Explain the different corporation tax rates that apply in Ireland and explain what types of income are subject to these different corporation tax rates.

Part A:
Breda incorporated her business on the 1st of January 2023. Her company, Clarke Limited has a 12-month accounting period which will end on the 31st of December 2023.

  1. Breda would like you to explain the schedular system for Irish corporation tax purposes. Explain what schedule and case her news agency trade would fall under and why?
  2. Explain the different corporation tax rates that apply in Ireland and explain what types of income are subject to these different corporation tax rates.
  3. Detail what types of expenditure are specifically disallowed when arriving at a company’s case I/II tax-adjusted profit. Explain what types of expenditure are typically allowed in arriving at a company’s case I/II tax-adjusted profit.
  4. Explain what capital allowances are and when a company might be entitled to claim capital allowances.
  5. Clarke Limited leased out a property under a 15-year lease on the 1st of January 2023. The annual rent receivable by Clarke Limited is €24,000 and a premium of €20,000 was received upfront by Clarke Limited on the 1st of January 2023. Explain how this income will be taxed for Irish corporation tax purposes.

Part B
Breda’s husband, Steve, purchased development land on the 15th of December 1976 for €50,000. The current use value of the land on the 15th of December 1976 was €10,000. Steve sold this land on the 20th of May 2023 for €450,000.

  1. Explain the following terms for Breda: ‘development land’, ‘current use value’ and ‘development value’.
  2. Explain what ‘indexation relief’ is and detail how it is restricted in relation to development land.
  3. Assuming Steve had no other disposals during the tax year 2023, calculate his capital gains tax liability arising on this sale.
  4. Outline when Steve’s capital gains tax liability is due to be paid.