Accelerated Loss Relief
On 23 July 2020, the Government announced the July Jobs Stimulus 2020, which provided for several measures to boost the economy and get people back to work. Legislation underpinning the tax measures announced in the July Jobs Stimulus, the Financial Provisions (Covid-19) (No. 2) Act 2020, was passed by Dáil Éireann and signed into law was by the President on 1 August 2020. The Act provides for:
- an accelerated repayment of corporation tax for companies that have incurred or expect to incur a trading loss in an accounting period that includes some or all of the period from 1 March 2020 to 31 December 2020; and
- a new once-off income tax relief measure for self-employed individuals who were profitable in 2019 but, as a result of the Covid-19 pandemic, incur losses in 2020.
Temporary acceleration of corporation tax loss relief Accelerated corporation tax loss relief can be claimed by previously profitable companies, that incur trading losses in accounting periods affected by the COVID-19 pandemic. To qualify for this relief, the company must be tax compliant and must have incurred or expect to incur a trading loss in an accounting period which includes some or all of the period from 1 March 2020 to 31 December 2020. The maximum amount of the estimated loss which qualifies for early carry-back against the taxable profits of the preceding period is 50%.
Temporary income tax relief for self-employed individuals carrying on a trade or profession Self-employed individuals whose trade or profession was profitable in 2019 but who incur losses in 2020 can make a claim to have those losses, and certain unused capital allowances, carried back and deducted from their profits for the tax year 2019. A €25,000 limit applies on the total amount of losses and capital allowances that an individual may carry back. An individual who incurs, or who reasonably expects to incur, a loss during 2020, can accelerate the timing of the income tax relief by making an interim claim based on an estimate of the amount of the relief that will be available to the individual.
Irish Tax Institute Representations
The Institute is in ongoing engagement with Revenue regarding the accelerated loss relief measures announced as part of the July Jobs Stimulus.
On 28 July 2020, the Institute made a submission to Revenue with some immediate observations and questions on some of the measures in Financial Provisions (Covid-19) (No.2) Bill 2020 (as initiated), in particular the accelerated loss relief measures announced as part of the July Jobs Stimulus.
On 19 August 2020, the Institute made a submission to Revenue regarding the tax measures in the Financial Provisions (Covid-19) (No. 2) Act 2020, seeking further clarifications relating to the Tax and Duty Manuals (TDM) on the July Jobs Stimulus tax measures, including the accelerated loss relief TDMs, Corporation tax: Accelerated loss relief for companies adversely impacted by Covid-19 restrictions and Loss relief for self-employed individuals adversely impacted by Covid-19 restrictions.
At a meeting of the TALC Direct/Capital Taxes sub-committee on 3 September 2020, the Institute sought confirmation that the iXBRL accounts for the preceding accounting period do not need to be filed at or before the point at which an interim claim for accelerated corporation tax loss relief is made, under the measures in the Financial Provisions (Covid-19) (No.2) Act 2020. Revenue referred to the guidance provided on the COVID-19 information and advice webpage in relation to iXBRL filing and refunds and noted that this current practice applies equally to interim loss relief claims. Revenue’s website notes that: “The processing of repayments and refunds will also be prioritised in the absence, due to the current circumstances, of iXBRL accounts (where applicable) as part of the CT1 for accounting periods ending on or after March 2019, subject to appropriate checks in selected cases. The iXBRL accounts information should be returned at the earliest opportunity.”
We will continue to engage with Revenue on these matters and we will update members on this webpage, on Twitter and in TaxFax.
Revenue Resources and Documents
Temporary acceleration of Corporation Tax loss relief webpage
August 2020 – TDM – Corporation tax: Accelerated loss relief for companies adversely impacted by Covid-19 restrictions
Temporary Income Tax relief for self-employed individuals carrying on a trade or profession webpage
August 2020 – TDM – Loss relief for self-employed individuals adversely impacted by Covid-19 restrictions
August 2020 – TDM – Averaging of Farm Profits
August 2020 – Revenue press release providing further information on tax measures outlined in July Jobs Stimulus
Government Resources
Department of the Taoiseach
July 2020 – July Jobs Stimulus