Patent Royalty Income

Patent Royalty Income

The government recently abolished the tax free status of royalty income from a registered patent.This means that if you are a marginal rate taxpayer,that you could suffer a punative rate of 52% (inclusive of PRSI and USC)on this income.However all may not be lost.

We have dealt with cases where the owner of the patent,can still retain some of the tax benefits on this type of income.

Depending on the circumstances, we can examine your situation if you are in receipt of Royalty income from a patent,and determine if you can qualify for the tax benefits that are still available.Contact us for a free consultation on the matter and we can advise you within 2 weeks of our meeting.

Sailing too close to the Wind

Sailing too close to the wind”

Despite the difficult economic times we are living in at the moment,there are lots of companies who have carefully managed their finances and find themselves in the unique position of having excess cash on their Balance Sheets.While this augers well for the business concerned and provides a vital source of finance that is not currently available from the banks,it can have its downsides in that it leaves the company open to predatory actions form various sources.

Typical examples of this are:

-Mischievous claims for compensation from third parties,

-Requests for discounts from customers on supplies of product/service

-Wages increases from employees and Trade Unions,

-Denial of rent reductions from landlords,

- Pressure from minority shareholders to declare dividends.

- Pressure from loan creditors for repayment or denial of a discount for early repayment.

-Loss of competitiveness due to overcapitalisation of the company.

-High risk of Revenue Audit,given that the business actually has cash.

Companies that like to boast of their cash reserves can sometimes “sail too close to the wind” and may find themselves becoming the victim of their own successes.While one can never complain of having too much cash in their bank accounts,its present status as a much desired commodity,means that there are plenty of hungry wolves out there ready to pounce at the first opportunity. Its very important that the business retains as much cash as possible so that it can finance its development and growth in these difficult and uncertain times.

To alleviate this unusual situation ,GBW have designed a structure which allows the company to retain its cash reserves in full,while at the same time,it does not have to disclose the fact in the Annual Return to the Companies office.A search of the company accounts at CRO will not disclose the cash reserves.There is no change to the ownership and the company will still continue to enjoy the benefit of limited liability and the 12.5% rate of Corporation tax.The structure is fully approved and in operation by several companies already.

Contact us for more details.

Reduction in Social Welfare Payments

The 4% decrease in Social Welfare payments includes a decrease of €8 per week in occupational injury, health and safety and disability benefits from 1st January 2011. The same reduction will be applied to the maximum and minimum rates of maternity and adoptive benefits.

Merger

On the 14^th February 2011, O’Callaghan Lotty and GBW formerly merged their business. The new firm will have two offices, one in Cork and the other in Dublin. All contact details will remain the same. The merger of these practices is another positive step forward in a strategy to be one of the best providers of financial, strategic and tax advisory services in Ireland. We have now an excellent team of skilled and experienced professionals which will enhance the existing offerings of both firms while increasing our combined breadth and depth of knowledge. Our new enlarged practice enables us to compete for more business in the family owned, owner manager companies sector as well as leveraging our niche services such as management consultancy and insolvency, where we already have a strong market position”. As part of the merger, it sees Kevin O Callaghan retire from practise. Kevin said “This merger makes a lot of sense for our clients, as it provides access to the size and service range of a national firm, combined with the personal service and knowledge of a local firm. I believe I am leaving the Practise in very good hands”. Jim Butler of GBW will be joining Alan Lotty in the Cork office; Jim said “I am delighted with the completion of this merger. The merged business will offer our clients the combined expertise of both firms and an enhanced range of services. Both practices are committed to strong growth strategies, and the merged business will be positioned to compete for new business on a bigger scale for Tax, Audit and Assurance work. There is a great fit with the expertise in both firms”. The new firm will be known as GBW O’Callaghan Lotty, and we look forward to meeting with you in the coming weeks and months.

Universal Social Charge

A new Universal Social Charge (USC) has been brought into law with effect from 1 January 2011, and will replace the Income Levy and the Health levy. Employers are responsible to deduct this charge from employee pay at the relevant rate starting January 2011

Budget Review 2010

A lot of headlines dominated the Budget of 2010 which had its pain for all but some new reliefs going into 2011. Access our full 2010 Budget Review

Medical Practitioners – Tax Planning Opportunity

We have identified a method of saving  significant amounts of tax by changing your practice to a company. It is fully tax compliant and approved by qualified accountants and is available to all types of medical practice and hospital consultants.

Savings can be made in the current Income Tax year if you act now. For a free consultant (by appointment only) contact David at dgillett@gbw.ie or James at jbutler@gbw.ie