dj paying taxes

mambo

Daroxtar wrote: »

@ Djdeclan: If i register as a DJ can i claim back much from the price of a new set of decks, a mixer, monitors, headphones,a Kaos Pad and about 200 new vinyls? They'd be classed as essential equipment, tools of the trade, right? Seriously, what kind of percentage of the outlay could i recoup?

You should be able to depreciate decks, mixer, etc. over N years, and the amount you depreciate them each year could be offset against your tax bill for that year.

ianuss

Is that true? I thought you couldn't use depreciation to reduce your tax liabilty. I'm fairly certain you can't do that. Depreciation is just an accountancy concept, no?

You can use depreciation/wear and tear to calculate any tax payable/owed on a disposal of an asset, but that's a capital gains tax issue afaik.

DUBACC

BaZmO* wrote: »

How many DJs do you know that earn more than €70K a year (apart from John Gibbons of course, but he'd pay most of his taxes in all the far flung places that he seems to play).

Sites advertising DJ services should only be charging VAT at 13.5%

Actually, sorry to butt in - but the threshold for registering for vat is €37,500 in this case as the DJ is offering services as opposed to goods.

DUBACC

ianuss wrote: »

Is that true? I thought you couldn't use depreciation to reduce your tax liabilty. I'm fairly certain you can't do that. Depreciation is just an accountancy concept, no?

You can use depreciation/wear and tear to calculate any tax payable/owed on a disposal of an asset, but that's a capital gains tax issue afaik.

You can use it yes - but it is known as capital allowances. In most areas, you get a deduction of 12.5% of the cost of the assets as an allowance against your taxable profilts.

Depreciation is specifically disallowed as a deduction in all cases.

BaZmO*

DUBACC wrote: »

Actually, sorry to butt in - but the threshold for registering for vat is €37,500 in this case as the DJ is offering services as opposed to goods.

Whoah whoah whoah!!! I was only quoting the accountant!

DUBACC

BaZmO* wrote: »

Whoah whoah whoah!!! I was only quoting the accountant!

Ah i know - just offering a helping hand as i go along my merry way....

Depreciation is an accounting reporting policy for writing off the cost of an asset against profit as an expense over its useful life, Capital Allowances is more or less the same thing but its the term and the method used for Revenue purposes, under Capital allowances the cost of equipment is written off against taxable profits in most cases at 12.5% or 8 years (its deemed useful life).. To arrive at taxable profit depreciation along with some other items is added back to actual profit (increasing the taxable profit), then the Capital Allowance is taken back off to arrive at the taxable figure.

Capital Gains tax generally does not apply to wasting assets/assets used in a trade like equipment, it applies to sales of assets like property

djdeclan

Firstly, DUBACC is correct, it is €37,500, although i think there is a way around that if you don't want to register (most mobile DJs won't as they will be working for non VAT registered clients most of the time).

Secondly, icky_ocky & DUBACC have hit the nail on the head with regard to capital allowances. As a general rule of thumb you can write off the purchase price of your equipment over 8 years (12.5% per annum).

Where you might run into a bit of trouble is if you register as a sole trader with the Revenue Commissioners as of (say) 1 January 2011 and the receipts for the purchase of your equipment are dated in 2008. Try explaining that during an audit!

In terms of VAT registration if you are solely working in venues which are VAT registered themselves you would be better off registering for VAT as it will allow you claim back VAT on certain expenses such as equipment, diesel (you cant claim VAT on petrol) advertising, cds etc. If you are doing 21sts for john and mary they wont be able to claim back the VAT and you are immediately adding 21% onto your price by charging them VAT thus you should only register if your income exceeds the threshold.

To gbee if you only earn €10k then you'll have no tax to pay as you will be below the threshold. If, on the other hand, you are earning €10k on top of a decent wage and indeed you are liable to tax at the marginal rate along with prsi and all that good stuff then you have no excuse for not having it in the bank to pay them (even though after deducting expenses you'll have little to pay) - you're not exactly living on the breadline now are ya!

gbee

djdeclan wrote: »

To gbee if you only earn €10k then you'll have no tax to pay as you will be below the threshold. If, on the other hand, you are earning €10k on top of a decent wage and indeed you are liable to tax at the marginal rate along with prsi and all that good stuff then you have no excuse for not having it in the bank to pay them (even though after deducting expenses you'll have little to pay) - you're not exactly living on the breadline now are ya!

My understanding is the OP is already in full time employment.

djdeclan

djdeclan wrote: »

Where you might run into a bit of trouble is if you register as a sole trader with the Revenue Commissioners as of (say) 1 January 2011 and the receipts for the purchase of your equipment are dated in 2008. Try explaining that during an audit!

I thought equipment on hand at the start of a trading period could be valued and capital allowances then claimed upon.. its just that if the Sole Trader was VAT registered from say Jan 1st 2011 then obviously VAT could not be claimed back as the equipment was purchased back in 2008 (pre registration date)?

Regarding VAT registration; people should also note that if they register for VAT and claim the VAT back on the cost of purchasing equipment then if they decide to sell the equipment on at any point down the line then they are liable to pay VAT to the Revenue on the sale price of the equipment, similarly if business is not going well and they decide to pack it in and de-register, then if they just keep the equipment for personal use they may also be liable for VAT on taking the equipment out of the business for personal use (self supply)

mambo

djdeclan wrote: »

Lads as far as I am aware DJing does not qualify for the reduced 13.5% VAT rate and therefore all DJ services that are subject to VAT should have VAT charged at the 21% rate.

I checked with Revenue and they say the rate for DJing is 21%.