The Finance Bill 2012 is published

The Finance Bill 2012 was published on February 8, 2012 and at a massive 297 pages there are a lot of points to take in. Some of the more interesting and unusual points are listed below.  If you would like to discuss these or any other point raised in the Finance Bill please contact us on Dublin on 01 612 0990 or Newbridge on 045 435 282.

VAT on Bread

The list of breads that are subject to VAT at 0% have been clarified by the bill. These include loaves, rolls, batch bread, bagels, baps, blaas, burger buns, finger rolls, wraps, naan breads and pitta bread. Other bakery products are subject to VAT at 13.5%.

Cricket

Professional cricket players have now been added to the list of professional sportspersons entitled to tax relief on certain income. It was certainly a good bill for Johnston, Mooney & O’Brien!

Mortgage Interest Relief

The changes to Mortgage Interest Relief outlined in the budget have been brought into effect.

VAT

The increase of the standard rate of VAT to 23% has been confirmed effective from 1 January 2012. The rate on district heating will fall to 13.5% from 1 March 2012.

Universal Social Charge

The threshold for paying USC has been increased from the 2011 level of €4,004 to €10,036. Meaning any individual earning less than €10,035 in a year will be exempt from the Universal Social Charge.

Skilled Workers

One of the more controversial provisions is the creation of A Special Assignee Relief Programme. This programme will help cut employers’ costs in hiring skilled workers from overseas to work in their Irish-based operations. Employees signed up for at least one year and a maximum of five years will be exempt from income tax on 30 per cent of salary between €75,000 and €500,000.

DIRT

Deposit Interest Retention Tax has increased to 30%, up from 27% in 2011.

Stamp Duty

Stamp duty will now come under the self assessment system.

R&D tax credits

Companies who receive a research and development tax credit can give all or part of it to key employees. The claim cannot exceed the corporation tax payable by the company over that accounting period. Key employees cannot be the company’s directors and three-quarters of their work for that period “in the conception or creation of new knowledge, products, processes, methods and systems”.

Corporation Tax

The corporation tax exemption for new start ups, subject to certain qualifying conditions, has been extended until 2014.

Foreign Earnings Deduction

In an effort to support companies who are trying to break into markets in China, India, Russia, Brazil and South Africa a new foreign earnings deduction has been introduced. This allows a deduction for up to €35,000 a year for three years for income earned abroad.

Retirement relief

An upper limit of €3m on retirement relief has been introduced to allow farmers who are aged 66 or over transfer their business.

Taxation of illness benefit

The exemption from income tax for the first 36 days of illness or occupational benefit has been removed from 1 January 2012.

Third level fees

The amounts ineligible for tax relief on third level fees have been increased to €2,250 for full time and €1,125 for part-time courses.

CAT pay & file deadline

The pay and file deadline for Capital Acquisitions Tax has been changed back to 31 October to coincide with the Income Tax deadline.