Registered AITI Tax Qualification Info and Questions

TaxStudent

well at least they are finished now until August!!!!!

TaxStudent

yes go with the exemption.... part 2 is very doable from scratch

noveltea

I am glad they are over. I thought Personal Tax was the hardest. I went with the HER for Question 4. The questions were quite hard.

I found VAT quite hard too. The VAT on property question threw me a bit.

However I was very happy with how the other two exams went. I found the classes prepared me well for the last one. I will defo be back in August for Personal Tax.

Legend100

noveltea wrote: »

I will defo be back in August for Personal Tax.

Don't write yourself off just yet....when I sat them in 2011, I was convinced i was repeating personal, was sure I got no more than 30% but got 50 on the button, positive thoughts!

AITI Student

Hi Guys,

Part one student here assignment due in 10th of June have 60% of it completed but two small stumbling blocks and cant seem to find infomation to fully back up what i think, hopefully someone can advise.

Question.
Nell works as a transaltor of technical manuals on a freelance basis for number of companies. invoiced 2012 €40k worth of fees but recived €20k by 31 Dec 2012.

Secondly she sold rights to "quick Transalte" and App to a technology company for €10k. it provides trnasaltion for basic common terms for english speaking individuals in a foreign country. She came up with idea on holiday incurred no costs in developing it. Never deveolped such an App and considers it highly unlikely she would do again. she did not think she would have ability herself to exploit the App to its greatest commercial potential, so was happy to sell it.

In relation to the first part, this is in relation to accurals and Cash basis concept, from what im aware the cash basis is gone? it only applies to barristers, but i cant find anything online specifically stating this, our lecturer did state this in one of the lectures though.

So my understanding is that Nell has no choice but to do accruals basis as of from 1992 SP-IT/2/92, or can she do both and i should be advising her to do the cash basis as then shes only taxed on the €20k received, it says all her tax affairs previoulsy are all up to date etc am i going into this too deep?

Second part the sale of the App, its a one off and not a trade, as she doesnt do it for a living is this a capital receipt? shoudl it be liable to CGT or different schedule? or am i compeletey lost?

Appreciate any adivice or help.

Thanks,

AITI Student

AITI Student

Guys any advice or direction on the above would be greatly appreciated, assignement 90% done, just need claifircation on the above.

Thanks,

AITI Student

Mr. Incognito

For the invoicing, she is self employed so I believe it will be taxed when it is received.

If she has only received 20K for the year you only tax the 20K. You cannot tax income not received yet.

I do remember for Schedule E in the footnotes it says that income is taxed in the year that it relates to not when it is received. There was a case on this point but it's in the legislation. Look it up.

As to the second point, it is a once off income. Apply badges of trade, Subject matter, length of transaction, supplementary work, circumstances, motive.

I always remember it as SMurfs with Little FeeT SWiftly Cross MounTains so I have it off that way.

It is not a trade so Schedule D Case 1 would not apply hense Schedule D Case IV

As to whether it is a capital good incorporeal property is exempt from CGT so it falls to income tax imo.

AITI Student

Hi Mr Icognito...please see below another post from the site which has me slightly confused...can u confim that its recived payments only or does the sole trader have choce as to whetehr its accruals or cash basis......as below seems to contadict this?

AddUp wrote: »

It seems like you are confusing the "Cash Receipts Basis" for the payment of VAT on sales invoices with how your profit is arrived at for the purposes of calculating Income Tax.

If you are registered for VAT and on a "Cash receipts basis" you only pay VAT to the Revenue when you get paid by your customer. However for the purposes of calculating your profit (Income less expenses = profit) to determine what your Income Tax liability will be you include all sales whether or not you have been paid for them. What you have not been paid at your year end will be recorded as Debtors on your Balance Sheet. It is a good idea to get this sorted before the 31st of October 2009 as you will be taxed on the 2008 rates therefore avoid the dreaded Income Levy :mad:!! This is a regular mistake made by Sole Traders and could prove to be very costly if you are faced with a Revenue audit!!

Your new accountants are on the ball so don't be afraid to ask them for advice. They were quick off the mark in pointing out this potential time bomb. THAT IS WHAT YOU PAY THEM FOR.

Long winded but I hope it clears the fog

Alan Shore

Mr. Incognito wrote: »

For the invoicing, she is self employed so I believe it will be taxed when it is received.

If she has only received 20K for the year you only tax the 20K. You cannot tax income not received yet.

Back to tax school for me so. I have never seen invoices issued being excluded from taxable income in a year.

Mr. Incognito

I am getting confused myself. From the Revenue website it says

What income do I include on my Tax Return?
Your tax assessment is normally based on your actual income arising in the tax year from 1 January to the following 31 December. However, if your income consists of profits from a business, trade, profession or vocation you may opt to prepare your accounts for an accounting period that ends within the tax year. Assessments in respect of any other income i.e. investment income, rental income, foreign pension or foreign salary are all based on the actual income arising in the tax year (i.e. from 1 January to the following 31 December).

http://www.revenue.ie/en/tax/it/leaflets/guide-pay-file.pdf

Page 14.

Profit Assessable in 2012
This is the amount on which you are assessed for tax. Generally, you are assessable on the adjusted net profit
for the accounting period ending in the year 2012 - e.g. if accounts are normally prepared for a period ending on
30 June, then the assessable profits for 2012 will be the profits of the year ended 30 June 2012.

Sales/Receipts/Turnover - this is gross trading income receivable

I am not an accountant, law and tax are my background so adjusted net profit is a term that I am not qualified to define nor do I prepare income tax computations for sole traders

Receivable appears to include invoices. Can someone with relevant experience clarify?

Alan Shore

The profit for the year Is based on invoices issued, so includes debtors at year end.

Mr. Incognito

Alan Shore wrote: »

The profit for the year Is based on invoices issued, so includes debtors at year end.

Do you have authority for this? I think I may have it here.

http://www.irishstatutebook.ie/1997/en/act/pub/0039/sec0091.html

Section 91(5) points to the earnings basis.

http://www.revenue.ie/en/practitioner/law/statements-of-practice/sp-it-2-92.pdf

“...the profits or gains of a trade or profession in any period shall be treated as computed by reference to earnings where all credits and liabilities accruing during that period as a consequence of the carrying on of the trade or profession are brought into account in computing those profits or gains for tax purposes, and not otherwise, and “earnings basis” shall be construed accordingly;...”

The earnings basis is obligatory for the first three years of trade.

As I would read that accruing is relevant. Not accrued which would be receipts.

It would seem then to include invoices but after three years you can move to a conventional basis.

chops018

Hi all,

Didn't see this sticky at the top when I posted my other thread..

So, I should have all 8 of my FE1's (professional law society exams to be a solicitor) done come October. However, there doesn't seem to be many apprenticeships going around, let alone paid one's - fees are around 12k for the 2 years in Blackhall.

Anyway, I was thinking of doing this:

http://taxinstitute.ie/CareersandCou...ification.aspx

or the Tax technician one.

Much cheaper than the above, and it's at weekends so I could work during it too. Also you have an international qualification at the end of it.

It says, and I've heard, law grads are good for this kind of thing due to looking at legislation and precedent.

However, I am wondering are the other aspects difficult to grasp?

Plus, would it be worth it? Even if when it's done I got offered an apprenticeship to be a Solicitor would the above still benefit me?

Any thoughts on it at all would be appreciated, thanks!

TL;DR - Have a Masters in Law, and hopefully all the FE1's completed come October. Is it a good idea to do the above course? Is it a good professional qualification to have with being a Solicitor or indeed just to have it by itself?

sky2424

You haven't once mentioned that your actually interested in tax?! In fact, you didnt show any interest in the qualification itself, didn't even comment on the modules, let alone how the qualification would actually benefit your career path. Look sorry to be harsh but these exams are pretty hard- end of. You sound like your drifting in to them for cost/economical reasons- which doesn't exactly bode well.

By all means sit them if you want- but your post doesn't exactly show commitment.. And if there's one thing you need for these exams it's commitment. I suggest you go look at the pass rates.

All the best

chops018

sky2424 wrote: »

You haven't once mentioned that your actually interested in tax?! In fact, you didnt show any interest in the qualification itself, didn't even comment on the modules, let alone how the qualification would actually benefit your career path. Look sorry to be harsh but these exams are pretty hard- end of. You sound like your drifting in to them for cost/economical reasons- which doesn't exactly bode well.

By all means sit them if you want- but your post doesn't exactly show commitment.. And if there's one thing you need for these exams it's commitment. I suggest you go look at the pass rates.

All the best

No that's no problem at all. I don't mind someone being harsh, once they are not insulting.

I do have an interest in it, not a huge one, but I do in the fact it may further my career in law and then I thought it could be used for a different path if I wanted to go down that route solely.

I've a huge interest in Law and I was wondering would such a qualification be attractive to employers and getting a paid apprenticeship - as I see some of the big Tax firms in Dublin are also the same firms that give out the paid Solicitor apprenticeships.

I'd love to get, and do, any qualification that would make me more employable in any aspect of the working world really. Also I love to better myself in doing such courses. And the above doesn't seem as costly, and it there is a qualification at the end of it, and if it lead to my real passion - law, resulting in a paid apprenticeship then I would be delighted.

Look, I know what you mean. Don't take these things lightly, it isn't overly expensive, but it is costly just the same. I will be finished my professional law exams in October hopefully, and I'll have 5 years to get an apprenticeship after that. Would taking from now till this time next year to see what position I'm in etc. be a good idea, and then reassess the above? Instead of fast tracking into it now and realising this time next year it was possibly a waste of money?

sky2424

chops018 wrote: »

No that's no problem at all. I don't mind someone being harsh, once they are not insulting.

I do have an interest in it, not a huge one, but I do in the fact it may further my career in law and then I thought it could be used for a different path if I wanted to go down that route solely.

I've a huge interest in Law and I was wondering would such a qualification be attractive to employers and getting a paid apprenticeship - as I see some of the big Tax firms in Dublin are also the same firms that give out the paid Solicitor apprenticeships.

I'd love to get, and do, any qualification that would make me more employable in any aspect of the working world really. Also I love to better myself in doing such courses. And the above doesn't seem as costly, and it there is a qualification at the end of it, and if it lead to my real passion - law, resulting in a paid apprenticeship then I would be delighted.

Look, I know what you mean. Don't take these things lightly, it isn't overly expensive, but it is costly just the same. I will be finished my professional law exams in October hopefully, and I'll have 5 years to get an apprenticeship after that. Would taking from now till this time next year to see what position I'm in etc. be a good idea, and then reassess the above? Instead of fast tracking into it now and realising this time next year it was possibly a waste of money?

I understand where your coming from and how difficult it is to get into law these days but I'm not convinced signing up for tax exams just now is the way to go.

I've been involved in the recruitment process for an accountancy firm and its very transparent when a candidate doesn't have a genuine interest in the position at hand. This is even more transparent with the ever increasing number of candidates with a legal background applying half heartedly for tax roles. I know when I interviewed candidates, regardless of how impressive a law graduates background was, if the passion for a career in tax wasn't there then they weren't offered a position.

If you have a genuine interest in tax and want to secure a tax role, then yes signing up for the tax exams will most definitely help you.

If your interest lies firstly in law, and you commit to these tax exams, then you run the risk of any future employer doubting your interest in law and wondering if tax is what your more passionate about (given the financial/personal commitment). You could of course omit this from your CV but then this defeats the purpose of signing up in the first place.

Tbh it depends what type of practice you intend on applying to also. I could probably reconcile the benefit of signing up for these exams if your intending on applying for one of the bigger legal firms who offer rotations- that way you can angle it in your interview that whilst you've an interest in both tax and law and look forward to using your tax knowledge in a tax based rotation, your also interested in exploring rotations in litigation etc. And should you get an permanent offer at the end, then just choose a more tradition legal department. In this instance, tax would help you get in the door initially but possibly allow you to practise in a more traditional legal route long term. Of course, this is the ideal scenario and only you know how realistic your chances of this happening are.

Of course smaller legal practises may have exposure to more general work where someone with both legal and tax knowledge would be appreciated. But are many smaller legal practises hiring?

As for applying for accountancy practises, and as above, I can only speak from my experience but if you dont have an interest in tax right now then it might be best to hold off on this route for a while. In any event I'd imagine it'd be a lot more difficult to transition into law long term. But that's not to rule it out completely. And if applying to legal practises isn't proving fruitful, then this route is definitely one to consider. But do not apply until you have a serious understanding of tax and at least some interest.

As an aside, you might also want to have a look at the AITI syllabus- corporation tax, income tax, indirect tax etc. And forget doing the technician course, wouldn't be of much benefit to you in my opinion.

NEWBIEGRL8

Just wondering if anyone is suprised at the marks they were awarded in the April 2013 sitting for Part 2?:(

I know that there is an information meeting in Dublin with ITI if you have queries or are unhappy with recent results, but i'm down the country so its not feasible for me.

Has anyone previously asked for a re-check and got a pass or is it just a money racket?

Thanks

gerrykeegan

NEWBIEGRL8 wrote: »

Just wondering if anyone is suprised at the marks they were awarded in the April 2013 sitting for Part 2?:(

I know that there is an information meeting in Dublin with ITI if you have queries or are unhappy with recent results, but i'm down the country so its not feasible for me.

Has anyone previously asked for a re-check and got a pass or is it just a money racket?

Thanks

I applied last year for three re-checks. No change in the marks at all.

NEWBIEGRL8

Oh no thats not good at all :-( sent it in anyway

dustyrip

Hi

Just checked Part 2 results and the pass rate was 73% for all four papers. Can anyone explain this? It has always been around 50%. Not sure how it can go from a pass rate of 50% to 73%.

I am waiting on Part 3 results in July. I am shocked with the Part 2 results.

ucd.1985

Apparently down to the fact that the ACA tax course has a similarly high pass rate.

April O Neill

Hi,

I'm starting the Professional Diploma in Taxation at DCU in September. On completion it will exempt me from Part 1.

I'm doing volunteering for the few months until the course begins, but also have a fair amount of free time. I'm very new to the area, as my primary degree was in science, and I gave up business studies after first year in secondary school.

I'd love to get started reading now if possible, as it will really be a great help come September, as it's a full-on course and I'll be getting milkround application ready at that time too, as well as working part time. It's hard to access material that explains the tax system comprehensively until I start and have access to books and online material only available to registered students.

I was wondering if anyone has any material they could pass on to me? There lots of info on the revenue website of course, but if anyone has any teaching material that breaks it down better, that would so great!

Thank you!

Nemanrio

Does the government offer assistance in paying fees etc. if you are unemployed?

TaxStudent

Anyone feeling hard done by the ABT result?

LosPrimos

I feel very hard done by!, i got 82% in assignment and felt i attempted all the paper and at the very least deserved to pass. I am thinking of getting recheck

LosPrimos

I have put in for a recheck, probably just throwing my money away, but i cant believe it

LosPrimos

Hey TaxStudent how come you took down you posts re rechecks?

noveltea

Legend100 wrote: »

Don't write yourself off just yet....when I sat them in 2011, I was convinced i was repeating personal, was sure I got no more than 30% but got 50 on the button, positive thoughts!

You were right!!!! Positive thoughts. Got 50 as well, was delighted. Passed them all and looking forward to free weekends come winter. Wooo

April O Neill

I'm starting the Professional Diploma in Taxation in DCU in Sept. At the end, I will have exemptions from Part 1 and part 2 of Part 2.

What does part 2 of Part 2 mean exactly?

I've downloaded the TCA 1997, good lord, it's 1518 pages long. Do I need to read this at this stage? And if so, how do I get to grips with it? I am not well versed in legalese.

Thanks!

scheister

April O Neill wrote: »

I'm starting the Professional Diploma in Taxation in DCU in Sept. At the end, I will have exemptions from Part 1 and part 2 of Part 2.

What does part 2 of Part 2 mean exactly?

I've downloaded the TCA 1997, good lord, it's 1518 pages long. Do I need to read this at this stage? And if so, how do I get to grips with it? I am not well versed in legalese.

Thanks!

with the TCA 1997 you have to be able to reference it when needs be so get an idea of the main sections of it and then have a good idea of them

luckyboy

scheister wrote: »

with the TCA 1997 you have to be able to reference it when needs be so get an idea of the main sections of it and then have a good idea of them

The TCA can be hard to digest at first, but it does get easier if you stick with it. Just don't expect to be able to decipher it all the first time you read it. Revenue publish Notes for Guidance on each section of the TCA which make it a lot easier to understand. The ITI also publishes an annual Tax Summary which is also very good

TaxStudent

anyone gett results of their re-check today? any positive results out there

c.k28

I'm studying for my taxation II exam and I'm just wondering in relation to VAT if someone could explain to me in simple terms what the "use of goods or supplies for exempt purposes" means?

dustyrip

Hi

Is the compulsory question on the Indirect Taxes paper VAT on Property only or can it be anything from the course?

Thanks

dustyrip

c.k28 wrote: »

I'm studying for my taxation II exam and I'm just wondering in relation to VAT if someone could explain to me in simple terms what the "use of goods or supplies for exempt purposes" means?

If its exempt then you can't get any VAT recovery on the good or supply. That's the main issue as far as I am aware!

LosPrimos

dustyrip wrote: »

Hi

Is the compulsory question on the Indirect Taxes paper VAT on Property only or can it be anything from the course?

Thanks

It's on vat on property only

LosPrimos

TaxStudent wrote: »

anyone gett results of their re-check today? any positive results out there

I got advanced business re checked, same result....

TaxStudent

Hi

Anyone go with s.600 relief in part A of Question 3 on the ABT paper Tuesday??? or am i well off the Mark

dustyrip

TaxStudent wrote: »

Hi

Anyone go with s.600 relief in part A of Question 3 on the ABT paper Tuesday??? or am i well off the Mark

I did and a few others that I spoke to after the exam did as well. Transfer of a Business to a company so it must have been Section 600.

For Part B of Question 3 I went with two share for share exchanges. Not sure if this was right though, but I don't think it was a three way party swap.

Szewinska

Hi All

Back to do this tax elective again for chartered after doing part 2s. Fun times. Love my tax.

Hopefully someone can help me on this.

If a company wants to take over another and asks for help in doing so.

what determines if you opt for a share for share or an undertaking 3 party swap. I cant see to see what would sway you one way or the other apart from no clawbacks with 3 party swap.

Has anyone any thoughts or ideas on this.

Cheers

TaxStudent

there are no clawbacks under three party swap... that's its big selling point... exempt from cgt and stamp duty..... two party swaps have clawbacks and are rarely used in practice....

if the share holders are receiving the shares for the transfer of a trade then three party swap is most efficient...

Szewinska

TaxStudent wrote: »

there are no clawbacks under three party swap... that's its big selling point... exempt from cgt and stamp duty..... two party swaps have clawbacks and are rarely used in practice....

if the share holders are receiving the shares for the transfer of a trade then three party swap is most efficient...

Thanks and what about a share for share. it seems the final set up is different here as its a subsidiary set up after

TaxStudent

s.586 share for share relief is used where one company takes over another with the shares in the acquiring company being given to the shareholders of the target company.. the key here is the acquiring company must control the target company following the transaction...there is not transfer of a trade or an amalgamation....... stamp duty relief is also available.

Szewinska

TaxStudent wrote: »

s.586 share for share relief is used where one company takes over another with the shares in the acquiring company being given to the shareholders of the target company.. the key here is the acquiring company must control the target company following the transaction...there is not transfer of a trade or an amalgamation....... stamp duty relief is also available.

thanks for your help. Much appreciated

beeftotheheels

TaxStudent wrote: »

there are no clawbacks under three party swap... that's its big selling point... exempt from cgt and stamp duty..... two party swaps have clawbacks and are rarely used in practice....

if the share holders are receiving the shares for the transfer of a trade then three party swap is most efficient...

But watch the accounting and company law issues, you need reserves for the three party swap and the lawyers disagree whether that's reserves equal to the book or market value of the assets being transferred, accountants often take the position that the transfer itself creates the reserves but this is unclear.

The number of times I've seen these transactions being done in the real world involving offences under the companies acts or accounting disasters is not funny.

Remember as well that if an exceptional dividend is to be paid it may be wise to whitewash the transaction, and the dividend will be out of pre-acq reserves and thus not go through the P/L of Newco in accordance with s149(5) of the Companies Act, it will be a write down in the carrying value of the subsidiary on the balance sheet of Newco.

Stamp Duty clawback on the share for share two party is the main downside.

For any students reading I would think that reconstructions and amalgamations are the most misunderstood area of tax law even leaving aside the company law and accounting implications. If you read the Keane case http://www.bailii.org/cgi-bin/markup.cgi?doc=/ie/cases/IEHC/2007/H466.html&query=title+(+keane+)&method=boolean

you'll see that not only one, but two big four firms and presumably at least one SC (not clear if Bill Shipsey argued the case or just opined on the matter hence I say at least one) hadn't bothered reading Fallon v Fellows and didn't know the law in this area as well as Seamus Carey in stamps branch.

Once you work with these rules for a couple of years they become almost second nature but every time I'm relying on them I go back and read the legislation, go back and read the cases, check the company law and the accounting treatment.

Remember that you need to consider the tax position of potentially three tax payers in terms of reliefs/ cost etc

The shareholders in Oldco s586, s587 but you need a bona fide scheme of reconstruction so read the Keane case

Oldco s615 or s617 for an asset transfer, if s617 applies it trumps s615 and s617 has the claw back provision in s623 whereas s615 has no claw back Read NAP Holdings v Whittles and Westcott v Woolcombers here s312 for capital allowances, s400 for losses, and s89 for stock

Newco s80 but also s615/ s617 in terms of asset cost s312 for capital allowances, s400 and potentially s401 for losses, and s89 for stock

Finally check the mergers directive rules in 630 et seq as they can apply in scenarios where you might not be expecting and have alternative claw back rules and then think about the interaction with s626B (if appropriate)

Szewinska

Thanks for that

beeftotheheels

Oh, one more point on this. Valuations are key as you need substantially the same people have substantially the same interest in the trade going forward to constitute a scheme of reconstruction.

If someone else is doing a valuation exercise that's great, if not you need to sense check it to ensure that the right number of shares are being issued, especially if you're moving two companies under one, or moving two businesses in together.

If there's a lot of fixed assets then in an owner managed business something like the balance sheet values (although check there's not a 2008 property sitting there at cost) and 2 to 5 times operating profit is usually in the ball park.

For a larger business without the same key man issues a small business would have you'd be looking at a profit (often EBIT or EBITDA) multiple, maybe even as high as ten.

Ultimately your client should determine the value as they'll know their business best, but you need to think whether it is in a range that can be defended with the tax authorities.

The number of times I've seen the wrong number of shares being transferred because the tax adviser forgot entirely to sense check the values, putting two Oldcos under one Newco and issuing the "A shares" in respect of Oldco A at par, and the "B shares" in respect of Oldco B at a significant premium suggesting that there was a transfer of value from the B shareholders to the A shareholders...

...not a scheme of reconstruction or amalgamation, potential value shifting, CAT issues and the fact that there may be a gift that the B shareholders never meant to make to the A shareholders

These rules can be tricky and complicated, but if you get your head around them these transactions are about as much fun as a tax adviser can have :-)

Evelyn Forde's book on reconstructions is great (although pricey)

http://www.bloomsburyprofessional.com/1163/Bloomsbury-Professional-Taxation-of-Company-Reorganisations-in-Ireland.html

ElektroToad

Hi all I'm planning to start studying for Part 1s in October. I'm trying to register as a new student on the ITI website but it seems that the links don't work?

I'm clicking the "New Registration (AITI)" link and nothing happens. I've tried using Internet Explorer, Chrome, Firefox etc.

It is just me? Or is the registration page just not working?

gerrykeegan

ElektroToad wrote: »

Hi all I'm planning to start studying for Part 1s in October. I'm trying to register as a new student on the ITI website but it seems that the links don't work?

I'm clicking the "New Registration (AITI)" link and nothing happens. I've tried using Internet Explorer, Chrome, Firefox etc.

It is just me? Or is the registration page just not working?

It does not seem to be working. Email registrations@taxinstitute.ie and they will be back to you fairly quickly.

NEWBIEGRL8

PART 3 - CORK OR DUBLIN FOR LECTURERS?

Hi

Can anyone tell me what the lecturers in Dublin are like for the Part 3's?

Did Part 2 in Cork and the lecturers were not up to scratch.
As Part 3's are significantly harder than Part 2, i'm willing to go to dublin if the course delivery is better, especially for ADV Personal Tax & Business Tax.

Any feedback on the dublin lecturers for part 3 very much appreciated