October 31 can be a scary time for taxpayers as well as for children, as it is the deadline for filing your Irish income tax return. Preparing and filing your annual self-assessed tax return can be a daunting task for any taxpayer. The Form 11 for 2018 is a staggering 42 pages long, with 15 panels and over 900 data points for the anxious taxpayer to complete, or wonder if they need to be completed.
Fear not, as our step-by-step guide to completing the Form 11 will make the task easier, and may even help you to save some tax along the way.
Due to the length of the Form 11, unfortunately not every line of it is covered in our guide.
We have instead focused on the main areas that taxpayers have difficulty understanding, highlighting the various tax reliefs/exemptions that you may be entitled to, and the main differences to watch out for in this year's Form 11.
As always, if you have invested in complex instruments such as foreign life insurance policies, or wish to claim property-based incentives, you should engage with a professional tax adviser.
Paper or Online?
The 2018 self-assessment Pay and File deadline is October 31, 2019, just over a week away. The paper version of the Form 11 can be found at revenue.ie.
Top tip: If you are running out of time to get your tax affairs in order before this date, you could pay and file through the Revenue Commissioners' Revenue Online Service (ROS). The deadline is extended until November 12, 2019, if you choose this facility. It is important to note that this extended deadline is only available where you are paying and filing online.
As an added incentive, ROS calculates the taxes due for you, as opposed to you crunching the numbers on the paper version. The following must be completed online on or before this deadline:
• File the Form 11;
• Pay any balance of income tax for 2018;
• Pay your preliminary income tax for 2019.
So, if you need to avail of the extended deadline and have not previously registered for ROS services, then you need to act quickly.
You should allow eight working days approximately to complete the registration process so that you can log on to ROS and be in a position to pay and file by the filing deadline.
For some self-employed individuals, it is mandatory to pay and file on ROS, even though they may have received a paper version of the Form 11 from the Revenue Commissioners.
How do I register for ROS services?
In order to register for ROS, click on the 'Register for ROS' link on the Revenue Commissioners home page (revenue.ie), and follow the below steps:
1. Apply for your ROS access number (RAN)
Once applied for, your RAN will be sent out by post to your chosen address. You should allow two to three working days for this to issue.
2. Apply for your digital certificate
You can only complete this step when you have received your RAN by post. Enter the RAN number and complete all relevant sections. A ROS system password will be posted to your chosen address - again, you should allow two to three working days for this to issue.
3. Retrieve your digital certificate and view
Using your ROS system password, you can retrieve and download your ROS digital certificate. You should name the certificate, and allocate a password to the document.
Once you have retrieved your ROS digital certificate, you can access ROS to file your return, pay your tax and view your account. If this is your first time filing a self-assessment Form 11 tax return, you will need to make sure you are registered for income taxes by following the e-registration process on the ROS website, or by completing the Form TR1, which can be found at revenue.ie.
How can I pay my tax liability using the ROS services?
The Revenue Commissioners accept the following methods of payment from you:
1. ROS debit instruction (RDI)
You will only need to do this once and it will allow you to submit a payment immediately. The amount of the payment and when the payment is made will be determined solely by you.
2. Credit and debit cards
Payments using your credit/debit card are limited to card providers Visa and Mastercard. The Revenue Commissioners absorb the charge where you use these cards.
3. Single debit instructions (SDIs)
You can set up an SDI using ROS, which allows you to make one-off payments directly from your bank account (which accepts direct debits).
Top tip: Always remember to have funds in the bank account you are using to pay your tax liabilities, and that it is a current account in the Single European Payments Area (SEPA), not a deposit account.
What is preliminary tax for 2019?
It is essentially a payment-on-account of your 2019 tax liability. If you are a self-assessed taxpayer, the amount of preliminary tax you must pay for 2019 must be equal to or exceed the lower of:
• 90pc of your final liability for 2019; or
• 100pc of your final liability for 2018; or
• 105pc of your final liability for 2017 (only available where preliminary tax is paid by direct debit, and does not apply where the tax payable for 2017 year was nil).
What if I miss these deadlines?
If you do not meet the Pay and File requirements, interest and penalties will be imposed by the Revenue Commissioners.
The good news is that the earlier you file the return after the deadline, the lesser the interest and penalties. If the 2018 return is filed by December 31, 2019, the surcharge penalty is 5pc of your income tax liability for the year, subject to a maximum amount of €12,695.
If the return is filed after December 31, 2019, the surcharge penalty is 10pc of your tax liability, subject to a maximum amount of €63,485.
Remember, though, that the surcharge liability is calculated without a credit for preliminary tax paid on account.
Also, in calculating the surcharge, a credit is allowed for PAYE tax deducted at source, unless the chargeable person or their spouse/civil partner is a company director.
When filing online, after the filing deadline has passed, ROS will automatically calculate and apply the relevant surcharge. You can appeal for the late submission surcharge to be reversed, for example in a case where there was a major failure in a computer system or a serious illness.
The interest rate on overdue tax in respect of income tax and capital gains tax is currently 0.0219pc per day, and this may be backdated to October 31 in the previous year.
Does non-payment of my Local Property Tax (LPT) have an impact on my tax return?
If you file your Form 11 on time but at the date of filing, you have failed to: • Submit your LPT return; or • Pay all outstanding LPT liabilities (including the 2019 liability); or • Enter into an agreed payment arrangement;
Then an LPT surcharge of 10pc will be added to your final tax liability for 2018.
Where the LPT is subsequently brought up to date, the surcharge will be capped at the amount of the LPT liability involved.
As you can see, it can prove quite costly if your LPT obligations have not been met, so ensure you get your LPT affairs up to date.
I made a mistake on my tax return, what can I do to fix it?
Top tip: If you made a mistake on your tax return and the Revenue Commissioners discover the error during an audit, they can impose penalties, even if you try to explain that you were unaware of the relevant tax laws.
The Revenue Commissioners will classify the mistake as careless behaviour, and the level of penalty that will apply will depend on whether the mistake has significant tax consequences.
The penalties could be reduced if you 'go on the front foot', notify the Revenue Commissioners of the errors, and fully cooperate with them to work out the additional tax due. You should always consult a professional tax adviser to help you with any complex tax matters.
Could I be audited?
Self-assessment returns are subject to audit by the Revenue Commissioners. Tax law provides that the Revenue Commissioners may make any inquiries or take such actions as are considered necessary to verify the accuracy of a return.
Tax law provides for both civil penalties, e.g. publication in a list of tax defaulters, and criminal sanctions for:
• Failure to make a return;
• Making of a false return;
• Facilitating the making of a false return; or
• Claiming tax credits, allowances or reliefs which are not due.
In the event of a criminal prosecution, a person convicted on indictment of an offence may be liable to a fine not exceeding €126,970, and/or to a fine of up to double the difference between the declared tax due and the tax ultimately found to be due, and/or to imprisonment.
TOP TIP: Although you do not need to submit any supporting documentation to Revenue with your tax return, you should retain all the paperwork and electronic records relating to your 2018 return for six years.
I'm a PAYE worker and have received for the first time some small amounts of non-PAYE income, and I want to claim some tax reliefs. do I really need to complete the Form 11?
If you had a PAYE source of income and your net assessable non-PAYE income was less than €5,000 in 2018, and this income was coded against your PAYE tax credits or fully taxed at source, you are not regarded as a self-assessed taxpayer (known as a chargeable person) for 2018, provided your gross non-PAYE income before expenses does not exceed €30,000. This means that you would not need to complete the Form 11. You should instead file the shorter Form 12 (half the length of the Form 11), which allows you to report your income and claim tax credits, allowances and reliefs for 2018.
If you are a company director, owning more than 15pc of the shareholding in a company, you are required to file a Form 11 each year, even if all your income is PAYE income.
You can fill out a paper Form 12, which can be found at revenue.ie. Alternatively, you can complete the eForm 12; this electronic form is available through the Revenue Commissioners' MyAccount service as it is much easier to complete than the paper version.
The eForm 12 does not provide for returning capital gains tax details.
You must fill out a separate capital gains tax return called the Form CG1 in this case, which is also available at revenue.ie.
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