More tax relief available under scheme revamp
Q I have heard about the new tax refund scheme for start-ups. Can you give me some information on what this is and how I might avail of the tax relief.
A First-time entrepreneurs will be able to claim back tens of thousands in tax relief in order to offset start-up costs following a revamp of a scheme operated by the Department of Jobs, Enterprise and Innovation.
In addition, the Government has introduced a €10m competitive fund to support more start-ups around the country.
Half of the fund will go to Local Enterprise Offices.
Under the revamped tax scheme, PAYE workers who opt to start up their own business are entitled to income tax refunds of up to 41pc of their capital investment.
The 'Start-Up Relief for Entrepreneurs' (SURE) scheme will involve a cap of €100,000.
Launching the revamped scheme, Finance Minister Michael Noonan and Jobs Minister Richard Bruton said the initiative is important given that two-thirds of all new jobs are now created by start-ups.
Mr Bruton said the tax relief is important because in the past start-up companies have "fallen into pitfalls where cash runs out before their potential is fulfilled". Business owners will also be encouraged to calculate the level of tax they are owed from the State and use this information to support loan applications with their bank.
Through SURE, the Government is directly offering cash to people who are considering starting their own business, up to a value of 41pc of their total investment. "We are determined to ensure that as many people as possible are aware of this generous scheme so that more people start businesses and help create the jobs we need," he added.
The following is a basic example of how refunds under SURE are calculated.
John makes a SURE investment of €100,000 in 2015.
The €100,000 investment made by John can be used to reduce his taxable income in one or more of the previous six tax years.
John's Earnings & Tax Paid for the last 6 years [2009 to 2014], per his Forms P60, and current year, per his Form P45, are as follows:
2009 2010 2011 2012 2013 2014 2015
Earnings 80,000 80,000 100,000 75,000 60,000 30,000 30,000
Tax PAID 21,496 21,496 29,532 20,562 14,412 2,700 2,700
John opts to utilise his SURE investment of €100,000 in 2011. This reduces John's taxable income and tax payable for 2011 to Nil and results in a SURE refund of €29,532 calculated as follows:
•2011 Earnings: €100,000
•SURE Investment: €100,000
•Taxable Income: € Nil
As John paid tax of €29,532 in the 2011 tax year, and has previously not received a full or partial refund of tax paid in the 2011 tax year, he will receive a SURE refund of the full amount of the tax he paid in the 2011 tax year of €29,532.
Queries in relation to the operation of this scheme should be e-mailed to SUREadmin@revenue.ie or by telephone (01) 702 4107 or call in to your Local Enterprise Office.