Income Tax Returns 2015 – Useful Tips

Accountants and Tax Practitioners around the country are busy in the run up to the Income Tax filing deadline on 10 November 2016.

We have found that the two most topical issues when preparing 2015 Income Tax returns are the application of the “Guillotine” Provisions and the Order of Set-Off of Losses and Capital Allowances.

“Guillotine” Provisions

In the 2015 tax returns, it is important that individuals assess whether the capital allowance “guillotine” provisions apply to tax incentives on their books.

The “guillotine” provisions kicked in at the end of 2014 where the tax life of an accelerated property had already expired. However, certain allowances are permitted to be carried forward to 2015 where the tax life had not yet expired.

When self-assessing whether the “guillotine” provisions apply when preparing the 2015 tax return, we recommend that a review is carried out to determine the nature and content of capital allowances and losses forward to 2015. Reliefs such as Section 23-type-relief and Section 50 (Student Accommodation) are not affected by the “guillotine” provisions so it is vital that the content of losses forward is reviewed in this respect. We have found that the review can be a fruitful exercise for clients as it quite often results in the preservation of allowances and losses that were thought to have been lost by the provisions.

We should also point out that allowances that were previously “restricted” as a result of the application of the High Earners Restriction (known as Section 485F allowances) are not affected by the “guillotine” provisions. These allowances are attractive in that they are available against total income. It is therefore crucial that the allowances are separately identified in the Form 11 for 2015.


Order of Set-Off of Losses & Capital Allowances

Another important matter for practitioners to be mindful of when preparing the Income Tax returns is the order of set-off of losses and capital allowances. Revenue eBrief No. 24/16 provides some useful guidance in this regard.

You will find a brief summary of the order of set-off as follows:

  1. Case V capital allowance forward (Non-Specified)
  2. Case V capital allowances forward (Specified)
  3. Current year Case V capital allowances (Non-Specified)
  4. Current year Case V capital allowances (Specified)
  5. Case V losses forward (Non-Specified)
  6. Case V losses forward (Specified) (e.g. Section 23 relief)

If you require any assistance or have any queries in relation to the above please get in contact.

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