Pearse Doherty
Question:363. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of measures implemented in sections 10 and 11 of the Financial Provisions (Covid-19) (No.2) Bill 2020. [20842/20]
View answerThursday, 30 July 2020
Questions (363, 364)
Pearse Doherty
Question:364. Deputy Pearse Doherty asked the Minister for Finance the estimated quantum of tax rebate due to sole traders or members of partnerships, disaggregated by intervals of €1,000, under the provisions of Section 10 of the Financial Provisions (Covid-19) (No.2) Bill 2020. [20843/20]
View answerWritten answers
I propose to take Questions Nos. 363 and 364 together.
Section 10 of the Financial Provisions (Covid-19) (No.2) Bill 2020 makes a number of amendments to the Taxes Consolidation Act 1997 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.
These provisions will allow such individuals to claim to have those losses (and certain unused capital allowances) up to a maximum amount of €25,000 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.
The provisions will also allow for claims for the relief to be made on an interim basis to give a cash flow boost to those taxpayers during 2020.
Finally, the provisions 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.
The estimated cost of this measure is €150 million in 2020.
With regard to the Deputy’s question as to the estimated cost of the measure in Section 11 of the Bill, companies are already permitted to carry back losses against the taxable profits of the previous accounting period. Section 11 provides for a temporary acceleration of this existing relief, so there is no incremental cost to the Exchequer in the medium term. However, it will provide much needed cash flow cash flow support of up to €450 million in a relatively simple and straightforward manner, thereby helping viable and tax compliant companies to continue trading.