Todays Blog

Posted by Pat  •  Filed under R&D Tax Credits - Volume Basis

The R&D credit currently applies to incremental expenditure with reference to a fixed base period of 2003. The first €100,000 of qualifying R&D expenditure will now benefit from the 25% R&D tax credit on a volume basis. The tax credit will continue to apply to incremental R&D expenditure in excess of €100,000.
Use of the credit to reward R&D employees
Companies in receipt of the R&D credit will have the option to use a portion of the credit to reward key employees who have been involved in the development of R&D. This credit will be a tax-free payment in the hands of the employee.

Tagged: Timothy & O'Connor, CRO, Revenue, PAYE

 21/02/12

This Weeks Blog

Posted by Pat  •  Filed under Investment Incentive (EII) & Seed Capitol Scheme (SCS)

The new EII scheme has been introduced to replace the Business Expansion Scheme. This scheme is now available to the majority of small and medium sized trading Companies. Under the EII Scheme income tax relief at an effective rate of 30% of the amount invested is allowed in the year of investment. Further tax relief of 11% is deferred until the third anniversary of the investment and is subject to certain conditions being satisfied. The scheme allows an individual investor to obtain the relief on investments up to a maximum of €150,000 per annum in each tax year up to 2013. Investors must be resident in Ireland and the shares purchased must be held for at least 3 years to claim the full relief.

Tagged: Timothy & O'Connor, CRO, Revenue, PAYE

 21/02/12

This Months Blog

Posted by Pat  •  Filed under Relevant Contract Tax (RCT)

The new RCT on-line system commences 1 January 2012.

  • 0% Rate – subcontractors fully tax compliant.
  • 20% Rate – subcontractors registered for tax and significantly tax compliant.
  • 35% Rate – subcontractors not registered for tax or poor tax compliance.

Where a principal makes a payment without first obtaining a Deduction Authorisation the principal will be liable to RCT at 35% regardless to the deduction status of the subcontractor. In addition to the RCT amount, a penalty up to €5,000 may be payable. Application for the Deduction Authorisation must be done in advance of the payment on the ROS online system.

Changes to Self - Assessment
“Chargeable Persons” will now have to actually calculate and include their tax liability/refund due as part of their return, in addition to the income/gains and claims for the year. In future a Revenue Assessment will only issue where Revenue disagree with the calculation or if a paper return is submitted by 31 August.  This measure will apply to Income Tax Returns for the Tax Year 2013.  

Enhancement of Special Assignment Relief Programme
This relief aimed at attracting key talent to Ireland will operate by exempting from income tax 30% of the individual’s employment earnings between €75,000 and €500,000. The conditions are as follows:

  • The employee must be assigned to work in Ireland from a country with which we have a double tax treaty and arrive for work in Ireland before 31 December 2014.
  • They must work for the Irish employer for a minimum of a year and a maximum of 5 years.
  • They must have been working for the assigning employer for 12 months prior to relocating in Ireland.
  • They cannot be resident in Ireland in the 5 years prior to their arrival.

Foreign Earnings Deduction
A new Foreign Earnings Deduction is to be introduced to aid companies seeking to expand into emerging markets. The deduction will apply for individuals who spend 60 days or more developing markets for Ireland in (Brazil, Russia, India, China & South Africa).
The relief operates by reducing the individual’s taxable Sch D or Sch E income in proportion to their foreign workdays compared to their total workdays. Relief is capped at €35,000 and the deduction will operate for 3 years ending in 2014.
Start-up Companies - Exemption for start-up Companies from Corporation Tax and Capital Gains Tax is extended to 2014.
Cessation of employer PRSI relief regarding employee pension contributions. - All employer PRSI relief regarding employee contributions to pension schemes with effect from 1 January 2012 is abolished.
Universal Social Charge - From 1 January 2012, individuals with total income lower than €10,036 (previously €4,004) will be exempt from the Universal Social Charge. The following rates will apply from this date:
Persons under age of 70 – Annual Income                                       Rate


Total Income under €10,036

0%

First €10,036

2%

€10,037 - €16,016

4%

Over €16,016

7%

Over €100,000(self assessed income only)

10%

Redundancy Rebate -Employer rebate on statutory redundancy payments is reduced from 60% to 15%.
Employee PRSI on investment income  - From 2013 employees paying tax through the PAYE system will now also be required to pay PRSI on rental and investment income.
Employee PRSI on share-based remuneration -Employee PRSI will apply to all share based remuneration from 1 January 2012. The exemption from employer PRSI on all such remuneration remains in place.

Mortgage Interest Relief
Purchasers of properties between 2004 and 2008.
Mortgage Interest relief will be increased to 30% for first time buyers who took out their first mortgage between 2004 and 2008. The rate of tax relief on the interest paid on such loans will, for the tax years 2012 to 2017, be 30%.
Purchasers of properties in 2012.
First time buyers who purchase a home in 2012 will be entitled to claim mortgage interest relief at a rate of 25%, while non-first time buyers will be entitled to claim relief at a rate of 15%. Mortgage interest relief will be phased out by 2018.
Household Charge -The household charge of €100 per household will be effective from 1 January 2012. This charge will be replaced by a charge on property values from 2014 onwards.
Absenteeism - Previously, the first 36 days of Illness Benefit and Occupational Injury Benefit paid to employees was tax free, this exemption is now removed.
DIRT - The main deposit interest retention tax (DIRT) rate has been increased from 27% to 30% and the higher DIRT rate of 30% has also been increased to 33%. These increases will apply from 1 January 2012.
Approved Retirement Funds (ARF’s)
The annual imputed distribution from ARF’s has been increased from 5% to 6% for ARF’s or multiple ARF’s exceeding €2m. The annual imputed distribution is the amount of an ARF which must be subject to tax annually. This applies for the year to 31 December 2012 onwards.
Personal Retirement Savings Accounts (PRSA’s)
Vested PRSA’s (PRSA’s from which retirement benefits have commenced to be taken) are now treated the same as ARF’s for the purpose of the annual imputed distribution and the increase to 6% referred to above.
Capital Gains Tax
The rate of CGT was increased from 25% to 30% with effect from 7 December 2011. A new incentive for property purchased between 7 December 2011 and the end of 2013 was introduced. If a property is bought during this period and held for at least 7 years, the gain attributable to that 7 year holding period will be relieved from CGT. (i.e. Property sold after 10 years, 7/10th of gain relieved).
Capital acquisitions tax
The rate of CAT was increased from 25% to 30% with effect from 7 December 2011.The parent- to- child tax free threshold for CAT purposes has been reduced from €332,084 to €250,000.Retirement Relief thresholds for transfers remains at €750,000 where an individual is aged between 55 and 66. Where an individual is age 66 or over, the limit is reduced to €500,000.

Stamp Duty - Commercial property
The rate of stamp duty on non-residential property has been significantly reduced from the top rate of 6% (on transfers exceeding €80k) to a flat rate of 2%.
This 2% rate will not only apply to transfers of commercial & industrial land and buildings, but also to farmland and transfers of business assets such as goodwill, debtors, contracts etc. The new rate will also apply to premiums paid on leases of commercial buildings.
The 2% rate will apply to instruments (e.g. deed of conveyance/lease for immovable property, asset purchase agreement for business assets) executed on or after 7 December 2011.
Relief for transfers within families
The special 50% stamp duty reduction for transfers within families, which was removed for transfers of residential property in Budget 2011, is to be totally abolished from 1 January 2015.
Property and Investment - Property based tax incentives
Some changes were announced including the introduction of a 5% USC surcharge targeted at property investors whose gross income exceeds €100,000.  The surcharge will apply on the amount of income sheltered by property reliefs in a given year and will be introduced with effect from 1 January 2012. Changes have been made to tax deductibility of Property based Capital allowances.

VAT

The standard rate of VAT has increased from 21% to 23%, effective from 1 January 2012.

The 9% reduced VAT rate, which was introduced on 1 July 2011 and remains in force until 31 December 2013 applies to restaurants, accommodation, hairdressing and certain printed publications and recreational admission charges. With effect from 1 January 2012 this rate will also apply to admission to historic houses and gardens.

Taxation of Farmers

  • Farmers will be allowed a double income tax deduction for increases in carbon tax on farm diesel.
  • Enhanced 50% stock relief for partners in registered farm partnerships to run until December 2015.
  • Vat Refunds made under Ministerial Orders (e.g. farm buildings acquired or built by unregistered farmers), can now effectively be clawed back with interest and penalties where the conditions of the Order are no longer satisfied.

 

 

First Floor, Quayside House,1-2 Princes Street, Tralee, Co. Kerry
Tel +353 (0)66 712 9579/712 4454, Fax +353 (0)66 712 9585, E-mail info@tocaccountants.ie, info@paybond.ie

 21/02/12

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Our Vision is to provide a professional payroll service that will support employers to reaffirm the bond of trust with their employees each payday. This bond of trust also exists between  Principals and their Sub-Contractors. Our Vision is to facilitate the on going efficient operation of contractual payments to Sub Contractors.

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Our Mission is to provide an outsourced payroll administrative service to Employers and Relevant Contracts Tax Agency service to Principal Contractors that gives our clients the flexibility to focus their management resources on core business. Our service offering is based on regular and timely communication between our client and our engagement team.

Address: Quayside House Tralee
Phone: 066-712-9579
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