Tax Returns For Driving Instructor

Macca206

I am currently paying PAYE in my main full time job but since July I have been working part time hours as a driving instructor. For the driving I have paid

€1600 training
€300 exams
€500 for dual controls
€390 per month car
€2250 import tax on car

I have done a handful of lessons but overall have made a deficit as most of the costs are start up costs. I went to claim it back via my PAYE but was told I cant. With the October deadlines coming up, how can I claim back these expenses, what forms do I need and whats the dealine? Can I claim back on all these? For example the car which is spread over 4 years or the import tax as I brought it in from the UK? I did not have a car before this as bought it specially for the Driving Instructing.

Mr. Incognito

Edit.

You cannot claim expenses from a trade against PAYE Income.

Okay had a quick look and you're generating professional income so you need to file a Form 11 Return, which is available on the Revenue website.

Deadline is October 31. Your expenses can only be set against trade income so in essence your trade income will be exempt from tax as I doubt that it's over your expense.

Macca206

Thanks setanta..so basically I cant claim the money back but just means any income Ive made will be tax free?

information

Macca206 wrote:

€500 for dual controls
€390 per month car
€2250 import tax on car

I wouldn't call these expenses

ircoha

Macca206 wrote:

Thanks setanta..so basically I cant claim the money back but just means any income Ive made will be tax free?

To quote MT: No, No and No.

given ur PT job, this is apt:

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." -- Ronald Reagan "

the income must be returned on the F11 and then u deduct any expenses [ was the course approved by revenue]
and amortise any assets against the income. there will be issues here for personal use so there must be an arrangement in place with Revenue already
[ur best bet is contact the association of DI's they will know because Di's are regulars in the list of defaulters published by revenue:) ]

Worst case: contact revenue.

To clarify what I was saying above:
assets are amortised, or depreciated in ur finacial accounts and are charged against ur tax by a process called capital allowances.

Cars have always been subject to special treatment by the revenue and I am not fully up to date with current rules.

Robbie is spot on re Section 381, search www.revenue.ie for section 381 : lots of stuff there: files too big to post here.

IMO the vtr will be added to the cost of the car, as will the dual stuff

robbie checker

Section 381 allows trading losses to be offset against a taxpayers gross income which includes Paye income. Therefore you can offset the losses but must claim the relief on the tax return.

Mr. Incognito

Thanks setanta..so basically I cant claim the money back but just means any income Ive made will be tax free?

No. You misunderstand me. You will be liable to tax on your trade income. However a deduction is allowable for expenses incurred "wholly and exclusively" for the trade. If there is an element of personal use it is disallowed. The import VRT and car expenses may have to be apportioned if there is an element of personal use. As your expenses when you fill out your Form 11 will exceed your income (this is a guess, only you know that) you may have a nil tax position. You still have to declare the income on the Form 11.

Macca206

Sorry this is all a bit confusing. Say taking it very basically I have paid €5000 in PAYE tax.

I have paid

€1600 training
€300 exams
€500 for dual controls
€390 per month car
€2250 import tax on car

I have received €1000 in fees

How much am I liable to pay in tax or am I likely to get a tax rebate in any way?

Also do I just put this on the F11 form and allow them to work out my tax?

Finally do I send the form in AFTER october 31 or does it need in before then? i.e. what tax period am I accounting for (till sept 07, oct 07 etc?)

ircoha

Macca206 wrote:

Sorry this is all a bit confusing. Say taking it very basically I have paid €5000 in PAYE tax.

I have paid

€1600 training
€300 exams
€500 for dual controls
€390 per month car
€2250 import tax on car

I have received €1000 in fees

How much am I liable to pay in tax or am I likely to get a tax rebate in any way?

Also do I just put this on the F11 form and allow them to work out my tax?

Finally do I send the form in AFTER october 31 or does it need in before then? i.e. what tax period am I accounting for (till sept 07, oct 07 etc?)

In fairness I find your response, as well as the information posted somewhat confusing also.
have you done some of the things we have suggested eg contact http://www.iol.ie/~idia/
search revenue.ie


First off, explain the 390 per month on the car: is this a loan to buy the car or is it hire purchase with a VAT element in each payment. Did u charge vat on the income u received?

My view is as follows:
€1600 training is a legit expense
€300 exams: ditto
€500 for dual controls: will be added to capital cost of car

€2250 import tax on car: will be added to capital cost of car

to spell it out
if u paid 10,000 for the mo-mo, the value to be written off, over time is now
12,750 10,000 + 500 + 2250

the rules for that i dont know, particularly as u have personal use of car also, so that is why I suggested u contacted the DI assoc: they will be able to point u in the right direction.

The €390 per month car will have an interest and capital portion to it. the interest portion is an expense, however given that there is a personal element to the car, all of it will not be allowed.

My advice to u is to sign up for ROS if not already on ROS.ie , and fill in the numbers in the f11 that are clearly not at issue.[ 1600, 1000, 300]

Then put a note in the submission to say that you are unsure of the treatment of the VRT etc and they will get back to you.

In the meantime perhaps contact http://www.taxireland.ie/

they may be able to recommend a book that shows how the capital cost of cars is dealt with in trade accounts, or go into a decent book shop and browse.

kluivert

To the OP lets break this down to its simpliest form.

First forget about your paye income and tax paid on it ok.

In order to arrive at the figure of how much in income tax you may owe the Revenue in regards to your trading activity, you must first prepare a profit and loss account to determine what the profit or loss of the trade is.

When you have this done you then prepare your tax adjusted profit/loss calculation. This will determine whether or not you will owe the Revenue any tax from your trade. If you have a tax adjusted losses, you may carry this forward to the next year and can be used against tax adjusted profits.

You need to read the section for businesses on the Revenue site www.revenue.ie and gain an understanding of how the tax administration works.

JoeTurner

Macca206 wrote:

Finally do I send the form in AFTER october 31 or does it need in before then? i.e. what tax period am I accounting for (till sept 07, oct 07 etc?)

From your original post I think you say you only started earning the extra income in July of this year.

If so you'll have to pay an estimate of your tax (known as preliminary tax) by October 31st. Your final tax return for 2007 is not due until 31st October 2008.

I'd go with the opinions of the other posters who recommended signing up for the Revenue's online services - www.ros.ie....

Joe

Mr. Incognito

<snip>

kluivert

SetantaL

PM sent for inappropriate post.