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Corporation Tax Charge in Management Fees

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  • 13-04-2008 8:48pm
    #1
    MsFifers
    Registered Users Posts: 997 ✭✭✭


    Hi
    Our Management Company AGM will be held this week, and for the first time a "corporation tax" charge is outlined in the service charges. The charges in previous years were for all the usual things like insurance and waste collection etc. There was no tax charge. But this year there is a corporation tax cost listed not only for this year, but also for 2005 and 2006 - so its increasing the total service charge quite considerably.

    Are Management Companies liable for corporation tax? Surely as they aren't "trading" they aren't?! Any registered "profit" is just the surplus income due for the sinking fund and upcoming maintenance costs.

    I got that book "The Essential Guide to Apartment Living in Ireland" and there is no mention of corporation tax in it. If anyone could provide any clarification I'd be really grateful.


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    #2
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,505 Mod ✭✭✭✭johnnyskeleton


    Likewise, I would have thought that corporation tax is only charged on profit. IIRC it is charged on Net profit prior to distributions. So, I suppose if you have paid more money into the company than it has paid out then technically this is a profit. Silly way to run the company though.


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    #3
    RoryW
    Registered Users Posts: 1,048 ✭✭✭RoryW


    I would have thought that no CT should apply. There is a phrase called "mutual trading" and this is what the Revenue Website says

    http://www.revenue.ie/services/foi/s16_2001/pt_36.pdf

    Extracts from above link

    1. A surplus from mutual trading is not liable to tax.

    3. Companies of the following types are normally non-trading concerns outside
    the scope of Case I of Schedule D.-

    (a) Ordinary trade or professional associations incorporated under the
    Companies Act 1963, being non-trading bodies formed to protect the common interests of members and deriving their funds from annual
    subscriptions, etc., paid by members.

    (b) Companies which conduct a members club for social or recreational
    purposes (see par. 4 to 8 of T.I. 1.0.2).

    (c) Other bodies incorporated for non-trading objects, and deriving their
    funds wholly or mainly from members’ subscriptions or from
    donations towards such objects


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