Seizing on the nearest project with a tax break attached is not considered to be a sensible approach to taxation planning, writes Laura Slattery.
The countdown to the Hallowe'en deadline for paying and filing a tax return now stands at six days. That's not an awful lot of time left for chasing down accountants in the hope they can find you a nice, legal, tax break.
It is, however, plenty of time to worry about the size of your liabilities and think about how, next time, it's going to be different.
Next time, you're going to exploit every tax shelter under the sun.
But while "tax relief" might sound like the magic, soothing words that will soften the blow of a massive tax bill, financial advisers urge their clients not to get so carried away that they forget about the risk involved.
"People are flattered by tax breaks. There's this Irish attitude of 'I'd do anything except pay the tax'," says Mr Paul Overy of advisers Financial Engineering Network.
Tax-deductible investments such as the Business Expansion Scheme (BES), Section 481 film finance and a range of property incentives are all about spending money to save tax, but hopefully getting something back in return.
Some people might prefer to give their money to a passing musician, film producer or property developer than the Revenue, but seizing upon the nearest project with a tax break attached is not generally considered to be a sensible approach to tax planning.
If you put €10,000 into a scheme offering full tax relief, the only guarantees to your capital is the €4,200 you will make in the form of a tax saving, provided you are a 42 per cent taxpayer.
The other €5,800 is completely at risk.
Another more positive way of looking at such schemes is that the investment fund would have to lose more than 42 per cent before individual investors start making losses. But each tax-deductible investment should be considered and researched on its own merits, tax experts warn.
For example, if investing in a property tax scheme, it is important to check with local estate agents that you are not paying over the odds.
In the case of a BES or film project, it might be a good idea to be familiar with the industry you are investing in.
But make sure you're not so close to the project that it clouds your investment judgement: friends and family often stump up cash for BES projects. That's not an investment decision, says Mr Overy, that's breaking the rules on keeping business and personal affairs strictly separate.
"People race towards the tax break and do little or no diligence to the investment itself. You have to ask yourself, if there was no tax break, would I consider doing it? If the answer is no, don't do it," says Mr Overy.
