Money for 2007 received in 2008?

[Crevette]

I was made redundant late last year and it took them a while to sort out my money due for unused holiday payments (I received this in mid january).

I have just received the 2008 tax declaration form for 2007 income.

Should I enclude this income, even though received in 2008? (or this this figure on next years declaration).

Thanks,

Rob

[Ron Avery]

"I have just received the 2008 tax declaration form for 2007 income.  Should I enclude this income, even though received in 2008?"

Seems to me the answer is clearly showing in your post Rob[:)]

[Crevette]

I'm not sure it is that simple!

If so, I would gain as my salary is less this year.

The money received in 2008 should have been paid in 2007 but my old company were so disorganised that it ended up getting paid in 2008.

Rob

[cassis]

Like Ron said, if you received it in 2008 then it is income declarable in 2008.  Even if you were owed it from 1962.  When you earned it is not relevant, it's when you received it.  Imagine if you earned it but never received payment for some reason.

[dr orloff]

I disagree with the blackcurrant. I always declare on an 'accruals' basis.

[NormanH]

tH[quote user="dr orloff"]I disagree with the blackcurrant. I always declare on an 'accruals' basis.[/quote]

 Then l suggest politely that you are wrong.

Cassis for ever

[geno]

I have successfully argued with our local impots to move due tax back to previous year (situation was a bit different, the money was sent to me but wasn't processed by payroll for several months). Despite including a letter with both years tax returns, I received a "proposition de rectification" (= tax investigation on a specific point) from the following year, when it seemed I had under-declared according to their records. Stressful, but worth it financially.

In your case, if the employment ended in 2007 then any payments should clearly have been due before the end of 2007 so I think you'd also have a good case.

However, unless you have another higher paying job starting already, what do you have to gain? You will pay more tax in the end, and lose out on interest on the tax due, and probably get investigated. Just a thought.

[dr orloff]

My reasoning is not based upon detailed knowledge of french tax law in this area but on two suppositions.

Firstly, that my local tax office have confirmed that interest income from the UK should be accounted for in France on an accruals basis.  I therefore assume that the accruals principle is important in french taxation.

Secondly, in the UK, ITEPA 2003 says that if the amount should have been paid in a particular tax period then it should be accounted for in that tax period, even if payment were made in the following tax period.  In the case in question, it seems reasonable that payment should have been made in 2007 upon termination of employment.  Given that there is increasing homogenisation of accounting principles in different countries and, I would guess, a desire by the tax authorities to grab your money at the earliest opportunity, then I personally would extrapolate the same logic to France and declare the amount in 2007.

By all means NormanH suggest that I am wrong, which I well may be.  But please enlighten me as to why - particularly I would like to learn the specific principles of french taxation in this area.

 

[Ron Avery]

 I don't think anyone is right or wrong here, there are probably all sorts of rules about accruals, provisions for outstanding creditors even in France. In the UK there are different principles involved for all sorts of situations, some professionals who charge fees get taxed on their billed fees not what has been received and this can mean paying tax on income that will not even be received in the next tax year or even at all.

In Rob's case he should ask his tax office, I believe he is a French speaker, personally I think he can declare it in 2007 if he wants to or 2008, either way there is a justification if queried, what I would do is look carefully at the tax bands before deciding which route to choose.

[Crevette]

I rang the tax help line and after explaining the situation they confirmed that if the money was received in 2008 then it's imposable for the 2008 income.

French tax hotline: 0810 46 76 87 (in French)
8h - 22h Monday to Friday and 9h - 19h on Saturdays

Rob

[allanb]

[quote user="dr orloff"]I disagree with the blackcurrant. I always declare on an 'accruals' basis.[/quote]

[quote user="NormanH"]Then I suggest politely that you are wrong.[/quote]

Does either of you have a reason? 

[edited: sorry, Dr Orloff, I missed your subsequent post on this.]

I have tried googling this subject without finding an answer.

I have one piece of income which I always declare on an accrual basis, only so that my declaration will agree with the annual certificate issued by the payer. 

I also suggest that if you had a fixed-term bank deposit with interest credited in one lump at the end of the period, you would be entitled to report the accrued amount each year, to avoid some of it being taxed at a higher rate.  But I don't know for sure.