Does a new subsidiary co qualify for corp tax relief?

[ninak]

Just wondering about something. We are considering setting up a subsidiary Co. of our existing Co. Can subsidiary companies qualify for the Corporation tax relief scheme? The service would be a different one than that provided by our existing company, so it would be a new business. Should we set up a separate Co altogether to qualify?

If we do have to set up a new Co to qualify, I see that companies can be deemed to be associated if they are both under the control of the same persons. If so would setting up a new company with the same directors as the existing one disqualify it from the Corp tax relief anyway?

Sorry if this is confusing, but I am a bit confused!

 

[Tomorrow]

From memory, the stipulation is that the trade
must be a new trade, not related to a previous trade.
So if it is a new trade, it should be ok.

Note that the rules have now changed and the corporation tax relief is
now given in the form of a reduction in PRSI paid by the company.

www.accountantonline.ie

 

[ninak]

Hi Tomorrow,thanks for the reply. I was reading up on those changes today. Does that mean that if the corporation tax profits are more than the prsi paid during the year, the bal of tax is still owed?

 

[ninak]

Sorry, one more question. On revenue it says relief is linked to "employers prsi payed" does that include the S class prsi paid to ourselves as prop. directors?

 

[mandelbrot]

Hi Tomorrow,thanks for the reply. I was reading up on those changes today. Does that mean that if the corporation tax profits are more than the prsi paid during the year, the bal of tax is still owed?

Yes that's exactly it; the relief is focussed on new businesses that are generating employment. So if you don't employ any new employees in this new company (apart from the directors) then there is effectively no tax break.

Sorry, one more question. On revenue it says relief is linked to "employers prsi payed" does that include the S class prsi paid to ourselves as prop. directors?

No unfortunately, because technically S class PRSI is paid by the director rather than by the company, and there is no employer's contribution.

 

[ninak]

Thanks for the info mandelbrot. As I thought then. Hate that useless S class !!!