I Am A Company Owner – How Can I Reduce My 2019 Corporation Tax Liability?
Donald J Trump: “Nobody knows more about taxes than me, maybe in the history of the world.”
Whilst the current U.S. President seems to have a knack of not having to pay taxes, it’s a different story for most business owners.
If you have your company year end coming soon you will be aware that company profits equals a corporation tax bill.
Is there a way to reduce or eliminate your company corporation tax bill?
The answer is Yes. Company owners are also employees in their own business. This means that your company can make a lump sum payment into an ‘Occupational Pension Scheme’ for your benefit, and this payment can reduce or eliminate your 2019 corporation tax liability.
How does it work?
Prior to your company year-end you need to make as accurate an estimate as possible of your 2019 company profit. Take the following example:
John’s company has 2019 estimated profits of €100,000. This will lead to a corporation tax bill of €12,500 (12.5% Corporation Tax on €100,000 profit). However, prior to the company year end 2019, John’s business makes a €100,000 payment into an Occupational Pension for John. This means John’s €100,000 profit is now €0 profit because the pension payment is an allowable company expense. The added bonus is of course that John has also extracted €100,000 from his business into a Pension for his own personal use in the future. It is not only a great way of reducing John’s corporation tax bill, it is also a great method of transferring company cash into private ownership. Furthermore, investment growth on the money in the pension also grows tax free and the money in the pension is separate to the assets of the company which protects John personally.
We have been advising clients all over Ireland for many years, showing them how to make smart decisions when it comes to reducing their income and corporation tax liability using effective pension planning.
Call or email us today and we would be delighted to guide you through your options.
Michael Coburn BBS, QFA, FLIA, LCOI, RPA, SIA
Phone: 01 5267770