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
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