Some of the wealthiest in the country pay little or no tax: How is it done?

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ninsaga

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Seem to recall somewhere that 'some' of the wealthiest in the country pay little or no tax. If this is the case then how is that....

I mean for example, if someone bought a property for €50k & sold it for €200k, then they would be liable for CGT on the €150k profit ..right?....but is it that these investors then instead of pocketing the money from the proceeds of the sale that instead they reinvest the full amount of €200k back into some other form of investment?

ninsaga
 
Re: How is it done?

No. It used to be possible to avoid CGT in the manner you describe by using a (rather limited) concession called rollover relief but it was abolished some years ago.

The most common of the tax avoidance schemes used by the wealthy in this country involve maximising capital allowances on tax-incentive properties that are available to offset against rental income.
 
when you hear or read that "'some of the wealthiest in the country pay little or no tax" that usually refers to income tax rather than CGT. There are a number of legal tax avoidance schemes available to wealthy people. In addition, many wealthy people base themselves in other countries for tax purposes and end up paying no income tax in Ireland.
While the Govt pays lip service to a so-called "review" of such schemes (costing a fortune in fees to consultants, by the way) the reality is that a Govt with FF in it is reluctant to deal with this because many wealthy people make significant contributions to the FF party and individuals therein, thereby ensuring that they exert significant influence on Govt policy.
(This is not an anti-FF rant, it is just the way it is. I have no affiliation to any political party).
 
Well with no planning officers ever being fired for saying 'NO', in reality the bizarre 'planning' process means developers who are in the business have not had to bribe anybody for years. With a cilvil servant prepared to say NO rather than YES why would Mick Bailey need to pay anybody?

Easily the greatest contributor to developers profits are planners saying NO.
 
FF are a soft target in discussions such as these as they have been in power for 18 of the past 20 years. However people forget that Ruairi Quinn was the Finance Minister who was responsible for the greatest ever expansion in property incentive tax schemes in the mid 90s including such dubious schemes as the Seaside Resorts holiday cottages incentives. Compared to nowadays, it was a lot easier back then for high rollers to eliminate their tax bills altogether using these incentives yet Ruairi and his friends didn't see anything wrong in this.
 
Yeah, it's because the government's dabbling in Keynesian economics (i.e. offerring financial support for various commercial activities some of which are of arguable benefit) uses the mechanism of tax breaks rather than directly issuing grants. This means that only people with high incomes can avail of this government largess or porkbelly as the Americans call it. It also means it doens't appear as an item in the budget which means they can avoid political debate on whether the government should be spending 100s of millions on helping builders destroy the traditional fabric of Irish seaside towns and villages by encircling them in semi-detached estates of holiday homes.

It's a win-win for politicians (and I'm not singling out FF on this). You get to hand out the pork to a favoured special interest group (for some strange reason, it's always the construction industry) but you don't have to budget for it or justify it politically.

If you don't earn over 150K a year, you're simply not invited to the party. Whatever about the extremely dubious nature of the argument that the holiday home industry, for example, needs financial support from the government, I can't see how restricting the support to only the existing high-earners is defensible at all.
 
Isn't the original question ' what are the legal income tax avoidance schemes that the super rich avail of?' I'm throwing out as a possibility ( only that as these are wild guesses as I am not an expert, indeed I haven't a clue) - aren't there exemptions for earnings for 'artists', so that the likes of U2, prominent artists and authors can be exempt on that part of their earnings? Also wasnt there something mentioned about tax relief on earnings from the horse/bloodstock industry, or was that in relation to government grants?
 
I am not defending U2 (especially that twat Boner) but giving tax breaks to artists is not necessarily a bad thing

These are people who can, if they want, become non-resident very easily and still pay no tax in this country
Look at the number of British artists that are not British residnet for tax purposes

They are still taxed on any other income the same as others, on which they would not be if they were non-resident
Also, it encourages them to inwardly invest their wealth in this country as it is the country where they reside

stuart@buyingtolet.ie
 
Vanilla said:
Also wasnt there something mentioned about tax relief on earnings from the horse/bloodstock industry, or was that in relation to government grants?
Click to expand...

Fees from "stallion services" (you know what I mean!) are exempt from tax I believe.

[broken link removed]
 
I can see why it can be a good idea to encourage art and literature. I wonder though whether a cap on the exemption threshold might not be fair? Or perhaps there is one and I'm talking through my hat!
I wonder why there's an exemption on stallion fees? To encourage that industry?
 
I am an artist (trained as a sculptor in the 1970's) and investigated my possible tax-free status if/when I return to Ireland (I am Irish). It is difficult to establish the criteria for tax exemption, and as most working artists have relatively small and unreliable incomes from sale of their work there is very little to get exemption on! I would not put 'artists' in the category of 'wealthiest in the country' and suggest U2 and others have high earnings on account of their celebrity status.
 
I'd suggest that the artists exemption is capped at something like 100k, or even 500k per annum - there really is no reason for the state to subsidise the super-rich in this way. If they go offshore, then good luck to them. There might need to be some mechanism for those whose income comes in spikes, e.g. authors who do very well one year from a new book, but very badly over the next few years.
 
Rainy - that is the precise reason for encouragement of the arts and the Aosdana system. So many artists cannot continue through the very lean times and give up. Unfortunately there's never likely to be any speculation 'bubble' in the artworld:rolleyes:
 
criteria for tax exemption

I thought the rule of thumb was that you had to show that more than 2/3 of your annual income came exclusively from the practice of your "art"...(?)
 
Hello Doc - yes.......and for the first 5 years or more after setting up shop it is virtually impossible to live off 10K or so (if you sell 4 - 5 pieces) so most bona fide practising artists must do other things also (labouring, part-time barwork, part-time teaching etc.) which makes them ineligible for status of artist! A bit of a Catch 22! Regarding the tax breaks for celebrities - they do rather stick in the craw as absurd but there are intangible cultural and psychological benefits to presence of creative individuals in the midst of the lumpen proletariat (I speak as both artist and lumpen prole before everyone fires off protests:p. )
 
Todays Irish Times article - that the 30 wealthiest people in Ireland pay no tax!
 
I'd still second RainyDay's comment about the inequity of not capping the exemption. Mega-rich 'artists' like Bonio/Michael Flatface get more than enough satisfaction on the brown-nose front as it is; could not a small slice of their earnings, properly ring-fenced, yield a whole host of tangible 'cultural and psychological benefits'...?

[Edit: speaking of 'struggling' billionaire artists - here's one bit of good news..! :D]
 
But who were the 30 wealthiest people in Ireland not paying tax, were they people who live outside the country most of the year. But in that case, being pedantic, they're not really the wealthiest people in Ireland. Are they counting just income tax, did they ignore CGT, stamp duties, VAT etc..
Michael O'Leary is surely one of our wealthiest residents - but most of us know he pay's his taxes, since he pays using a large lottery style cheque every year.

I remember reading U2 play plenty of tax since the exemption is just on the songwriting portion of the income.

Some of the fuss came about as a response to a Joan Burton Dail question, I believe at that time they were around 13 people earning 1M a year or over not paying any tax. For numerate people the figure was trivial and the story could have ended there. Some of the people involved had invested in schemes with tax reliefs (hotels were mentioned as an example) and were writing off the income against the original investment, if the investment generated jobs I be prepared to say it's a good thing.

Also at least these people are declaring their income, there's plenty who don't - particularly in the construction and related sectors.
 
Re: criteria for tax exemption

DrMoriarty said:
I thought the rule of thumb was that you had to show that more than 2/3 of your annual income came exclusively from the practice of your "art"...(?)
Click to expand...

Are you sure about the 2/3 thing, I thoughtonce the income came from a work they determine to be a piece of art it was exempt? That would seem to be what is suggested here:

[broken link removed]

If Ruairi Quinn can apply I'd wonder if 2/3 of his income is coming from his book.

http://www.unison.ie/business/stories.php3?ca=80&si=1475222
 
i presume what people do is to say invest in a multistorey car park, or student apartments or something etc? Right, so lets say you did that for 10 years in a row. But at some stage I assume you are going to get money back. Lets say you had invested 50k in a student apartment block in 2001. So at this stage you are receiving rental income yes? So I assume that staxable unless you are investing in more tax free schemes? But at some stage you have to take money back out of them...say sell the students apartments....so what happens then???
 
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