Revenue introduced this relief to allow entrepreneurs obtain tax relief in relation to tax paid by them in prior years. If you are starting a new company, you may be entitled to an income tax refund of up to 41% of the capital you invest under SURE.

Example

Revenue provide a basic example which is set out below. John makes a SURE investment of €100,000 in 2015. The €100,000 investment made by John can be used to reduce his taxable income in one or more of the previous six tax years. John’s Earnings & Tax Paid for the last 6 years [2009 to 2014], per his Forms P60, and current year, per his Form P45, are as follows: John opts to utilise his SURE investment of €100,000 in 2011. This reduces John’s taxable income and tax payable for 2011 to Nil and results in a SURE refund of €29,532 calculated as follows: 2011 Earnings: €100,000 SURE Investment: €100,000 Taxable Income: €Nil As John paid tax of €29,532 in the 2011 tax year, and has previously not received a full or partial refund of tax paid in the 2011 tax year, he will receive a SURE refund of the full amount of the tax he paid in the 2011 tax year of €29,532.

General Conditions

The general conditions for SURE are that you must: • Establish a new company carrying on a qualifying trading activity; • Have mainly PAYE income in the previous 4 years. This would include a person currently in PAYE type employment, an unemployed person, a person recently made redundant or a retired person; • Take up full-time employment in the new company either as a Director or an Employee; • Invest cash into the new company by way of purchase of new shares.

The Investor (you)

• You must make an investment by purchasing new eligible shares. • You must hold the shares for a period of 3 years from the date of issue. • You must hold at least 15% of the issued share capital of the company for 12 months after the issue of shares, or if the company is not trading at that time, from the date it begins to trade. • Your income from previous years must have been mainly liable to PAYE. However income in the year immediately before the investment can be from any source. For example if your SURE investment is made in 2015, your income for the 2011 to 2014 tax years are examined and the following applies: - 2014: Your income can be from any source - 2013, 2012, 2011: Your non-PAYE income should not exceed the lower of your PAYE income or €50,000. • You must enter a full-time employment for a 12 month period with the company as an employee or a director starting either within the year in which the investment is made or if later, within 6 months of the date on which the share issue is made. It should be noted that you cannot be employed elsewhere during this 12 month period (except where the aggregate amount of such other employment(s) is no more than 10 hours per week). • You must not receive any payments from the company other than reasonable remuneration and expenses in the 3 year period after the share issue. During the 12 months before your first investment in the company you must not have held (or have been entitled to acquire either directly or indirectly) more than 15% of the share capital, loan capital or voting rights of any other company. This condition may be set aside where you only held an interest in only one other company and either: - The company is dormant i.e. no turnover in any of the previous 3 years; or (a) The company had an annual turnover not exceeding €127,000 in each of the three accounting periods prior to the SURE investment; and (b) The other company mainly carried on a qualifying trading activity. The subscription for the shares must be for bona fide commercial purposes. • You must not avail of SURE for the purposes of avoiding tax only. • Neither you nor the company may enter into any agreement, arrangement or understanding which could reasonably be considered to eliminate the risk from your investment.

What questions do you have?

We are happy to help. Please post your comment below or call Paul Leonard, Partner at Cooney Carey, on 01 677 9000. Alternatively, send him an email: pleonard@cooneycarey.ie

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