Newstalk
Newstalk

19.14 20 Oct 2020


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Some businesses may end up paying tax on funds received under the new COVID-19 Restrictions Support Scheme, Revenue has said.

The tax collectors told Newstalk that money given to businesses would be "a reduction against deductible trading expenses".

That means it would lower the amount of expenses businesses can claim back to reduce their tax bills.

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Deductible expenses include things like employees' pay, rental bills, and other costs directly related to the running of a business.

Firms are entitled to claim those costs back by off-setting them against their trading income.

That serves to reduce their tax bill by making the firm's taxable profit lower.

However, Revenue said additional tax would only be payable in cases where the business is profitable within its financial year - meaning many struggling firms are unlikely to receive extra bills.

The support scheme was announced by Finance Minister Paschal Donohoe in last week's budget.

It will see cash advanced to businesses who have to close premises because of a move to level three, four or five restrictions.

A payment of up to €5,000 per week will be made, based on a businesses 2019 average weekly turnover.

Firms can apply to the Revenue Commissioners for a cash payment in respect of an advance credit for trading expenses for the period of restrictions.

Revenue said: "The scheme will operate on a self-assessment basis and is conditional on the taxpayer continuing to file all tax returns on time, holding a current tax clearance certificate and on the intention to resume the business when the restrictions are lifted. Details of taxpayers availing of the scheme will be published on the Revenue website at a later time."

Reporting by Gavin McLoughlin


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