tax I and Tax II): €1,000 (2nd class grade 1 overall degree) Deloitte (Aggregate of Tax I, Tax II, Fin Acc II and Fin Acc III): €1,000 (2nd class grade 1 overall degree)



Agenda:

Part 1: Income Tax

Subject 1: Losses

• Relief for trading losses • Order of relief • Interaction of loss reliefs with other reliefs • Creating or augmenting losses with capital allowances • Loss relief on commencement • Relief for other (non-trade) losses

Readings

Gallery Chapter 17

Subject 1: Outcomes

• Calculate the final income tax liability of an individual after claiming all possible loss relief • Understand how a loss relief claim can displace other personal reliefs and tax credits • Identify the due date for making a claim for loss relief • Describe the different forms of loss relief • Calculate loss relief on commencement • Explain how Case I/II capital allowances may be used to create or augment a Case I/II loss • Describe the nature of losses under other miscellaneous Cases and Schedules

Subject 1: Study Material

Assignments: 17.1 and 17.2 Questions: 17.1 to 17.5 inclusive Revision Question: IT 12

Subject 2: Partnerships

• The nature of a partnership • The ‘precedent’ partner • The ‘relevant’ period • Apportionment of profits • Capital allowances and charges • Losses • Interest on capital • Partners salaries • Joining and leaving a partnership

Readings

Gallery Chapter 18

Subject 2: Outcomes

• Identify the existence of a partnership • Understand how partners are assessed for income tax • Calculate the amount assessable on each partner, including where there is a change in the

profit-sharing ratio



• Calculate the capital allowances and charges due to each partner, including where there is a charge in the profit-sharing ratio

• Explain the treatment of losses • Calculate the amount assessable on each partner where there is interest on capital and/or

salaries paid to partners • Explain the rules that apply where a partner joins or leaves the partnership

Subject 2: Study material Assignments: 18.1 and 18.2 Questions: 18.2 to 18.7 inclusive Revision Question: IT 13

Subject 3: Self Assessment

• Introduction to the Self Assessment System • ‘Pay & File’ system • Payment of tax and penalties for late payment • Tax Returns and penalties for late filing • Maintenance of records • Revenue Audits • Appeal Procedures

Readings

Gallery Chapter 10

Subject 3: Outcomes

• Understand the criteria to determine if an individual is a chargeable person • Explain what impact ‘pay and file’ obligations have for a chargeable person • Describe the two types of Revenue Audit and their implications for a chargeable person • Understand the mechanics of appeal procedures


Assignments: 10.1 and 10.2 Questions: 10.1 to 10.3 inclusive

Subject 4: Computation of Tax payable

• Pro-forma income tax computation • Personal and other tax credits, refundable and non-

refundable • Allowances/reliefs deductible at marginal rate • Tax rates and tax bands • Low income exemption and marginal relief • Universal Social Charge

Readings

Gallery Chapter 11



Subject 4: Outcomes

• Explain the difference between refundable and non-refundable tax credits • List the various tax credits and allowances for the 2012 income tax year and describe the

criteria for determining entitlement to relief for allowances/relief/tax credits • Explain how tax bands are applied in different circumstances • Calculate marginal relief where total exemption from income tax is not due • Calculate a net tax liability/refund • Explain how the USC operates • Understand the difference between definition of income for Income Tax purposes and that

for USC purposes



Subject 5: Taxation of Married Couples

• Basis of assessment for married couples • Relief in year of marriage • Taxation treatment in year of death • Effects of separation and divorce

Readings

Gallery Chapter 13

Subject 5: Outcomes

• Describe the different assessment options available to married couples • Calculate the tax relief available to couples in the year of marriage • Understand the tax impact which the death of a spouse has on the surviving spouse • Explain how a separated couple might qualify for joint assessment • Describe how divorced couples are taxed and what options for assessment are available

to them

Subject 5: Study Material Assignments: 13.1 Questions: 13.1, 13.2, 13.4 Revision Questions: IT



Subject 6: PAYE/PRSI System

• Operation and calculation of PAYE • Temporary Basis/Emergency Basis • Pensions • Operation of PRSI • PRSI rates • Employer duties • Application of PAYE/PRSI to benefits-in-kind

Readings

Gallery Chapter 23

Subject 6: Outcomes

• Understand how the PAYE system operates and describe its implications for an employer • Describe the difference between the ‘cumulative’, ‘Month 1’, ‘Temporary’ and Emergency

basis of taxation • Explain how the PRSI system operates and describe the different classes of PRSI • Understand the rules for determining the valuation of benefits-in-kind and how such benefits

are taxed through the payroll system


Assignments: 23.1 Questions: 23.1



Part 2: Capital Gain Tax

Subject 7: Introduction to Capital Gains Tax

• The charge to capital gains tax (CGT) • Disposal of an asset • Timing of Disposal • Chargeable/Non-Chargeable Assets • Chargeable person • Territorial scope of CGT • Connected persons and married persons • Due dates for payment of CGT and filing of

returns • Withholding Tax rules

Readings

Gallery Chapter 24

Subject 7: Outcomes

• Identify issues/transactions which give rise to a disposal of an asset for CGT purposes

• Appreciate the importance of the timing of disposal and ascertain correct timing of disposal

• Identify non-chargeable assets, i.e. those that are exempt from CGT • Explain the CGT treatment of wasting and non-wasting assets • Explain the implications of the residence, ordinary residence and domicile status of

an individual on the scope of CGT • Understand the remittance basis of taxation and identify the taxable portion of a gain

where only a portion of the sales consideration is remitted to Ireland • Understand the scope of CGT for companies • List the bodies which are not chargeable persons for the purposes of CGT • Describe the CGT treatment of transactions between connected persons • Describe the CGT treatment of married persons • Identify the due dates for payment of CGT and for filing of returns • Understand the general rules and procedures in relation to CGT withholding tax.


Assignments: 24.1 and 24.2

Subject 8: Computation of CGT on the sale of various assets

• Identifying sales consideration and acquisition cost • CGT treatment of incidental costs of acquisition

and disposal • Capital Grants

Readings

Gallery Chapter 25



• Application of market value • Relief for indexation • Enhancement expenditure • Treatment of transactions between spouses • Calculation of a CGT liability • Part-disposal rules • Calculation and use of capital losses • Non-wasting chattels

Subject 8: Outcomes

• Identify the amount of consideration or ‘deemed’ consideration and the amount of the allowable cost for CGT purposes

• Describe the CGT treatment of enhancement expenditure and calculate CGT liability where enhancement expenditure has been incurred

• Calculate gains after inflation relief on disposals and part-disposals of chargeable assets

• Calculate losses arising on the disposal of chargeable assets and show how loss relief may be utilised

• Describe the CGT treatment of married couples and the CGT implications of transfers between spouses

• Calculate marginal relief from CGT on non-wasting chattels and calculate losses arising on the disposal of non-wasting chattels

• Describe the implications of the €2,540 exemption limit for disposals of non-wasting chattels, which form part of a set


Assignments: 25.1, 25.2 and 25.3 Questions: 25.1 to 25.9 inclusive

Subject 9: Advanced computational issues

• Development Land • Share identification Rules • Bonus issues • Rights issues • Scrip Dividends • Bed and Breakfast transactions

Readings

Gallery Chapter 26



Subject 9: Outcomes

• Understand what is meant by development land and describe the onerous CGT provisions that apply to disposals of development land

• Calculate gains arising on the disposal of development land • Apply loss relief where there are disposals of development land • Calculate gains arising on the disposal of shares, whether acquired by direct

purchase, under a rights issue, a bonus issue or a scrip issue • Calculate gains arising on the sale of rights under a rights issue • Describe what is meant by a ‘bed-and-breakfast’ transaction and apply the relevant

anti-avoidance rules.



Subject 10 CGT reliefs

• Principal private residence relief

Readings

Gallery Chapter 27

Section 27.2 only

Subject 10: Outcomes

• Identify the circumstances in which principal private residence relief applies • Calculate the partial principal private residence relief which applies when a residence

has not been occupied by the claimant for all of the period of ownership • Understand the restrictions which apply when a principal private residence has

development potential


Assignments: 27.3 Questions: 27.1, 27.7 and 27.9 and Revision Questions CGT3 and CGT5



Part 3: Corporation Tax

Subject 11: Losses

• Utilisation of Case I/II losses as allowances and as credits on a value basis

• Utilisation of manufacturing losses • Utilisation of trade and non-trade charges • The order of set-off under the various Case I/II

provisions • Treatment of non-trade losses • Restriction of losses on late filing

Readings

Gallery Chapter 30


• Understand the treatment of ;

Ø losses under each of the Schedules Ø Excess Case V capital allowances Ø Trade charges Ø Non-trade charges Ø Capital non-development land losses Ø Capital development land losses

• Distinguish between the treatment of Case I/II excepted trade losses and relevant trade losses

• Compute corporation tax computations while taking account of the following: Ø Losses arising where there are periods of differing length Ø Losses arising in respect of various sources of income

• Claim loss relief in the correct order • Calculate unutilised losses available for carry forward • Restrict the reliefs available where returns are filed late


Assignments: 30.1 Questions: 30.1, 30.2, 30.3, 30.4 and Revision Question CT5



Subject 12: Introduction to Close Companies

• Introduction to Close companies • Close Company definitions • Impact of close company legislation on individuals

and companies • Calculation of close company surcharges

Readings

Gallery Chapter 32


• Understand the rationale for close company legislation and discuss its increasing significance in the context of modern tax rates

• Define a ‘close company’ and identify a close company • Describe the implications for participators/directors and close companies of engaging

in certain transactions • Calculate the surcharges on undistributed profits for close companies in receipt of

both trading income and professional service income


Assignments: 32.1 and 32.2 Questions: 32.1 to 32.6 inclusive and Revision Question CT6



Part 4: Value Added Tax

Subject 13: Introduction to VAT

• The transactional nature of VAT • The scope of VAT • The charge of VAT • Supply of moveable goods • Supply of services • Place of supply • Rates of VAT • VAT exempt supplies • The ‘Package or Cocktail Rule’ • The ‘Two-Thirds Rule’ • Input VAT deduction • Accountable persons • VAT group registration • Waiver of exemption • The taxable amount • ‘Deeming’ provisions

Readings

Gallery Chapter 3




• Explain when a charge to VAT arises • Describe the transactional nature of VAT • Describe what constitutes a supply of good and a supply of services • Understand and distinguish between a multiple supply and a composite supply • Describe the VAT treatment of the appropriate of goods for private use or for the

purposes of an exempt activity • Appreciate the importance of the place of supply • Identify the rates of VAT which apply in Ireland and the goods and services to which

they apply • Identify goods and services that are exempt from VAT • Distinguish between ‘exempt’ and ‘zero-rated’ • Explain the two-thirds rule • Identify those persons who are obliged to register for VAT • Discuss the advantages and disadvantages of voluntarily registering for VAT and

describe the factors that should be considered in deciding whether or not to voluntarily register for VAT

• Identify the circumstances where an application for group registration may be granted, and discuss the advantages and disadvantages of having a VAT group registration

• Explain what constitutes the taxable amount • Explain what is meant by ‘deeming’ in VAT legislation • Calculate a basic VAT liability for an accountable person


Assignments: 3.1, 3.2, 3.3, 5.1 and 5.2

Questions: 3.2



Other Information:

Readings are indicated above and are to be completed in advance of lectures. Additional readings may be given during the semester. This course is a combination of theoretical learning and computational problems. It is important to practice both types of question. It is important that you understand Taxation I before moving onto Taxation II. It is equally important to understand each chapter in Taxation II before moving onto a new chapter.

General:

This course outline is available on blackboard in pdf format. Should you have a visual disability and require the document in another format, please contact me and I will oblige.

ay 319 course outline 2012 2013[1] - national … 11 – ay 319 sandra mcdonald | tax 11 | ay 319...

Documents