Year-end tax planning


Capital allowances for energy-efficient equipment and motor vehicles

Older taxpayers will recall the rush to purchase equipment and other fixed assets prior to the end of the tax year, as 100% deduction was available through free depreciation in the year of purchase.

Unfortunately, such 100% deductions are long gone, with the exception of expenditure on energy-efficient equipment and vehicles. Until 2017 the scheme applied only to purchases of such equipment by companies but this is now extended to purchases by sole traders.

Pension contributions

Tax deduction is available in 2016 to sole traders and company directors for pension contributions paid by the 2016 file and pay date (31st October 2017).

For companies, deduction is available only in the financial year in which the payment is made. As many companies have a 31st December year-end, only contributions paid by 31st December 2016 will be allowed in this year.

Capital Acquisitions TAX (CAT)

This is a tax on gifts and inheritances. Lifetime thresholds are available. However, in addition, an annual exemption of €3,000 is available. It is a “use it or lose it” exemption so the gift(s) must be made by 31st December 2016 in order to avail of the relief for this year. So for example, each parent could gift €3,000 per annum to each child. Over say ten years, this would represent a €60,000 tax-free transfer of assets to the child, without affecting the lifetime exemption.