Conor KennedyLaw Library

Legislative Process

Conversion of political commitment or decisions into Act of Oireachtas

Undertaken by Revenue Relevant in-house expertise Finance Act different to other Acts Legislative timescale – 4 mths from

Budget Act signed into law on 13th March

2008

Rate BandsS.2 amends S.15 TCA – Standard rate bands

Tax year 2007 Tax year 2008

€ €

Single person 34,000 35,400

Widowed/single parent 38,000 39,400

Married couple

One earner 43,000 44,400

Two earners 68,000 70,800

Credits Tax credit 2007 Tax

credit 2008

  € €

married person 3,520 3,660

bereaved in yr 3,520 3,660

single person 1,760 1,830

 Credit certain widowed persons 550 600

 One-parent family tax credit 1,760 1,830

 Widowed parent tax credit

1st year 3,750 4,000

2nd year 3,250 3,500

3rd year 2,750 3,000

4th year 2,250 2,500

5th year 1,750 2,000

Credits 

Designation Tax credit 2007 Tax credit 2008

  € €

Age tax creditmarried person 550 650single person 275 325

Incapacitated child tax credit 3,000 3,660Home carer tax credit 770 900 Blind person’s tax creditblind person 1,760 1,830both spouses blind 3,520 3,660 Employee tax credit 1,760 1,830

Exemptions & Credits

Credits & Allowances

S.7 - Mortgage Interest Relief First Time Buyers

Single €10,000 Married/Widowed €20,000

S.8 - Preferential Loans Home Loans 5.5% Other Loans 13%

S.9 - Employed carer for incapacitated person

Deduction = €50,000 Change to ensure deduction claimed in yr of

incapacitation

S.10 - Trade Union Subs €350

Exemptions & Employee RemunerationS.11 - Rent a room relief

Increased to €10,000S.12 - Accountable Persons

Withholding tax bodies – adds/amends/deletesS.13 - Approved Savings Related Option Schemes

Savings by employees to acquire shares Shares can be discounted by 25% Alternatively take cash tax free Monthly savings limit increased to €500

S.14 - Employee Share Ownership Trusts (ESOT) ESOT acquires shares with view to transfer to

employee Transfer can be up to €38,100 per annum FA amendment allows ESOT to repay loan earlier

than 10 years

Farm Income

S.15 - Farm income averaging – no clawback in certain cases

Commencements of Milk Production Partnership

Relevant if earlier trade carried on

Convertible Securities

S.16 inserts new S.128C Capable of converting into different

securities or money’s worth Historically employment related shares

valued at date of issue Restricted rights – therefore highly

unmarketable

Additional tax charge on conversion, release, assignment or disposal

Tax charged on market value less certain costs

S.17 – PAYE Regulations

Collection of tax due on non-PAYE income through the PAYE system;

Collection of tax directly from where the employer has failed to deduct tax;

The requirement for employers to submit certain details as prescribed in accordance with PAYE Regulation 31;

Authority to allow the Revenue to notify employer that it is not necessary to comply with the PAYE regulations.

Remittance & Returns

S.18 – Remittance Basis UK sourced investment and employment income

(not relating to employment performed in Ireland) Derived by individuals not domiciled in the State or

who are Irish residents but not ordinarily resident. Relevant UK income is now only to be taxed on

such individuals to the extent that it is remitted into Ireland.

The remittance basis has not been extended to UK capital gains.

S.19 - Share Schemes – Return of Information Automatic obligation to file returns Enable Revenue to determine participants’ tax liability Supervise the admin of scheme

Compensation & EmploymentsS.20 - Sugar beet restructuring

Spread of 6 yrs for moneys received

s.21 - Salary Sacrifice New definition Excludes

Travel passes Approved profit sharing schemes

S.22 – Termination Payments Additional €5,000 exempt to retrain worker Paid by employer Employee must have at least 2 yrs service Course must be undertaken within 6 mths of

termination

Income Tax

S.23 – High Income Earners Clarifies correct sequence of events in

calculations

S.24 – BES & Seed Capital Schemes EU State Aid approval Recycling companies

Approval or assistance from County Enterprise Boards

Medium companies only in ‘assisted areas’

S.25 – Employee benefit contributions Trust type fund for Employees Alignment of CT deduction for contribution to

time when employee is taxed on benefit

S.26 – Capital Allowances – Palliative Care Hospice type care

Rules for allowances similar to private hospitals Approved by HSE 20 in-patient beds 15 yr period Allowances

15% Year 1 -6 10% Year 7 Commencement Order

Capital Allowances

s.27 – Mid Shannon Corridor New EU Regs on Aid guidelines Recovery proceedings if aid illegal or

incompatible

S.28 – Caravan & Camping sites Building or structures now qualify Allowances of 4% per annum

S.29 – Property developers Childcare facilities – S.843 New childcare Regs Denies allow to connected persons Also denies allowances on medical type

centres and Mid Shannon Corridor

Capital Allowances

S.30 – Decommissioning of fishing vessels EU initiative t0 decommission vessels Compensation payments If balancing charge spread over 5 years

S.31 – Motor Vehicles Inserts 6 new Sections as Part 11C

S.380K - S.380P S.380K – Definitions & General S.380L – Modifies allow to Category of Vehicle S.380M – Leasing of vehicles S.380N – Hire purchase arrangements S.380O – Lessee or hirer becomes owner S.380P – Taxis & short care hire exclusions

Motor Vehicles

Category A - Opel Corsa & Toyota Prius 1.5

Category B - Ford Focus Category C - Audi A3 Category D - Ford Mondeo 2litre Category E - BMW 330i Category F - Jaguar XJ6 Category G - Range Rover

Motor Vehicles

Capital Allowances

Categories A/B/C D/E F/G

Cost less than €24,000 €24,000 50%None

Cost more than €24,000 €24,000€12,000 None

Balancing Allowance/Charge corresponding implications

Motor Vehicles

Leasing charges

Categories A/B/C D/E F/G

Cost less than €24,000 Proportionate 50% None

to €24,000 of charge

Cost more than €24,000 Restricted 50%None

to €24,000 of charge

Reliefs & Amendments

S.32 – Film Relief Extension of 4 yrs to 2012 Limit increased to €50 million EU Clearance required

S.33 – Farm Stock Relief Disease eradication measures Relief now applies where part of herd

disposed

S.34 – Irish Heritage Trust Now qualifies as a Charity Removed from Schedule 26

S.35 – Relevant Contracts Tax

35% withholding tax regime Connected person definition amended

No obligation on a company not involved in construction operations .

Work on own buildings or lands Condition relaxed for work on private dwelling

Applies only to in individuals connected to forestry or meat processing companies

Excludes individuals connected to construction companies

Relaxed condition relating to joint declaration of employment status in certain cases

Investments

S.36 – Securitisation Now includes partnership interests Financial Assets

Contracts for insurance/reinsurance Greenhouse gas emissions allowance

S.37 – Credit Insurance Companies Appropriations of profit to reserve tax

deductable

S.38 – Exit tax on Gross Roll ups Branch in other EU or EEA State Written approval from Revenue is required

S.39 – Investments

S.39 – Investment Undertakings Gross roll up regime FA 2006 changes

Chargeable event – 8 yrs FA 2008 changes

Deemed disposal election dates Less than 10% of fund made up by Irish –

disposal to be reported by investor on self assess basis

Refund by Revenue directly to unit holder where Irish hold less than 15%

Anti-Avoidance

s.40 – Allowance for ‘know-how’ No deduction where

Company acquires ‘know-how’ Connected company acquires trade

Bona fide commercial reasons Consultation with experts

S.41 – Expenditure involving crime No deduction for illegal payments

S.42 – Reconstruction Relief Anti-Avoidance - ‘Investment Companies’ Prevents deferral by use of gross roll up

regime

Corporation Tax

S.43 – Treatment of certain dividends EU or Treaty Countries Dividends from trading profits of foreign

companies now taxable @12.5% Credit also allowed for foreign taxes Pooling of credits 25% tax credits available for offset

against 12.5% but not visa versa

Corporation Tax

S.44 – Close Companies Dividends received from Irish close

company No surcharge Now conforms with foreign dividends Election required

S.45 – Profit Resource Rent Tax Petroleum leases In addition to 25% CT Taxable fields

Corporation Tax

S.46 – Accelerated Capital Allowances Energy efficient equipment 100% write off in Yr 1 Categories

Electric Motors Lighting Building Energy Management systems

Only available to CompaniesS. 47 – Preliminary Tax

Small companies now profits up to €200,000 100% of last year Unrealised Gains arising to IFRS companies

Corporation Tax

S.48 – Company Purchase of own shares No deduction for costs except purchases

involving employees

S.49 – Double Taxation Relief Reversal back to original system Actual income as calculated in foreign

jurisdiction Specific changes to company mergers

S.50 – R&D Expenditure Credit of 20% of excess spend over base year Base year – 2003 AP’s after 2014 – 10 years before

Y/E 31/12/14 – Base yr = 2004

Corporation Tax

S.51 – Dividends before disposal of shares New S.591A Prevent tax free dividend paid before disposal New measure assess dividend as share disposal

S.52 – Schedule 4 Amendment Sch 4 lists exempt State sponsored bodies Commission for Communications Regulation Retrospectively to 1 December 2002

S.53 – Manufacturing Relief Technical change to method of calculation

Capital Gains Tax

S.54 – Retirement Relief Decommissioning of fishing vessels

Compensation Boat owned for 6 yrs Individual must be 45 yrs old

New Bona Fide Test Dissolution of Farm Partnerships

Caters for inheritances & partitions

S. 55 – Disposal of a site to child Increased site value to €500,000 Aggregates threshold for joint transfers

Capital Gains Tax

S.56 – CGT Exempt Bodies – Sch 15 Commission for Communications

Regulation Retrospectively to 1 December 2002 Digital Hub Development Agency

Excise – Electricity Tax

S.57 – Interpretation EU Directive Households exempt Applies from 1st October 2008

S.58 – Charging sectionS.59 – Imposes the obligation on supplier

Consumer liable if false information is furnished

S.60 – Returns & PaymentsS.61 – Mixed Supplies

Electricity Tax

S.62 – RegistrationS.63 – Reliefs

Formula A x P1 x R1 + A x P2 x R2

S.64 – RepaymentsS.65 – OffencesS.66 – Power to make RegulationsS.67 – Care & Management provisionsS.68 – Effective Date – 1st October

2008

Excise

S.69 – Amends provisions on Warehouses & Tax Warehouses

Clarification of responsibilities

S.70 – Technical amendments to incorporate electricity tax

S.71 – Rates of Mineral Oil TaxS.72 – Amends certain derogationsS.73 – Relief for MicrobreweriesS.74 – Rates of tobacco products taxS.75 – Increase in duties on retailers off-

licences

Excise

S.76 – Repeals relating to firearms authorisation

S.77 – Amendment of penalties for excise offences

S.78 – Defines “CO2” emissions for VRT

VRT Rates

S.79 – Sets out CO2 Emission Categories

CO2 Emissions (CO2g/km) % payable of the value of the vehicle

0g/km - 120g/km Greater of 14% or €280 120g/km - 140g/km Greater of 16% or €320 140g/km – 155g/km Greater of 20% or €400 155g/km – 170g/km Greater of 24% or €480 170g/km - 190g/km Greater of 28% or €560 190g/km - 225g/km Greater of 32% or €640 More than 225g/km Greater of 36% or €720  

Excise

S.80 – Harmonises VAT & VRT to exclude long-term vehicle hire

S.81 – Remission of excise on Hybrid electric cars

Value Added Tax

New Property Regime Removes leases from charge

EVT 4A Surrender & Assignments

Old Properties No development in last 5 yrs

Capital Goods Scheme Option to Tax Freehold equivalents Transitional Measures

Definitions & Charge

S.82 - InterpretationS.83 – Amends S1. VATA

Definitions Mainly to facilitate new property provisions In preparation for new VAT Act

S.84 – Amends S.2 ‘Charge of VAT’ In preparation for new VAT Act

S.85 – Amends S.3 ‘Supply of Goods’ To cater in the main for the new property

rules

New VAT Rules

S.86 – Amends S.4 VATA Confirms old rules to 30th June 2008 Old rules continue to apply to ‘transitional

properties’ Old rules still apply to reversionary interests

and post letting expenses

S.87 – Repeals S.4AS.88 – Supplies of immoveable goods

Inserts S.4B & 4C into Main Act S.4B – exemptions & joint option S.4C – transition properties

Property Transactions

S.4B(1) – defines completed & occupiedS.4B(2) –exemptions

(a) – undeveloped (b) – not developed in last 5 yrs (c) – developed property occupied for more

than 24 mths (d) – minor development which is less than 25%

of sale price

S.4B(3) – land & development agreements

S.4B(4) – no registration thresholds

Option & Residential

S.4B(5) – Option to tax - Joint optionS.4B(6) – Reverse charge S.4B(7) – Residential properties

1st supply by developer – taxable Short term letting by developer will not exempt

future sale

Transitional Properties

S.4C(1) – (a) developed properties & not disposed prior to 1st

July 2008 (b) long leases prior to 1st July 2008

S.4C(2) – Undeveloped or no VAT entitlement

Property exempt Joint option to tax

S.4C(3) – VAT Entitled & Creates exempt let

VAT clawback calculated using deductibility rules

S.4C(4) – Surrender/Assignment Deemed to be supply of immoveable goods

Transitional Properties

S.4C(5)- disposal of taxable property may invoke ‘Capital Goods Scheme’ adjustment

S.4C(6) – Surrenders & Assignments Taxable if entitled to deduct initial tax Exempt if not entitled to deduct but option to tax

S.4C(7) – Reverse Charge on taxable surrender or assignment

S.4C(8) – (a) document to be furnished on surrender/assignment (b) new interest holder now ‘Capital Goods Owner’

Transitional Properties

S.4C(9) – Holiday home owners (a) cancellation of election – old rules apply

S.4C(10) – No application of certain CGS rules

S.4C(11) – Applies appropriate definitions from the CGS scheme

S.4C(12) – Certain procedures to acquisition of property after 1st July 2007

Waivers

S.89 – Amends S.5 VATA ‘Supply of Service’ (a) excludes immoveable property from S.5(3)(a) (b) inserts new Ss. (3B) - private use

S.90 – Amends S.7 ‘Waiver of Exemption (a) cancellation of waiver under new rules (b) inserts new ss(5) – no new waivers

S.91 – Inserts new S.7A & S.7B S.7A(1)

(a) option to tax = rents taxable (b) option to tax exercised when VAT on

development reclaimed & VAT chargeable on rents (c) option exercised by insertion of VAT clause in

letting agreement (d) option terminated by exempt, residential or

connected party letting or on election

Waivers

S.7A(2) No option to elect when letting to connected party However if connected tenant has 90%

recoverability, option may be exercised.

S.7A(3) – defines connected partiesS.7A(4) – No election on residentialS.7B – Transitional - Waiver of Exemption

S.7B(1) – previous waivers covered by new scheme

S.7B(2) – CGS does not apply to waivers S.7B(3) – connected party lettings – waiver

ceases to apply.

Waivers

S.7B(4) – Waiver can remain in place between connected parties subject to certain conditions

S.7B(5) – Calculates minimum thresholds

S.92 – Amends S.8 VATA ‘Accountable persons’

(1)(a) now a taxable person & accountable for VAT (1)(b)&(c) consequential changes (1)(d) inserts new ss (1B)

Reverse charge on construction services by subcontractors

Principal now accountable (1)(e) increases new VAT thresholds

€37,500 – services €75,000 – goods

(1)(f) amends grouping rule for new definition of taxable person

Chargeable Amount

S.93 – Amends S.10 VATA – inserts new ss (4D)

(a)(i)– immoveable property used for private use

(a)(ii) – allows regulations to allow Revenue identify property in use for private purposes

(b) 2/3’s rule now set aside for construction services

(c) applies to value long lease before 1st July 2008

Deduction for VAT

S.94 – Amends S.12 VATA ‘Deduction for VAT’ (a)(i) – allows deduction for option to tax to contra

reverse charge option tax & transitional properties (a)(ii) allows principal contractor to deduct tax

against reverse charge VAT

S.95 – Amends S.12B VATA ‘Transport Scheme’

(a) amends definition of taxable dealer

S.96 – Amends S.12C VATA ‘Agricultural machinery’

S.97 – Amends S.12D VATA To facilitate new VAT on property rules

Capital Goods Scheme

S.98 – New S.12E

(1) applies to taxable persons (2) substantial definition subsection (3) tax life of property – adjustment period

New = 20 years Refurbished = 10 years export companies Transfer of business Property transferred – adjustment period ends

Capital Goods Scheme

S.98 – (4) defines interval period as 1st 12 months

Compare activities at beginning and end of 12 mths

If change in taxable activities Refund VAT relating to non business use

(5) rules for change of use Annual review required

If decrease in VATable activities – Refund VAT

If increase in VATable activities – VAT deductible

Capital Goods Scheme

S.98 – (6)(a)(i) deals with change of more than 50%

in taxable activities (6)(c) – landlords opts to tax & later cancels

Repay VAT reduced by no. of yrs of taxable use (7) Sale of capital goods

if taxable partially allowed to deduct initial VAT deduct VAT unclaimed reduced by no. of elapsed

yrs If exempt

deduct VAT unclaimed reduced by no. of elapsed yrs

Capital Goods Scheme

S.98 – (7) Sale of capital goods

Provision for transfer of business (8) Tenant refurbishes property

10 yr scheme surrender or assignment

VAT clawback subject to no. of yrs elapsed No clawback is passed on as capital good Furnish document to new leaseholder

(9) Anti-avoidance – connected parties

Capital Goods Scheme

S.98 – (10) Transfer of a business

document to be furnished by transferor Transferee thereafter responsible

(11) Capital good No further obligation under the scheme

(12) Obligation to maintain ‘capital good record’

(13) Provision to make regulations

Miscellaneous VAT Issues

S.99 – Determination of tax due Amends S.14 VATA Cash receipts

no application if discount granted after invoice issue

S.100 – Duty to keep records Amends S.16 VATA Changes required for the new property

regime

Miscellaneous VAT Issues

S.101 – Invoices Amends S.17 VATA

Documentation for reverse charge on principals

Forfeited deposits VAT refundable

S.102 – Tax due & payable Reduction of tax payable by amount of

cancelled deposit

S.103 – Penalties Obstructing a Revenue official

Miscellaneous VAT Issues

S.104 – Fraudulent Returns Technical changes

s.105 – Entitlement to make RegulationsS.106 – Change to 1st Schedule to reflect

new VAT on property regimeS.107 – Changes to 13.5% Vat categoryS.108 – Increase summary offences fine to

€5,000S.109 – Miscellaneous changes for changes

to ‘taxable person’

Stamp Duty

S .110 – InterpretationS.111 – Allows for e-stampingS.112 – Stamp Duty to be paid in intervalsS.113 – Changes to residential property ratesS.114 – Exemption on transfer of certain

shares to recognised intermediariesS.115 – Anti-avoidance provision to prevent

share transfer between certain connected parties

S.116 – Extends reconstruction relief to certain registered societies

Stamp Duty

S.117 – Transfer of a site to a child increased to €500,000

S.118 – Relaxes condition for exemption on transfer of loan capital

S.119 – Grants exemption on reconstructions to certain investment undertakings

S.120 – Exempts transfers of “greenhouse gas emissions allowance”

S.121 – Grants exemption on house conveyances to a housing authority

Stamp Duty

S.122 – Clawback period for owner occupiers now 2

yrs Anti-avoidance measure to ensure relief

enjoyed by ‘genuine first time purchasers’

S.123 - New rates for financial, credit cards

S.124 - Technical amendment to make assessments

S.125 – Amends to 1st Schedule

Stamp Duty

S.125 – Residential Property Consideration (or Aggregate Consideration) Rate

of Dutyexceeds €127,000

 First €125,000 NilNext €875,000 7%Excess over €1,000,000 9%

Capital Acquisitions Tax

S.126 – InterpretationS.127 – Amends commencement date

for 4 yr time limit for refundsS.128 – Revenue certificate now

required to register propertyS.129 – Tax Treaty amendments

Miscellaneous

S.130 – InterpretationS.131 – Heritage items need to be in

existence for over 30 years & removes €50,000 minimum limit

S.132 – Irish Heritage Trust facilitation for Fota

S.133 – Request for information from financial institutions. Brings in Post Office

S.134 – Investigative powers Allows Revenue interview suspects in Garda

custody

Miscellaneous

S.135 – Residency determination Allows any officer of Revenue to make

determination

S.136 – Reporting of income from foreign property

S.137 – Technical changes to CATS.138 – Increases fines for summary

offences to €5,000S.139 – Customs relating to arrival &

departure of aircraft

Protective Notice

S.140 – Amendments to S.811A Protective procedure Notification of a possible tax avoidance

transaction Penalty if Revenue discover

Now 20% 2 yr time limit for Revenue to form an

opinion Additional procedures for Appeal

Commissioners and Courts