Students Applying for a College Grant

Applicants for college grants are advised to apply early. The grant awarding authority will need supporting documentation in order to determine eligibility for a grant. You may need a PAYE Balancing Statement (P21) from Revenue as proof of earnings for last year to support your grant application. You can get a P21 quickly and easily online using PAYE anytime.

Payroll – Treatment of Taxable Illness Benefit

Revenue issued a notice for employers operating payroll advising that from 1 January 2012 all employees’ taxable illness benefit should be included with earnings. However, where employers have decreased tax credits and tax cut-off points rather than including the benefit as part of taxable pay, this approach can be continued for 2012 only.  Revenue has now issued eBrief No. 37/12 which covers the treatment of taxable Illness Benefit paid to PAYE employees by the Department of Social Protection (DSP).

For more details on this please contact CAG Chartered Accountants

Voluntary Sector – Boards of Management and RCT & VAT

Boards of Management must now operate as a principal contractor from 2012 onwards. Typically this will meanoperating RCT each time a contractor is engaged to do work in relation to the school building, e.g. plumbers, builders etc. In addition to operating RCT, Boards of Management must also register for VAT because the Reverse Charge regime applies to RCT contractors.

Boards of Management should not ignore this new requirement and if any further details are required please contact CAG Chartered Accountants.

Implications for Overdrawn Directors Loan/Current Account

This article addresses the position where the director’s loan is overdrawn i.e. the director owes this money back to the company. There are many issues which the director and the company must comply with and we have drawn attention to the most pertinent ones below.


Income Tax charge under S438 for the company

If a balance remains outstanding on the director’s loan account at the company’s year end, this can lead to an income tax charge of 20% for the company. For example if there is a loan balance of €60,000 the total benefit is regrossed and treated as €60,000/80% = €75,000.  The company must then pay €15,000 to the Revenue as an income tax charge.


If the Director repays this loan, the company can request a refund of this income tax payment from Revenue provided it is done within 4 years from the end of the year of assessment in which the loan is repaid.



Benefit in Kind for the director

An overdrawn director’s loan account can trigger a benefit in kind for the director. An overdrawn director’s loan account is effectively an interest-free loan and any benefit will be treated as Benefit In Kind and the company must operate PAYE / PRSI / USC on this benefit.


Tax implications if the loan is forgiven by the company

If the loan is forgiven by the company, the Director will be liable to income tax on the full amount of the loan.  The company is not entitled to any tax deduction for the forgiveness of this loan.


Company law implications of an overdrawn Director’s loan

It is illegal for a company to loan more than 10% of its net assets to their Directors and if this restriction is violated, the Directors can be prosecuted by the Office of the Director of Corporate Enforcement (ODCE).


Record Keeping and Disclosure

Proper record keeping for each of the directors is necessary as poor records could result in the incorrect allocation of expenses/payments resulting in the precise taxes not being paid.

Furthermore, good records are important because disclosure of the balance on each overdrawn director’s loan account must be made in the company’s accounts.


If you are experiencing difficulties with director’s loan account, CAG Chartered Accountants would be happy to discuss this article relevant to your situation.

Employee PRSI on Share Options – Change in Practice from 1 July

From 1 July 2012, employees and former employees are obliged to account for employee PRSI, in addition to tax and USC, on share option gains in their Relevant Tax on Share Options (RTSO1) returns.
As members will recall, since 1 January 2012, employee PRSI has been payable on all share option gains.  However, employers have withheld PRSI through the payroll.  Section 9 of the Social Welfare and Pensions Act 2012 transferred responsibility for accounting for the PRSI to the employee with effect from 1 July 2012.


For more details contact our office.

New Business Regulation Website

The Department of Jobs, Enterprise and Innovation has recently launched, a web portal aimed at reducing the burden of red tape on business by bringing together in one place clear information on regulations imposed by over 30 Government bodies. was developed to address a clear need identified by business for a single source of information on regulatory requirements; by providing users with over 150 separate links to information, guidance and contact details, the portal reduces the need to trawl through multiple pages on different websites in search of the right information.


Website address:

New Contact Arrangements for ROS Payments

Payment queries for those using the Revenue On-Line Service [ROS] should be directed to our new dedicated helpline number – 1890 226 336 (international customers +353 1 7023052).