Taxation 11 – AY 319
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.
Name
Lecturer
Times
Office
Ext
Ms. Sandra
McDonald
Lectures:
Tutorials:
E-mail
Sandra.M.McDonald@nuigalway.ie
Day
Time
Venue
Thurs
10-11
IT 250
Thurs
15-16
ENG-G047
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
Sandra McDonald | Tax 11 | AY 319
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Taxation 11 – AY 319
Course
Material
Core Text
Content is available at http://blackboard.nuigalway.ie/
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
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
Supplementary
Texts
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
Workload
hours
End of Semester Examination
100%
Credit weighting:
Lecture hours:
Tutorial hours:
Independent study:
Examination:
Total Student Effort:
5 ECT
24
8
80
2.5 hours
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)
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Taxation 11 – AY 319
Agenda:
Part 1: Income Tax
Subject 1: Losses
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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
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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
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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
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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
Sandra McDonald | Tax 11 | AY 319
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Taxation 11 – AY 319
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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
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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
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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
Subject 3: Study Material
Assignments: 10.1 and 10.2
Questions: 10.1 to 10.3 inclusive
Subject 4: Computation of Tax payable
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Pro-forma income tax computation
Personal and other tax credits, refundable and nonrefundable
Allowances/reliefs deductible at marginal rate
Tax rates and tax bands
Low income exemption and marginal relief
Universal Social Charge
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Readings
Gallery Chapter 11
Taxation 11 – AY 319
Subject 4: Outcomes
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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 4: Study Material
Assignments: 11.1 and 11.2
Questions: 11.1 to 11.4 inclusive
Subject 5: Taxation of Married Couples
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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
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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
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Taxation 11 – AY 319
Subject 6: PAYE/PRSI System
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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
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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
Subject 6: Study Material
Assignments: 23.1
Questions: 23.1
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Taxation 11 – AY 319
Part 2: Capital Gain Tax
Subject 7: Introduction to Capital Gains Tax
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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
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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.
Subject 7: Study Material
Assignments: 24.1 and 24.2
Subject 8: Computation of CGT on the sale of various
assets
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Identifying sales consideration and acquisition cost
CGT treatment of incidental costs of acquisition
and disposal
Capital Grants
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Readings
Gallery Chapter 25
Taxation 11 – AY 319
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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
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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
Subject 8: Study Material
Assignments: 25.1, 25.2 and 25.3
Questions: 25.1 to 25.9 inclusive
Subject 9: Advanced computational issues
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Development Land
Share identification Rules
Bonus issues
Rights issues
Scrip Dividends
Bed and Breakfast transactions
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Readings
Gallery Chapter 26
Taxation 11 – AY 319
Subject 9: Outcomes
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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 9: Study Material
Assignments: 26.1 and 26.2
Questions: 26.1 to 26.8 inclusive
Subject 10 CGT reliefs
•
Readings
Principal private residence relief
Gallery Chapter 27
Section 27.2 only
Subject 10: Outcomes
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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
Subject 10: Study Material
Assignments: 27.3
Questions: 27.1, 27.7 and 27.9 and Revision Questions CGT3 and CGT5
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Taxation 11 – AY 319
Part 3: Corporation Tax
Subject 11: Losses
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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
Subject 11: Outcomes
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Understand the treatment of ;
Ø
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losses under each of the Schedules
Excess Case V capital allowances
Trade charges
Non-trade charges
Capital non-development land losses
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
Subject 11: Study Material
Assignments: 30.1
Questions: 30.1, 30.2, 30.3, 30.4 and Revision Question CT5
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Taxation 11 – AY 319
Subject 12: Introduction to Close Companies
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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
Subject 12: Outcomes
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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
Subject 12: Study Material
Assignments: 32.1 and 32.2
Questions: 32.1 to 32.6 inclusive and Revision Question CT6
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Taxation 11 – AY 319
Part 4: Value Added Tax
Subject 13: Introduction to VAT
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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
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Readings
Gallery Chapter 3
Taxation 11 – AY 319
Subject 13: Outcomes
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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
Subject 13: Study Material
Assignments: 3.1, 3.2, 3.3, 5.1 and 5.2
Questions: 3.2
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Taxation 11 – AY 319
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.
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