The High Earner’s Restriction was introduced in the 2006 Finance Act with effect from 1st January 2007. The objective was to limit the use of certain tax reliefs and exemptions and to ensure that high income individuals who were eligible for these “specified reliefs” paid an effective tax rate of at least 20%.
Changes were introduced by Finance Act 2010 which extended the scope of the restriction to ensure these individuals now pay an increased effective rate of 30%. From 2010 onwards, the High Earner’s Restriction applies to a much greater number of tax payers which we can see from published figures (*Dáil PQ 25 March 2014)
Year | No. of Tax Payers | Additional Tax Yield |
2010 | 452 | €38.9m |
2011 | 1,544 | €80.2m |
2012 | 1,143 | €63.6m |
To whom does the High Earner’s Restriction apply?
From 2010 the restriction applies to an individual who meets all three of the following criteria:
How do we calculate the tax?
The effect of the High Earner’s Restriction is to increase the individual’s taxable income liable to Income Tax at the normal rates.
Example
Mr A has the following income for 2013:
He also has Section 23 Type Property Relief of €300,000
Steps:
Case I Trading Income €200,000
Case V Rental Income €300,000
Section 23 Relief (300,000) Nil
Taxable Income (T) €200,000
A = T + S – R €200,000 + €300,000 – Nil = €500,000
Therefore, the Higher Earner’s Restriction applies.
(T) i.e. €200,000 + (S) i.e. €300,000 – (Y) i.e. €100,000 = €400,000
Carry Forward of Excess Reliefs (S.485F TCA 1997)
Any “unutilised reliefs” in the tax year in question can be carried forward for offset against the individual’s total income in subsequent tax years.
The following points should be kept in mind:
What items are included in the list of specified reliefs?
Appendix 3 – list of Specified Reliefs is available on www.revenue.ie and the full list is set out in Schedule 25B of the Taxes Consolidated Acts 1997.
Here are some of the items included:
Examples of what’s not included are:
What about Double Taxation Relief?
Finance (No. 2) Act 2013 amended how Double Taxation Relief was calculated for those individuals subject to the High Earner’s Restriction.
The formula to be used is:
Irish Tax (after applying the High Earner’s Restriction)
Adjusted Income (A)
Previously the credit was calculated before applying the High Earner’s Restriction.
A repayment of an under claimed foreign tax credit is available for individuals who filed a tax return after 1st January 2008 and who would be entitled to a greater tax credit for double taxation suffered as a result of this new provision than under the pre Finance (No. 2) Act 2013 legislation.
Compliance Issues
Any individual subject to the High Earner’s Restriction must file a Form 11 (Self Assessment) and Form RR1 setting out details of the calculations of the H.E.R.
The details to be included in the RR1 Form are:
Following Finance Act 2007, a jointly assessed married couple or civil partnership will be treated as two separate individuals in determining if the restriction applies.
A single Form RR1 should be completed providing details of the application of the restriction to each spouse or civil partner where relevant.
Property Relief Surcharge (S.531AAE TCA 1997)
Finance Action 2012 introduced the 5% Property Relief Surcharge which applies where the individual’s aggregate income (i.e. gross income for Universal Social Charge purposes) is €100,000 pre annum or more and where certain property based incentive reliefs have been claimed in that tax year.
By property reliefs, we mean Section 23 type reliefs, property based capital allowances, etc.
The 5% Property Relief Surcharge is collected as additional Universal Social Charge.
There is an exception to this rule in the case of owner occupiers for residential properties.
Revenue’s view is that the surcharge does not take into consideration any restriction imposed by the High Earner’s Restriction. In other words, the surcharge applies to the specific property reliefs which would have been available in calculating the taxable income of the individual had the restriction been ignored.
Example
Mr A’s income for 2013 was as follows:
Case V – Rental Income €250,000
He also has Section 23 Type Relief €300,000
The Property Relief Surcharge will be 5% of €250,000 being €12,500
The surcharge is computed by reference to the S.23 Property Relief used in calculating Mr A’s taxable income before applying the High Earner’s Restriction.
Conclusion
This is an area currently under scrutiny by the Revenue Commissioners. If this is something that affects you, it might be worth reviewing the information contained in the previous tax returns you’ve submitted as well as double checking that your 2013Tax Return, which must be filed by 31st October 2014, is accurate and correct in line with Finance Act amendments.
The European Court of Justice held that the supply of services by a non-EU Head Office to a branch situated in the E.U. is now liable to VAT where that branch is part of a VAT group.
VAT grouping allows EU member states to treat two or more companies as a single entity for VAT purposes which means transactions between members of a VAT group are normally ignored for VAT purposes.
However, the ruling on this dispute between Skandia America Corporation and the Swedish Tax Authorities means that services previously deemed to be VAT exempt will now be subject to VAT rates of between 15% and 27%.
This decision is of particular relevance to the financial services industry since the products and services they sell (e.g. mortgages and insurance) are largely exempt from VAT. The ruling means they will now be unable to recover input VAT refunds within the EU resulting in additional costs for banks and/or insurers who have outsourced IT and other services.
The Background:
The Consequences:
The consequences of this ruling will be substantially higher tax bills for financial services companies especially in the U.K. which is considered the “Global Financial Services Centre.”
Special Assignee Relief Programme
The Special Assignee Relief Programme or S.A.R.P. applies to secondments in Ireland in 2012, 2013 and 2014 and lasts for five calendar years for each employee.
How does an employee qualify for this relief?
To qualify, the employee:
What Incentive is available?
The incentive available is a reduction of taxable income in Ireland by 30% of the “specified amount.”
The “specified amount” is calculated as an amount of 30% of the difference between €75,000 (being the lower limit) and the lower of either:
What are the actual savings to the U.S. Secondee?
Are there any other incentives?
Qualifying employees can also receive the following payments tax free:
What about restrictions?
The S.A.R.P. Relief does not apply to:
Notes:
Split Year Residence Relief
This relief applies to an individual who has not been Irish resident in the tax year prior to the date of arrival and who arrives in Ireland with the intention that he/she will be resident her in the following year. In such circumstances the individual will be treated as Irish resident only from the date of arrival.
Why is this important?
This is important because it means the individual won’t be liable to Irish income tax in respect of any foreign income arising to him/her prior to the date of arrival.
Does it apply to all income?
No. It only applies to employment income except for Directors’ salaries.
It does not affect any potential tax liability in respect of income from other sources.
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
On 2nd September 2013, Vodafone Group Plc. announced that it was disposing of its 45% interest in Verizon Wireless to Verizon Communications Inc.
At the same time, it also announced its intention to carry out a “Return of Value” to its shareholders, of which there are almost 400,000 in Ireland. Many of these shareholders had acquired Vodafone shares in exchange for their Eircom shares in 2001. The “Return of Value” would be partly in cash and partly in Verizon consideration shares.
On 14th May 2014 the Irish Revenue Authorities issued a comprehensive Tax Briefing outlining the tax treatment of the Vodafone Return of Value to its shareholders which provides comprehensive guidance on the calculation of the base cost for Capital Gains Tax purposes.
In what form will Vodafone return this value to the shareholders?
Either by the issue of:
What does that mean to the shareholder?
What does the Shareholder actually get?
What about the shareholders who exchanged their Eircom shares for Vodafone Shares in 2001?
These shareholders will NOT have a Capital Gains Tax liability.
Instead they will have a capital loss to offset against other chargeable gains arising in the current tax year or if unused they can be carried forward against future capital gains.
No Capital Gains Tax charge will arise for these shareholders in the following situations:
What is the base cost of the Vodafone Ordinary Shares?
The base cost for those Vodafone shares acquired in exchange for Eircom shares in 2001 is €4.46 per share.
Where in legislation are the apportioning rules?
Section 584(6) Taxes Consolidated Acts 1997 outlines the rule for calculating the apportionment of the original holding between the three elements of the new holding i.e. the cash element, the new Vodafone ordinary shares and the Verizon shares.
What about future disposals of these shares?
What is the Income Tax treatment for those opting for C Shares?
Individuals who opted for the C Shares have received a dividend from Vodafone which consisted of two elements:
The shareholder should include both amounts in his/her Income Tax Return i.e. the cash actually received and the market value of the Verizon Consideration Share Entitlement received. He/she must then pay the Income Tax arising on this dividend.
How is the tax on these dividends paid?
Are there any exemptions?
Individuals aged 65 years and over are entitled to claim an exemption from Income Tax if their total income i.e. income combined from all sources including Vodafone and Verizon dividends is
Will there be Dividend Withholding Tax on the Verizon Shares?
Dividends paid to shareholders of Verizon shares will, in general, be subject to US withholding tax, currently 30% of the gross dividend amount.
Irish resident shareholders can make a claim to the US Tax Authorities to be entitled to dividend withholding tax at the reduced rate of 15%.
This claim can be made by completing a Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and forwarding it to Computershare as stated on the form.
The Irish resident shareholder will be entitled to a credit for tax withheld against Income tax or Corporation tax on the dividends received.
The credit will be the lower of:
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
The Companies Act 2014 (the “Act”) introduced the provision that a Company Limited by Shares (“LTD”) could just have a single director.
In other words, a single Director company can be a private company limited by Shares. It allows for one Director but there must be a separate company Secretary.
Starting from the 1st of June 2015, all new companies will have a choice of two different types of companies to setup:
Private Company Limited by Shares (Ltd.)
Designated activity company (DAC):
Every Limited company in Ireland is required to have a Statutory registered office in the state. The following Irish addresses are required:
The address where the central administration of the company is carried out can, however, be located outside Ireland.
Companies will only have to meet two of the following three criteria to qualify as a “small company” for the purposes of claiming an audit exemption.
If a company qualifies for exemption, it must annex a copy of its abridged financial statements (approved by the directors) to the annual return.
Guarantee and Group companies will be able to qualify for the audit exemption.
Audit exemption for Irish companies can be lost if their annual return is filed late. This will result in the company losing its audit exemption for the next two years.
This article is for guidance purposes only. It does not constitute professional advice. No liability is accepted by Accounts Advice Centre for any action taken or not taken in reliance on the information set out in this article. Professional or legal advice should be obtained before taking or refraining from any action as a result of this article. Any and all information is subject to change.
PART I
For many businesses moving to Ireland, especially I.T. companies, a considerable amount of research and planning into our tax regime is usually carried out in advance. From experience, however, the question these companies rarely ask themselves is “what are the key VAT issues affecting our company if we locate to Ireland?
The current Irish VAT rules are as follows:
What does that mean to the Supplier or I.T. Business/Company?
The supplier of these services will be obliged to register and account for VAT in every E.U. member state in which they have private, non-taxable customers. There is, however, a “Special Scheme” where non E.U. businesses need only register in one E.U. state.
PART II
When we talk about “electronically supplied services” we mean:
There is a more detailed definition of “electronically supplied services” in Article 7 of Council Implementing Regulation of 15th March 2011 (282/2011/EU).
If a U.S. software company supplies software upgrades to private clients in twenty eight E.U. member states, does that company have to register in every one of those states?
The “Special Scheme” is optional and enables a non E.U. supplier making supplies of electronically supplied services to private, non-taxable individuals within the E.U. choose one E.U. state in which to register and pay VAT in respect of the supplies it makes within and throughout the E.U.
For example, a U.S. business/company supplies web hosting services to private consumers in Ireland, the UK and Germany. The U.S. business can opt to register for the “Special Scheme” in Ireland which means:
The U.S. I.T. business/company is eligible to use this scheme if it is not established in the E.U. and if it is not registered or required to be registered for VAT in any other E.U. member state.
Part III
From 1 January 2015, supplies of telecommunications, broadcasting and electronically supplied services made by EU suppliers to private, non-taxable individuals and non-business customers will be liable to VAT in the customer’s Member State.
The current place of supply/taxation is where the supplier is located, but from 1st January 2015 this will move to the place of consumption or the place where the consumer normally resides or is established.
Suppliers of such services will need to determine where their customers are established or where they usually reside. They will need to account for VAT at the rate applicable in that Member State. This is a requirement regardless of the E.U. state in which the Supplier is established or is VAT registered.
As a result of these changes, suppliers may need to register for VAT in every EU Member States in which they have customers. As there are no minimum thresholds for VAT registration, making supplies to a single customer in one Member State will necessitate VAT registration in that country.
With effect from 1st January 2015, the Mini One Stop Shop (MOSS) will be introduced which means that instead of having to register in each E.U. member state, the supplier will have the option of declaring and paying the VAT due for all the member states in the E.U. state where the business is established via a single electronic declaration which can be filed with the tax authority in the state where the supplier is established.
The MOSS scheme will be similar to the “Special Scheme” which is currently in place for non E.U. suppliers. It will allow for VAT on Business to Consumer supplies made in all or any of the twenty eight E.U. Member States to be reported in one electronic return.
Part IV
What needs to be considered prior to the introduction of the MOSS Scheme on 1st January 2015 by businesses already established in Ireland or thinking about establishing in Ireland?
PART V
One of the biggest problems envisaged with the MOSS systems is identifying the location of the customer.
It is essential for suppliers to correctly identify the customer’s location/permanent address/usual residence so they can charge the correct VAT rate applicable in that member state.
For most telecommunication, broadcasting and electronically supplied services, it will be obvious where the customer resides. The decision about the place of supply of those services should be supported by two pieces of non-contradictory evidence including credit card details and a billing address for example.
It is anticipated that there will be situations where the consumer’s location is less obvious. As a result, the following rules have been compiled between the Member States to help businesses ascertain the place of supply in B2C TBE transactions.
According to the Irish Revenue website:
In situations where the consumer advises you that he/she resides in a different location than previously thought, the supplier can change the place of supply but only if the consumer can produce three pieces of non-contradictory evidence to support that change of place of supply.
The evidence to be used in deciding the place of supply may vary depending on the industry but the most usual types of proof include the customer’s billing address, the address on his/her bank accounts, the IP address, etc.
Over the years I’ve been asked many times how court settlements should be taxed. I’m still surprised by the number of people who are under the impression that a special tax for compensation and damages exists – it doesn’t.
In order to determine the correct tax treatment of damages and compensation it is essential to establish what the payment relates to.
There are several possibilities, the main ones being:
1. Personal Injury Compensation
A total exemption from Income Tax and Capital Gains Tax may be available in the case of personal injury compensation payments and income arising from investments of such compensation payments provided the following conditions, as outlined in Revenue’s IT 13, are satisfied:
2. Compensation for Revenue Loss
If the compensation is for loss of earnings then the payment will be liable to Income Tax in the case of individuals and partnerships and Corporation Tax for companies.
Examples of compensation liable to Income Tax are as follows:
3. Compensation for Capital Losses
The main examples under this heading are as follows:
These capital sums will be liable to Capital Gains Tax and treated as if there was a disposal of the asset.
INTERESTING STORY
I recently came across this situation:
Recently I’ve received a number of queries relating to the Irish tax treatment of CFDs or Contracts for Difference. Although the information available is plentiful and appears to be straight forward, it’s important to be aware that each situation is different and as a result the tax treatment may vary considerably.
Firstly, what is a Contract for Difference?
Essentially it’s a contract between two parties i.e. the investor and the CFD Provider. At the close of the contract, the parties exchange the difference between the opening and closing prices of a specified financial instrument, including individual equities, currencies, commodities, market indices, market sectors, etc. In other words, two parties take opposing positions on the difference between the opening and closing value of a contract i.e. the price will rise versus the price will fall.
Contracts for Difference offer wide access to different financial instruments from a single account for a fraction of the cost of buying shares. They do not carry voting rights like ordinary stock and CFD trades on certain Irish stocks are not liable to Stamp Duty.
CFDs can be traded ‘long’ or ‘short’ to speculate on rising or falling markets i.e. the investor speculates that an asset price will rise by buying (long position) or fall by selling (short position).
CFDs do not confer ownership of the investment. Instead the investor has access to the price performance which includes any dividend or corporate action equivalent.
What is the Irish tax treatment for profits / gains?
Contracts for Difference are treated as Capital Assets liable to Capital Gains Tax UNLESS they are deemed to be held in the course of a financial trade in which case the profits are liable to Income Tax under Case I, Schedule D.
According to Revenue eBrief No. 36/2007:
“The contracts require two parties to take opposing positions on the future value of a particular asset or index. Investments are often made on a margin of 20% of the contract amount. As well as the difference in value of the asset from beginning to end of the contract period, certain other notional income flows are taken into account in calculating the overall gain or loss.
Where the contract is long (expectation of a rise in price), notional interest is a deduction and notional income a credit in the calculation.
Where the contract is short (expectation of a fall in price), notional interest is a credit and notional income a deduction.
The chargeable gain will be calculated on the gain or loss resulting from the computations above and including a deduction for all necessary broker fees incurred in the full contract.
Actual interest paid, if any, on the margin amount put up will be chargeable under Case III in the ordinary way and does not come into the CGT calculation.”
What’s the difference between holding Capital Assets and operating a financial trade?
The concept of a “trade” is a matter of interpretation and is usually determined by a number of factors known as “badges of trade.”
For example, a once off transaction would not normally be considered a “trade.” Depending on the circumstances and the timing it may be liable to Capital Gains Tax or indeed may be exempt from tax. If, on the other hand, the investor was involved in a large number of transactions throughout the year of assessment then this activity would be most likely be considered to be a trade and therefore liable to Income Tax.
What are the “Badges of Trade”?
There are a number of factors which will determine the existence of a “trade”. There is, however, no decisive test and no legislative definition. There is considerable case law concerning this issue and in 1954 a Royal Commission was set up in the United Kingdom to consider what factors should be taken into account in deciding whether a trade exists. A report was published outlining the “Badges of Trade” which are as follows:
1. THE SUBJECT MATTER OF THE SALE.
While almost any form of property can be acquired to be dealt in, those forms of property, such as commodities or manufactured articles, which are normally the subject of trading, are only very exceptionally, the subjects of investment.
Again, property, which does not yield to its owner an income, or personal enjoyment merely by virtue of its ownership is more likely to have been acquired with the object of a deal than property that does
2. THE LENGTH OF PERIOD OF OWNERSHIP.
Generally speaking, property meant to be dealt in is realised within a short time after acquisition. But there are many exceptions from this as a universal rule;
3. THE FREQUENCY OF SIMILAR TRANSACTION.
If realisations of the same sort of property occur in succession over a period of years or there are several such realisations at about the same date a presumption arises that there has been dealing in respect of each;
4. SUPPLEMENTARY WORK.
If the property is worked on in any way during the ownership so as to bring it into a more marketable condition, or if any special exertions are made to find or attract purchasers, such as the opening of an office or large-scale advertising, there is some evidence of dealing. When there is an organised effort to obtain profit there is a source of taxable income. But if nothing at all is done, the suggestion tends the other way;
5. THE CIRCUMSTANCES THAT WERE RESPONSIBLE FOR THE REALISATION.
There may be some explanation, such as a sudden emergency or opportunity calling for ready money that negates the idea that any plan of dealing prompted the original purchase;
6. MOTIVE.
There are cases in which the purpose of the transaction and sale is clearly discernible. Motive is never irrelevant in any of these cases and can be inferred from surrounding circumstances in the absence of direct evidence of the seller’s intentions.
In Summary
Say an individual is employed in an investments role by day and makes considerable CFD profits in his/her spare time based on a significant number of transactions, how would this income be taxed?
Although opinions published by Revenue in the context of financial services are primarily concerned with group financing and treasury operations I believe they have direct relevance to this situation and should certainly be taken into consideration in ruling in favour of Income Tax Treatment.
In one such case, Revenue believed that the company was trading on the basis that the company was actively managing the business and making strategic decisions regarding financing and treasury operations. Despite the fact that the activities of the company were outsourced (i.e. no individuals were employed in the company), the outsourcing arrangement was managed and controlled by Irish resident directors with the appropriate level of specialized expertise in this area.
In this example, as the individual’s Irish PAYE employment relates to the area of financial services/investments, it would be difficult to see how Revenue could treat his/her C.F.D. activities as anything other than trading activities liable to Income Tax.
In summary, as the C.F.D. relates to a large number of transactions with a profit motive which requires a considerable amount of skill and expertise, it would be highly probable that this income would be liable to Income Tax and not Capital Gains Tax.
IN CONCLUSION
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
Finance Bill – Capital Gains Tax. Income Tax. Corporation Tax. Stamp Duty. VAT. Personal Tax Reliefs
On 24th October 2013 the Finance (No. 2) Bill 2013 was published which confirmed the measures introduced by the Budget. It includes details on new income tax reliefs (a)the Home Renovation Incentive and (b) the Start Your Own Business Relief. There have also been changes to VAT, Capital Gains Tax (CGT), Stamp Duty and a change to Tax Residency Rules for Stateless Companies.
As the main priorities in Ireland at the moment are job creation and enterprise growth the following tax packages were introduced:
This is a new Capital Gains Tax relief which is aimed at entrepreneurs investing in assets used in new productive trading activities. The purpose is to encourage individuals to reinvest the sales proceeds from the sale/disposal of a previous asset into new productive trading or a new company. The main aspects of the relief are as follows:
(a) It applies to an individual
(b) who has paid Capital Gains Tax on the sale/disposal of an asset and
(c) invests in a new business
(d) at a cost of at least €10,000
(e) between 1st January 2014 and 31st December 2018.
(f) The investment cannot be disposed of earlier than three years after the investment date.
(g) Once the new investment is sold the Capital Gains Tax arising with be reduced by the lower of:
The assets must be chargeable business assets. Goodwill is included in this definition as are new ordinary shares in micro, small or medium sized enterprises after 1st January 2014. The main conditions are:
NOTE: Please be aware the commencement of this measure is subject to E.U. State Aid approval.
This is an exemption from Income Tax but not from Universal Social Charge and PRSI for a long term unemployed individual who is starting up a new, unincorporated business.
It means some one who is continuously unemployed for the previous fifteen months.
The first €40,000 of profits earned per annum will be exempt from Income Tax for two years.
The main points of this new measure are:
The transfer of shares listed on the ESM (Enterprise Securities Market) of the Irish Stock Exchange will be exempt from Stamp Duty. The ESM is the ISE’s market for growth companies.
The current stamp duty rate is 1%.
NOTE: Please be aware that this measure is subject to a commencement order.
The aim of this change is to assist smaller companies to access the tax credit without reference to the base year. The following changes have been made and will take place in the accounting periods starting on or after 1st January 2014:
There have been two major VAT changes:
The construction and building sectors saw the introduction of welcome changes:
The urban regeneration initiative has been extended to include residential properties constructed up to and including 1914 and covers the cities of Cork, Dublin, Galway and Kilkenny.
The aim is to stimulate regeneration of retail and commercial districts as well as to encourage families to return to historic buildings in Irish city centres.
HOME RENOVATION INCENTIVE
This is a new Income Tax incentive for home owners who:
What kind of relief is available?
Relief is available in the form of an Income Tax Credit of 13½% on qualifying expenditure between €5,000 (minimum) and €30,000 (maximum).
What does “Qualifying Work” mean?
Building extensions, window fittings, plumbing and tiling, plastering, etc. carried out by tax compliant builders.
How does the relief work?
Note: It is essential to keep in mind that the Revenue on-line system will track information on contractors involved and work carried out.
There were a number of other budget changes which will have a huge impact on our economy:
One Parent Family Tax Credit
Medical Insurance Tax Relief
Top Slicing Relief
Top Slicing Relief has been abolished completely for all ex-gratia lump sums paid on or after 1st January 2014.
D.I.R.T. (Deposit Interest Retention Tax)
COMPANY TAX RESIDENCE
There were changes to the company tax residence rules.
The company will be regarded as Irish resident for tax purposes where an Irish incorporated company is managed and controlled in another E.U. member state or treaty state and is not regarded as tax resident in any territory.
This applies from 24th October 2013 for companies incorporated after that date or 1st January 2015 for companies incorporated before 24th October 2013.
For further information, please click: https://www.irishstatutebook.ie/eli/2013/act/41/enacted/en/html
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
From 1st July 2013 the following payments by the Department of Social Protection will be liable in full Income Tax. Revenue published a guidance material leaflet on the Income Tax treatment of a range of benefits for PAYE taxpayers.
From 1st July 2013 the following payments by Department of Social Protection will be taxable in full:
It is important to remember that USC and PRSI will not apply to these benefits.
The Department of Social Protection, as part of an ongoing exchange of information with Revenue, will provide Revenue with all payment details to update the tax payers’ records.
Individuals who pay their tax through the PAYE system will, where possible, have their annual tax credits and cut-off point reduced by the amount of these payments so as to avoid any underpayment of taxes at the year end.
Employers and pension providers will be advised of the adjusted tax credits and cut-off points on employer tax credit certificates.
It is important to keep in mind that DSP payments for periods up to 1st July 2013 remain exempt from Income Tax, USC and PRSI.
For further information, please click: https://www.revenue.ie/en/jobs-and-pensions/taxation-of-social-welfare-payments/maternity-adoptive-health-safety-benefits.aspx
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.