Registered AITI Tax Qualification Info and Questions

smpc · 01-06-2011 09:17PM

Jackie Donohue wrote: »

Hi

Has anyone started the Part 3 HA and if so how are thay getting on.

Yes I have started it (P3 HA June). Its slow work with constant confusion and questions. I keep worrying that I am missing big points.

Was a bit confused about the 6th paragraph on the 2nd page which seem to point me towards the Noddy case. However I do not see how this applies in this case. any thoughts?

How are you getting on?

mehew · 02-06-2011 10:16AM

Hi guys

Im also doing the Part 3 Home Assignment - pretty daunting stuff!!

I think you're right about the Noddy reference - my understanding is that both co could transfer residency to Ireland and be taxed at 12.5% on that income as trading income providing they meet the Noddy principles?

This transfer pricing is wrecking my head, never worked in corporation tax so finding it hard to get around it. Does it effect any of the transactions as such?? I can only see transfer pricing issues outside of Ireland, for ex with the Bermuda co.

smpc · 02-06-2011 06:16PM

mehew wrote: »

Hi guys

Im also doing the Part 3 Home Assignment - pretty daunting stuff!!

I think you're right about the Noddy reference - my understanding is that both co could transfer residency to Ireland and be taxed at 12.5% on that income as trading income providing they meet the Noddy principles?

This transfer pricing is wrecking my head, never worked in corporation tax so finding it hard to get around it. Does it effect any of the transactions as such?? I can only see transfer pricing issues outside of Ireland, for ex with the Bermuda co.

hey,

re Noddy case my understanding from the last paragraph of the question is that we are not required to comment on any on "any items in foreign jurisdictions" and this is why I was confused. I do not think that the Noddy case applies to NewCo as NewCo is merely using the trademark. does this makes sense?

Lookin at TP currently and will report back.

Wish I was out drinking in the sunshine instead!

scheister · 05-06-2011 01:50PM

anyone on here doing the Part 1 home assignment atm.

mehew · 05-06-2011 06:09PM

ok, havent had a chance to check out the Noddy reference yet but I'm meeting a CT expert tomorrow to go through the assignment so I'll see what they think, I should have an answer for you tomorrow hopefully !!

livindublin · 05-06-2011 07:23PM

I'm doing the Part 3 assignment also (well making a pretty bad attempt I'd say lol). Been flat out with work and only started this weekend so not too hopeful of doing well on this but will give it a lash.

One thing that's baffling me though is the technical support and head office recharge! Does anyone know what this is in relation to? Damn thing is driving me mental.

smpc · 06-06-2011 09:59AM

livindublin wrote: »

I'm doing the Part 3 assignment also (well making a pretty bad attempt I'd say lol). Been flat out with work and only started this weekend so not too hopeful of doing well on this but will give it a lash.

One thing that's baffling me though is the technical support and head office recharge! Does anyone know what this is in relation to? Damn thing is driving me mental.

I was thinking these were just for purposes of transfer pricing. I did not see any other issues arise (considering we are not to look at any VAT issues).

do people agree with this?

smpc · 06-06-2011 10:03AM

mehew wrote: »

ok, havent had a chance to check out the Noddy reference yet but I'm meeting a CT expert tomorrow to go through the assignment so I'll see what they think, I should have an answer for you tomorrow hopefully !!

yeah it definately loks like a noddy reference but i think it might be a "red herring" as i understand from the examiners report on the january CA that it is very important to be concise and not meantion items that do not apply or are irrelevant. so i am thinking that this is thrown in but we are not supposed to put in it as it is not relevant in this case.

would love to hear what CT expert thinks tho!

smpc · 06-06-2011 10:04AM

scheister wrote: »

anyone on here doing the Part 1 home assignment atm.

doing P3 but it there something in particular that we could maybe help you with?

scheister · 06-06-2011 10:51AM

as it the 1st time just wondering the length the should roughly be and how are people dealing with the wife re BIK on the car if she keeps it/ hands it back after going on maternity. Cant really find much in the legislation about it.

smpc · 06-06-2011 11:06AM

scheister wrote: »

as it the 1st time just wondering the length the should roughly be and how are people dealing with the wife re BIK on the car if she keeps it/ hands it back after going on maternity. Cant really find much in the legislation about it.

i would use the Jan CA as guidance regarding length

available on ITI website http://www.taxireland.ie/education/students/documents/Part_1_Question_Solution_and_Examiners_report.pdf

appears to be about 22 pages long. also i would read examiners report as this can give you good guidance as what to look out for.

i do not think you will find anything specific in leg about use of car on maternity leave - i think the bottom line will be that she is getting the use of the " reason of his or her employment" S. 121 (1) (b) (i) TCA 97 and on this basis, the normal BIK rules will apply.

however, it should be noted that her business miles will drop to nil while she is on maternity leave (i know this is obvious but sometines it the small things that we miss)

this is top of the head - so if anyone disagrees please reply.

hopes is helps somewhat

scheister · 06-06-2011 11:34AM

smpc wrote: »

i would use the Jan CA as guidance regarding length

available on ITI website http://www.taxireland.ie/education/students/documents/Part_1_Question_Solution_and_Examiners_report.pdf

appears to be about 22 pages long. also i would read examiners report as this can give you good guidance as what to look out for.

i do not think you will find anything specific in leg about use of car on maternity leave - i think the bottom line will be that she is getting the use of the " reason of his or her employment" S. 121 (1) (b) (i) TCA 97 and on this basis, the normal BIK rules will apply.

however, it should be noted that her business miles will drop to nil while she is on maternity leave (i know this is obvious but sometines it the small things that we miss)

this is top of the head - so if anyone disagrees please reply.

hopes is helps somewhat

Its the business miles is the bit that has me stuck. in a full year she is doing 34,000km which puts her at 18% group. The car cost 30,000 there is no talk of its a ABC car so im assuming its under the old system. so 18% of the 30k is 5400. she goes on july 1st so if she hands back the car she only has to pay 2700. But by keeping it and the milage drops to 0. the miles stay at 17000 then the 18% become 30 percentage and she now owes 9000 over the year. Would that sound right??

smpc · 06-06-2011 12:00PM

scheister wrote: »

Its the business miles is the bit that has me stuck. in a full year she is doing 34,000km which puts her at 18% group. The car cost 30,000 there is no talk of its a ABC car so im assuming its under the old system. so 18% of the 30k is 5400. she goes on july 1st so if she hands back the car she only has to pay 2700. But by keeping it and the milage drops to 0. the miles stay at 17000 then the 18% become 30 percentage and she now owes 9000 over the year. Would that sound right??

the new abc regime applies where car is provided for 1st time n 2009 or later. so the assumption would be that she has had the car since prior to 09. (121 4B)

keeps car

mileage is half of 34k - 17k so 30% of omv. 9k makes sense

doesnt keep car

mileage is half 34k - 17k (based on facts)
the 24k that in para 4 a is halved (4 c i). so over 12k so you now look at table in 4 c
groups are halved - so that 32 to 40 becomes 16 to 20 and hence 18% applies.
so 30k by 18% = 5400

that how i would read it.

smpc · 06-06-2011 03:01PM

I think "noddy" reference is regarding the definition of "annual payment" for 238.

re trade names

it must be " pure profit income" to be "annual payment" to come within 238 so that W/T has to be deducted.

in this case, significant costs are incurred therefore not "pure profit income", not "annual payment, outside 238, no withholding tax.

travelbug22 · 06-06-2011 08:03PM

Hi

I need to get past papers for capital taxes part 2. Any chance somebody could PM them to me as I cant log onto tax find.

Cheers

livindublin · 06-06-2011 09:53PM

smpc wrote: »

I think "noddy" reference is regarding the definition of "annual payment" for 238.

re trade names

it must be " pure profit income" to be "annual payment" to come within 238 so that W/T has to be deducted.

in this case, significant costs are incurred therefore not "pure profit income", not "annual payment, outside 238, no withholding tax.

One thing I was thinking though was that, as there is no w/h tax obligations in respect of the trade mark costs, as a group they should they use the Isle of Man one considering that co will not have to pay tax on anything received (19% in poland), although that would have to be caveated that a market rate would have to be charged a la transfer pricing legislation. Anyone have any views on this?

Can't wait to finish this thing! I HATE Corp. tax lol

smpc · 07-06-2011 09:33AM

livindublin wrote: »

One thing I was thinking though was that, as there is no w/h tax obligations in respect of the trade mark costs, as a group they should they use the Isle of Man one considering that co will not have to pay tax on anything received (19% in poland), although that would have to be caveated that a market rate would have to be charged a la transfer pricing legislation. Anyone have any views on this?

Can't wait to finish this thing! I HATE Corp. tax lol

yeah but I do not think there would be a TP issue - as Legislation only replaces consideration with MV where payment is in excess of MV or receipt is less than MV.

therefore, if we use isle of man - we cud charge nil without TP issue. however, MV should be charged to maximise profits taken out of 12.5% charge and into nil charge. have you confirmed that CT deduction is available for TM royalties paid?

Nicky7520 · 07-06-2011 12:06PM

Help! I have just got the home assignment over the weekend (I am a repeat student) and have not been to any lectures/workshop this time around...Can anyone set me on my way by pointing me towards the relevant Sections? Not looking for any more than help than that but I am really at sea...:-((((((:confused:

ascuteasabutton · 07-06-2011 12:54PM

Nicky7520 wrote: »

Help! I have just got the home assignment over the weekend (I am a repeat student) and have not been to any lectures/workshop this time around...Can anyone set me on my way by pointing me towards the relevant Sections? Not looking for any more than help than that but I am really at sea...:-((((((:confused:

What Part are you sitting?

smpc · 07-06-2011 01:12PM

Nikki's heading is Meditrical - which is P3.

ascuteasabutton · 07-06-2011 01:30PM

smpc wrote: »

Nikki's heading is Meditrical - which is P3.

Ah ok didn't spot that, unfotunately I can't be of any help I am only doing P2!

Gonzalo123 · 07-06-2011 02:03PM

smpc wrote: »

yeah but I do not think there would be a TP issue - as Legislation only replaces consideration with MV where payment is in excess of MV or receipt is less than MV.

therefore, if we use isle of man - we cud charge nil without TP issue. however, MV should be charged to maximise profits taken out of 12.5% charge and into nil charge. have you confirmed that CT deduction is available for TM royalties paid?

In relation to the trademarks payments from Isle of Man - what about Article 9 of the OECD transfer pricing document, an arms length price can be applied to transactions between related parties where price would be different if the transaction was entered into between two independent enterprises. Not sure if this would apply?? If it doesn't apply, then I agree no transfer pricing issue.

I believe the trademark royalty payments are deductible against Case I profits.

Does anyone have a notion on what the head office recharge issue is - is there a transfer pricing issue on this, are the expenses deductible etc? Any ideas cause haven't a clue at all.

We need everyone to start posting their ideas on the assignment! Left this far too late!

smpc · 07-06-2011 02:13PM

Gonzalo123 wrote: »

In relation to the trademarks payments from Isle of Man - what about Article 9 of the OECD transfer pricing document, an arms length price can be applied to transactions between related parties where price would be different if the transaction was entered into between two independent enterprises. Not sure if this would apply?? If it doesn't apply, then I agree no transfer pricing issue.

I believe the trademark royalty payments are deductible against Case I profits.

Does anyone have a notion on what the head office recharge issue is - is there a transfer pricing issue on this, are the expenses deductible etc? Any ideas cause haven't a clue at all.

We need everyone to start posting their ideas on the assignment! Left this far too late!

does domestic legislation not override this? i saw commentary which was stating that unusual aspect of irish tp legislation is that is does not increase a payment to market value where it is under MV.

(i.e. it only protects the irish tax base) if payment is too high it brings it down to mv and if receipt is too low brings it up to mv. both of these would increase amt taxable in ireland.

do you know the basis to case I deduction for TM or is it just wholly exclusively 81 2 a?

head office recharge - am not sure to be honest. its at cost (right? - dont have Q in front of me - at work!) so at cost must be under MV and therefore no TP issue? ded on basis that it is wholly and exclusively? seems too simple!!

anyone got a view on head office recharge?

smpc · 07-06-2011 02:41PM

Nicky7520 wrote: »

Help! I have just got the home assignment over the weekend (I am a repeat student) and have not been to any lectures/workshop this time around...Can anyone set me on my way by pointing me towards the relevant Sections? Not looking for any more than help than that but I am really at sea...:-((((((:confused:

I found this article quite useful.

Taxation of Outbound Payments by Companies: Interest, Royalties, Annual Payments, Dividends and Related Withholding Tax Issues
ITR jan 07

available on taxfind.

Gonzalo123 · 07-06-2011 03:01PM

smpc wrote: »

does domestic legislation not override this? i saw commentary which was stating that unusual aspect of irish tp legislation is that is does not increase a payment to market value where it is under MV.

(i.e. it only protects the irish tax base) if payment is too high it brings it down to mv and if receipt is too low brings it up to mv. both of these would increase amt taxable in ireland.

do you know the basis to case I deduction for TM or is it just wholly exclusively 81 2 a?

head office recharge - am not sure to be honest. its at cost (right? - dont have Q in front of me - at work!) so at cost must be under MV and therefore no TP issue? ded on basis that it is wholly and exclusively? seems too simple!!

anyone got a view on head office recharge?

I think you are correct. Chapter 5 of ITI Corporation Tax 2010 is useful. The new rules do not address situations where Irish profits are overstated, which would be the case if no trademark royalties were charged. It is only where payments are greater than arm's length or receipts are less than arm's length that the Irish rules kick in.

It is likely that the transaction would not conform to Article 9 of the OECD Transfer pricing document, but I think that it conforms to the domestic Irish transfer pricing rules, which takes precedence in this scenario.

Chapter 19 - Part 2 Annual Payments - seems to confirm the deductibility of the payments. Haven't actually read anywhere that it's deductible in relation to Section 81.

Re head office charge - yes its at cost (no mark-up applied) - so yeah there's an argument there for no transfer pricing issue in relation to Ireland. Are these group related expenses deductible - incurred wholly and exclusively for the purposes of NewCo's trade? Anyone have any ideas on this?? This scenario must happen a lot where parents recharge expenses to subsidiaires, but I can't find anything on this!

Nicky7520 · 07-06-2011 03:22PM

thanks ill check that article out - posts are very helpful - once i get some of my own ideas i will also post (although it could be very lcose to deadline!!)

K Settes · 07-06-2011 04:33PM

Thanks for the pointers here for the part 3 question:

I spent the weekend looking at it - but didn't make that much progress - so your thoughts here are very helpful!

I'm afraid I have nothing to add at the minute but I have a quick question - is it 11.59pm on Friday evening the deadline for submission is?

Thanks!

smpc · 07-06-2011 04:42PM

K Settes wrote: »

Thanks for the pointers here for the part 3 question:

I spent the weekend looking at it - but didn't make that much progress - so your thoughts here are very helpful!

I'm afraid I have nothing to add at the minute but I have a quick question - is it 11.59pm on Friday evening the deadline for submission is?

Thanks!

it is very useful to talk it out. you get very confused when looking at it by yourself - tlkn yourself around in circles.

yes the deadline is this friday midnight so 11:59 as you say i guess. worth noting thought that Turn it in process supposedly takes some time so dont leave it until the last minute!

smpc · 07-06-2011 04:44PM

mehew wrote: »

ok, havent had a chance to check out the Noddy reference yet but I'm meeting a CT expert tomorrow to go through the assignment so I'll see what they think, I should have an answer for you tomorrow hopefully !!

Did the CT expert have a view on this "noddy" comment?

shellcarroll · 07-06-2011 05:13PM

this assignment is doing my head in - don't really know where to start. Thanks for pointing out the ITR jan '07 article though - it's putting a bit of structure on my thinking

Registered AITI Tax Qualification Info and Questions

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