Tax Refunds for PAYE workers

    

           YOU MAY BE ENTITLED TO TAX RELIEF ON :

• Mortgage interest for the house in which you live– if you bought your first house within the last 7 years
• Medical Expenses 20% of the amount paid.
  • Not apply to routine dental and optical work
  • Nursing home, maternity
  • Keep receipts
  • Claim VHI/BUPA first
  • Form Med 1 available from Revenue
• Medical insurance paid on your behalf by your employer. 
• Wheelie bin charges (amount paid by 20%) capped at €80
• If you are renting accommodation
• If you have paid a pension (barring one paid through your employer’s payroll).
• Trade union subscriptions- €70 per year
• Professional subscriptions and any expenditure necessary for your job e.g. Medical indemnity for doctors 
• Certain College fees – course must be over 2 years.- approved college
• Certain donations to charities and sports bodies
• Over 65s can earn up to €20,000 if single and €40,000 if married free of Income Tax and Income Levy. If you are over 65 and in receipt of a pension / deposit interest you may be entitled to a refund.    
• Certain trades are entitled to flat rate expenses eg. a nurse who provides and washes her own uniforms gets €733 x 20% = €146 per annum.  
• You may also be entitled to relief if you are married and the lower earning spouse is earning less than €27,400 or is not working at all.

2010 Finance Bill

 2010 FINANCE BILL SUMMARY

Start-up Companies

The relief from corporation tax for start-up companies has been extended to those companies commencing to trade in 2010. It applies for 3 years from the commencement of the trade. To qualify for the relief the Corporation Tax that would have been payable must not exceed €40,000. The relief does not apply to professional service companies.

Childcare Capital Allowances Scheme

The Bill proposes to terminate the scheme of capital allowances for expenditure incurred on the construction, conversion or refurbishment of buildings used as childcare facilities.  Transitional measures will apply to projects in the pipeline.  A termination date of 30 September 2010 will apply unless certain qualifying conditions are met.

Capital Allowances on Energy Efficient Equipment

The categories of energy-efficient equipment qualifying for 100% capital allowances in the year of purchase, where purchased for trading purposes, are being extended to include refrigeration and cooling systems and catering and hospitality equipment.

Income Tax

Restriction of Reliefs for High Earners

Section 22 of the Finance Bill outlines the means of increasing the effective rate of income tax for ‘high income’ individual taxpayers to 30% (previously 20%) applying greater restrictions on the use of certain income tax reliefs.

• The full restriction will apply where adjusted income is over €400,000 (previously €500,000).
• The entry level to which the restriction will apply is reduced from €250,000 to €125,000.
• The formula for calculating the restriction in section 485E TCA 1997 is amended so that the amount of specified reliefs allowed is the greater of €80,000 (previously €125,000) and 20% (previously 50%) of the individual’s adjusted income for the tax year.  This should give an effective rate of income tax of at least 30% where adjusted income is over €400,000.     
• There is no change to the list of specified reliefs as contained in Schedule 25B TCA 1997.
• The changes do not appear to simplify the legislation or clarify an anomaly in relation to the new reduced entry point of €125k and the current permitted annual income tax relief of €150k for BES investments, both of which were addressed in our pre Finance Bill submission.
• The changes apply from 2010 and subsequent tax years.

Rental Income

• Capital allowances arising in the year are to be deducted in priority to losses carried forward from a prior year.

Remittance Basis

• The Bill proposes to abolish the existing remittance basis of taxation for Irish domiciled individuals who are not ordinarily resident in Ireland.  
• Furthermore, Revenue must be satisfied of an individual’s non Irish domicile status for the remittance basis to apply.
• This change applies with effect from 1 January 2010. 

Special Assignment Relief 

• A special assignment relief was introduced in Finance Act (No.2) 2008 to attract key talent from overseas. 
• The relief applied to non Irish domiciled individuals who are nationals of non EEA countries and with whom Ireland has a tax treaty.  
• The Bill extends the relief to include EU and EEA nationals who are non Irish domiciled. In addition the Bill reduces the period of assignment to Ireland to one year from three years.
• The changes will apply to individuals who come to live and work in Ireland on or after 1 January 2010.

Domicile Levy

• The bill introduces a new €200,000 levy for individuals from 2010 onwards

o        Whose liability to Irish income tax is less than €200,000,

o        whose worldwide income for a tax year is over €1m

o        and whose Irish situated property is valued at over €5m on a valuation date.

• The levy applies to individuals who are Irish domiciled and Irish citizens regardless of residence.
• Irish income tax will be allowed as a credit against the domicile levy.
• In calculating the value of Irish property no deduction is given for borrowings. 
• The valuation date is 31 December for the year in question.
• For 2010, the levy will be payable on or before 31 October 2011.
• Reassuringly, shares in trading companies are excluded from the definition of Irish situated property for the purposes of the €5m test.

Income levy

The Bill provides broadly an extension of relief from the income levy with regard to earnings from foreign employments as follows: 

• Cases where cross border relief applies
• Income subject to a PAYE exclusion order

 Mortgage Interest Relief

• Mortgage interest relief is extended to 2017 for qualifying loans taken out on or before 31 December 2011.  Current rates and levels of relief will apply to these loans.
• Qualifying loans taken out during 2012 will get relief at 15 per cent for first-time-buyers and 10 per cent for non first time buyers. Secondly, the ceiling of qualifying interest for all these qualifying loans will be €6,000 in respect of married or widowed persons and €3,000 for others (irrespective of whether the borrower is a first-time-buyer or non-first-time-buyer).
• Loans taken out on or after 1 January 2013 will not qualify for mortgage interest relief
• Mortgage interest relief will be abolished completely for the tax year 2018 and subsequent tax years. 

Relief for Health Expenses

• The Minister may deem certain treatments ineligible for tax relief where those treatments would be considered to be contrary to public policy.
• Disallowance of cosmetic surgery  unless such surgery is necessary to ameliorate a physical deformity arising from, or directly related to a congenital abnormality, a personal injury or a disfiguring disease.
• Hospitals subject to some conditions, no longer need the approval of the Minister for Finance before a claim for expenses can be made. Nursing Home fees will qualify for relief provided 24 hour on site qualified nursing care is available.

PAYE Credit for Proprietary Directors

• The Bill provides that the credit can only be given to the extent that PAYE has been deducted.

Bin charges

• Abolition of income tax relief for service charges paid in 2011 and subsequent years. In 2011 you will be able to claim relief for service charges paid in 2010.

Capital Acquisitions Tax

• Introduction of a pay and file regime for CAT.  The pay and file deadline will be aligned with the Income Tax Deadline of 31 October. 
• The tax year will be split into 2 periods.  Where the valuation date for the gift or inheritance arises between 1 January and 31 August the pay and file deadline will be on 31 October in that year.  Where the valuation date arises between 1 September and 31 December the pay and file deadline will be 31 October in the following year.  The extended ROS filing deadline will apply where ROS is used. 
• E-Filing will be required where certain reliefs are being claimed. 
• Requirement for an Irish resident “agent” to be responsible for pay and file procedures where beneficiaries are non-resident.

Capital gains tax

• Regarding a CPO
  • The date of the sale will be deemed to be when consideration received.
  • Where the recipient has dies the date of sale is immediately before death.  
• CGT retirement relief will include payments received under a buy-back or redemption of shares (which are not treated as a distribution) provided all other conditions are met. Companies will have to notify Revenue of buybacks to which CGT treatment applies.
• The Bill proposes amendments to the 80% “windfall tax” introduced by the NAMA legislation by providing for an exemption for disposals of small sites of under 1 acre and with a market value below €250,000. It also extends the remit of the tax to profits or gains attributable to planning decisions which may be in contravention of the development plan for the area

VAT

• VAT rate reduced from 21.5% to 21%

VAT Margin scheme for second hand car dealers

• Under the new scheme dealers will be required to pay VAT on the margin earned on the sale of second hand cars acquired on or after 1 January 2010.  There are transitional provisions covering the period 1 January 2010 to 30 June 2010. 
• A similar scheme will apply to the sale of second hand agricultural machinery.

Anti-avoidance

• Restrictions will apply on allowable CGT losses in cases where arrangements were in place to secure a tax advantage
• Rent-a-room relief will not be available where the recipient is an employee or office-holder of the person making the payment

 Tax Administration 

• A number of changes to RCT administration have been made.  These include the possibility for a reduced return/payment frequency for principal contractors and they enable Revenue issue certificates of authorisation (C2s) to cover 2 tax years, rather than the current legislative limit of 1 year.  Revenue can also increase the limit on a relevant payments card (C47) unilaterally. 
• Section 1094 and 1095 TCA 1997 which relate to the issue of Tax Clearance Certificates have been amended so that a taxpayer must be compliant with Customs and Excise obligations before certificates will issue.  

Capital Acquisitions Tax – 2010 Group Thresholds

 

Group A €414,799 – Applies where the beneficiary is a child (including adopted child, step-child, and certain foster children) or minor child of a deceased child of the disponer. In certain circumstances parents also fall within this threshold where they take an inheritance from a child.

Group B €41,481 – Applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer.

Group C €20,740 – Applies in all other cases.

 

 

 

 

 

 

 

LEAP Training Course

LEAP TRAINING TAX

http://tweetmeme.com/story/421132921/ronanskehillcom-%C2%BB-blog-archive-%C2%BB-leap-training-%E2%80%93-tax

Frank Wharton came in to talk to us today on Tax. Great guy and good presentation. No flaffing around. Straight to the point.

 Tax is errr Taxing! Tax is something everybody hates paying. So when you get the opportunity to find out ways to pay less of it (legally) you tend to listen.

 The advice from Frank is simple.

•  Know what you have to pay, when you have to pay it and pay it.
• Be aware of the tax breaks and what you are entitled to.
• Avail of all the tax breaks!
• Avoid fines, which the revenue are happy to slap you with if you are late on payment
• As Ltd.  Company know what is valid expenditure and what isn’t.. if you’re a tech startup and looking for a 50 plasma tv as a monitor it may raise some questions
• If you have a registered company office in your  home you can claim a percentage of domestic bills. (Calculate the % of the house used as an office .. roughly) and then claim this % as an expense
• Keep receipts for every
• Try not  pay by cash
• Pay by Credit card/ Laser/ Cheque
• If you drive around to meet you customers etc you can claim back mileage at the  current civil servant rates

The bottom line for me is .. unless you look at this taxing stuff day in day out you won’t know all the tricks of the trade. As a startup you have to be able to juggle as many things as possible so you don’t spend every day thinking about .. is this tax deductable? Should I claim mileage or diesel vat back ? If you do then you are spending less time thinking about sales, clients, customers, development work and coffee.

 One of the best advice we’ve received in the past (and taken on board) is – know you strengths and weaknesses. When your one of weaknesses can result in your company losing potential hard earn money you should really think about getting the experts in.  Of course you should be aware of the rules of Tax and paying the Taxman but not have to worry about every little detail!

 Some of the things that surprised me:

•  The fact the 3 year corporation tax break for start-ups may not be applicable to a lot of start-ups.(I’ll do some more digging on this and post again at a later date)
• Directors taking money out from the company is considered Net Salary

 

Budget 2010 Summary

  TAXATION

 High Earners Restriction

• The High earners relief has been amended to ensure that such high earners will now pay a minimum rate of Income Tax at 30% where as it was previously at 20%
• The entry level threshold for the restriction will now occur at adjusted income levels of €125k and the full restriction will apply at €400k (Previously 250k and 500k respectively)

 Mortgage Interest Relief

• Qualifying loans taken out before 1 July 2011 will continue to get relief for 7 years. Transitional measures will apply to loans taken out between 1 July 2011 and end 2013.
• Those, whose entitlement to relief would, in the absence of this change, expire in 2010 or after, will continue to qualify for relief at the applicable rate up until end 2017.
• Abolition of the relief entirely by end 2017.

  Corporation Tax

• Extension of the existing scheme providing a three-year exemption from tax on the income and gains of certain new start-up companies to include companies who commence trading in 2010.
• Tax bill must be 40k or under. Does not apply to professional service companies.
• 12.5% Corporation Tax rate will remain.
• Enhanced incentives for R&D and intellectual property to be considered for inclusion in the upcoming Finance Bill

 Non-Residents

• A New 200k levy per annum is being introduced on Irish domiciles/nationals whose worldwide income exceeds €1m and whose Irish located Capital exceeds €5m
• It is unclear how it is proposed to identify persons liable to the charge, or how it will be collected and whether this levy will be reduced by any Irish income tax liability otherwise arising.

 Relief from Income Levy for Certain Farm Expenditure

• Will be allowed regarding compliance with the requirements of the EU Nitrates Directive.

Following reductions to excise duty will apply from 9 December

• Beer and Cider by 12 cent, Spirits by 14 cent per half glass, Wine by 60 cent per 75cl bottle. All VAT inclusive

 

Vehicle Registration Tax (VRT) Car Scrappage Scheme

• Introduced for 2010. VRT relief of up to €1,500 will be provided where a car of 10 years or older is scrapped and a CO2 friendly car is purchased

Capital Allowances

• Accelerated Capital Allowance scheme for energy efficient equipment will now include refrigeration systems and catering equipment

Carbon Tax

• Will apply to petrol and auto-diesel with effect from midnight, 9 December 2009;
• Will apply to Kerosene, Marked Gas Oil, Liquid Petroleum Gas (LPG), Fuel Oil and Natural Gas from 1 May 2010
• The application of the tax to coal and commercial peat is subject to a Commencement Order.
• Exemption from the tax will apply only to participants in the EU Emissions Trading Scheme (ETS) in respect of fuels so covered. 
• Accounting and payment of the carbon tax in respect of transport fuels is required to be made by the 15th day of the following month.
• A vouched fuel allowance scheme will be developed to offset the increase for low income families
• Increases per litre Petrol 4.2 cents Auto-diesel 4.9 cents 4.4% Kerosene 4.314c

Marked Gas Oil 4.687 LPG 2.797c Fuel Oil 5.215 Natural Gas 4.786 Peat Briquettes 39c per bale Coal €1.79 per 40kg

Reduction in standard VAT rate from 21.5 per cent to 21 per cent.

• From 1 January 2010. — If on cash receipts basis and bill before 1 January 2010 apply 21.5%

Pension Lump Sums

• The Minister flagged that he will consider limiting tax free pension lump sums on retirement to €200,000. A consolidated 33% rate of tax relief will require further consideration. More precise details on these pension related amendments are expected to be published shortly.

Property Tax

• A new property tax is to be introduced but at a yet to be determined date. For this tax, the Government will need to ascertain the registration of ownership and valuation of land in the State. The proceeds of this tax will be used to fund Local Authorities.

Health Expenses Relief

• Health expenses relief is granted at the standard rate for expenses incurred from 1 January 2009 barring nursing home expenses, which will be relieved at the marginal rate in 2010.

Nama Property tax

• An 80% windfall tax on land which has been rezoned from 30^th October 2009 has been introduced commencing in 2010
• Upon disposal the uplift due to rezoning from non development to development use will be subject to Income Tax at 80% with no loss relief.
• This will apply to trades only and it appears that it will not apply to construction operations one off sales of sites and land, which was purchased by way of CPO.

Employers Job incentive scheme

• If an employer employers a person who qualifies for the Back to Work Allowances for the first time, upon production of tax clearance cert the employer will be exempt from employers PRSI for the first 2 years of that employment.
• If the employees leaves the exemption is over for both employer and employee.

Future Measures 

• A new universal social insurance contribution will replace PRSI/Health & Income Levies
• Income Tax will apply on more progressive basis.
• Water charges are to be introduced based on consumption above a free allowance. Each household will require the installation of a water meter
• Revenue will tackle the shadow economy
• The curtailment/removal of further reliefs will be examined in the Finance Bill
• A credit review system is to be established for the SME sector offering an independent review of refusals for bank credit by banks participating in NAMA.

Public Service Salary reductions at various Pay levels from 1 January 2010:-

• 5% on the first €30,000 – 7.5% on the next €40,000 -10% on the next €55,000

 Pensions – new pensions regime

• Pensions based on career average earnings and not final salary.
• The minimum retirement date will move to 66 years.

 SOCIAL WELFARE

 Jobseekers Allowance

• Reduced to €100 per week for new applicants aged 20-21 and €150 per week for new applicants aged 22 to 24.
• The personal rate of Jobseeker’s Allowance and basic Supplementary Welfare Allowance will be reduced to €150 per week where job offers or activation measures have been refused
•  These rate reductions will not apply to claimants with dependant children.
• General reduction for all social welfare benefits bar state pension.

Child Benefit

• Reduced by €16 per month from January 2010 bringing the lower rate to €150 per month and the higher rate to €187 per month.  Families on social welfare will receive an increase in the qualified child allowance.

 Treatment Benefit

• In 2010, the entitlements under the Treatment Benefit Scheme will be limited to the Medical and Surgical appliances scheme and the free examination elements of the Dental and Optical Benefit schemes

 

These notes are based on the budget speech and not on draft legislation, which will not be available until the Finance Bill is published. No responsibility is accepted for any action which any individual or business may take or not take based on their reading of this fact sheet. Professional advice should be taken before any action is taken.