End-of-year action points and preview of 2003

1.) End of the savings book donation

This was postponed from 30 June 2002 to 31 December 2002 and is expected to be the final deadline.

2.) New processing

:: Employee Pension Fund Selection
If no health insurance fund has been selected as a precaution, this is not detrimental, as contributions paid to the regional health insurance fund from 2003 onwards are parked there anyway.

:: Discharge provisions under old law
The provisioning rate will be reduced to 47.5 % of severance pay entitlements from 2002 onwards, and to 45 % for 2003. If the employer decides to release the severance pay provision, this can be done on a tax-neutral basis as early as 2002, regardless of whether or not the transition to the new severance pay system takes place. Reversal in 2002 is advisable if the transfer amount is to be paid to the MV fund from 2003 onwards, as the full amount is then tax-deductible in equal annual instalments of one-fifth.

3.) Tax-effective payments for 2002

To be tax-deductible, these amounts must be paid before the end of the year:
– Donations to certain research and educational institutions, amounting to 10 % of the 2001 annual income. With effect from 5 October 2002, the list was extended to include certain private museums and umbrella organisations for disabled sports organisations (Section 4(4)(6) of the Income Tax Act).
– Special editions (Tax consultancy fees of any amount, church contributions up to €75,– per annum, personal insurance policies subject to restrictive carry-forward rules)
– Exceptional burden Without an excess, e.g. for catastrophic damage and in the event of a 25 % loss of earning capacity. With an excess, e.g. medical expenses
– Tax and contribution-free benefits for employees

4.) Income of adult children

– Family allowance
The claim shall lapse if, in the calendar year following the calendar year in which the child reaches the age of 18, their taxable income € 8,725,– exceeds. In this case, the family allowance received throughout the year will be reclaimed. The previous holiday arrangement has been abolished.
– Income tax
With self-employed activity (e.g. freelance contract) a Income tax return to be submitted if taxable income exceeds €6,975,– per annum.
– Value Added Tax
One VAT return is to be handed over if the annual turnover €7,500,– exceeds. However, up to €26,400,– p.a., there is a de facto exemption from VAT (small businesses).
– Social security
Does the withdrawal from a genuine employment relationship The de minimis limit of €301.54 is subject to full insurance obligations.

5.) Loss allocation models

According to § 2 para. 2 a and b EStG, existing Loss offsetting and loss carry-forward prohibitions You have been warned.
– The Offsetting losses is forfeited if the primary aim is to achieve tax advantages, as well as for holdings with a focus on the management of intangible assets or commercial rentals. Such losses can only be offset against profits from this holding in subsequent years.
– For the Loss carryforward Does a Offsetting limit amounting to 75 % of the positive income.
The Good newsFor the area of rental income, loss participation models are recognised for tax purposes in certain cases (e.g. pre-arranged residential property).
The bad news: Debt-financed pension insurance schemes (e.g. the ‘Schnee’ model) are to be regarded as equity investments within the meaning set out above. This applies to contracts concluded after 31 July 2002. Furthermore, restrictive measures have been in force since 31 October 2000 to prevent negative distribution-equivalent income arising from investment holdings.

6.) Social Security Law Accompanying Measures in the Wake of the Flood Catastrophe

– Ongoing contribution checks are suspended
– No additional contributions for late notifications
– Payment by instalments in the event of financial difficulties
– Waiver of interest on arrears
– Suspension of enforcement measures

7.) De minimis limits under the ASVG

The amount is expected to increase from €301.54 p.m. in 2002 to €309.38 p.m. in 2003.

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