Gerald Nash
Question:346. Deputy Ged Nash asked the Minister for Finance his plans for an income tax relief for self-employed persons to provide liquidity; and if he will make a statement on the matter. [20486/20]
View answerThursday, 30 July 2020
Questions (346)
Written answers
The Financial Provisions (Covid-19) (No. 2) Bill 2020 contains a measure to provide for a new once-off income tax relief for self-employed individuals carrying on a trade or profession who were profitable in 2019 but, as a result of the Covid-19 pandemic, incur losses in 2020. A key objective of this measure is to provide a cash-flow boost to individuals carrying on a trade or profession as sole traders or members of partnerships.
It will allow such individuals to claim to have those losses (and certain unused capital allowances) carried back and deducted from their profits for the tax year 2019. This will reduce the amount of income tax payable in respect of those profits. Furthermore, because many people have paid preliminary tax for 2019 they will get a refund of tax which will be a cash flow boost.
Losses will be ring-fenced to the same trade only and the total amount of losses that can be utilised per trade will be capped at €25,000. Therefore, depending on the marginal rate of income tax that applies to the self-employed person, the maximum cash-flow benefit per business will be either €5,000 (20% rate) or €10,000 (40% rate).
The provisions also give an option to farmers who incur a loss in 2020 to step out of income averaging for the tax year 2020, notwithstanding that the farmer may already have stepped out of income averaging in one of the four preceding tax years.
Self employed persons may also be able to benefit from a number of the other non-tax measures contained in the July Stimulus Package announced last week.