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Welcome to the FMB Chartered Accountants Blog. We answer all of your financial and accountancy questions, as well as keep you up-to-date with the latest news from FMB.

Finance Bill 2013

David McArdle - Wednesday, November 06, 2013

As stated by Chartered Accountants Ireland, The Finance Bill includes details on the main new income tax reliefs; the Home Renovation Incentive and the Start Your Own Business Relief. The Bill gives legislative effect to these reliefs and the other tax measures announced in the Budget.

A number of further tax measures are included in the Bill. The Minister of Finance, Michael Noonan said: “Budget 2014 was carefully calibrated to support economic growth and job creation, to reduce our deficit to 4.8% and to secure Ireland’s exit from the EU/IMF programme. Finance (No.2) Bill 2013 give effect to the tax measures that underpin this strategy.

Twenty five pro-business and pro-jobs measures were introduced in Budget 2014, including the retention of the 9% rate of VAT for the tourism sector, the reduction of the air travel tax to €0, the introduction of a home renovation tax incentive scheme, enhancements to a number of agricultural incentives and a package of measures to encourage innovation, entrepreneurship and investment.

In addition, I have decided to bring forward the commencement date for the home renovation incentive to include works that commence on or after the 25 October 2013. This will act as a timely boost to this key sector and will ensure that works starting from tomorrow will be eligible for this incentive.

The full cost of the pro-jobs measures is in excess of €500m in a full year and as I set out on Budget day close to €700m of new tax measures are required to funds the jobs package and reduce the deficit in the public finance. This Bill sets out further details on these revenue raising measures.”

Here are some measures not in Budget 2014 but are included in the Bill:

  • The Bill will enhance double taxation relief in respect of leasing income by providing for the carry-forward of unrelieved foreign tax against future taxable profits from the same source of income. This measure will be of particular benefit to the aircraft leasing industry;
  • The Bill provides for the removal of the 50% restriction on the amount of prior year trading losses a NAMA participating institution (PI) can set off against trading profits. The remaining PIs comprise AIB and Bank of Ireland, of which the State owns 99.8% and15% respectively. This amendment will protect the accounting carrying value of deferred tax assets at the banks, improving capital ratios under the new Basel III rules and enhancing the valuation of the State’s equity holdings in the two banks. It also reduces the risk of future capital injections by the State arising from upcoming stress tests.
  • Section 627 of the Taxes Consolidation Act (TCA) provides for an ‘exit tax’ on certain companies that cease to be resident for tax purposes in Ireland. Such companies are deemed to have disposed of their capital assets at market value (other than assets which are used for the purposes of a continuing trade in Ireland). In response to recent decisions of the Court of Justice of the European Union in relation to the ‘exit tax’ regimes of other Member States, the Bill amends Ireland’s regime. The amendments provide for an optional scheme of deferred payment of the ‘exit tax’ in cases where a liability arises on unrealised gains on the migration of a company from Ireland to another EU or EEA Member State
  • As the legislation relating to benefit-in-kind is still determined in miles it has been necessary for employers and payroll providers, in correctly calculating the notional pay associated with the use of a company car, to carry out additional calculations to convert distances and usage into miles. An amendment is proposed to rectify this

For full information, see FMB’s Finance Bill announcement

FMB Chartered Accountants are experts in Taxation and can assist you in the minimisation of taxation arising on your income. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.


The Taxation of Irish Rental Income

David McArdle - Friday, November 01, 2013

All PRTB affairs must be in order to secure an interest deduction for residential rental properties. 


As stated in the Citizens Information, The Private Residential Tenancies Board (PRTB) is an organisation set up by the Government of Ireland. Its main role is to provide a dispute resolution service for landlords and tenants. The PRTB is also responsible for tenancy registration and from September 2004 all landlords must register new tenancies with the board.

Rental Income arising in Ireland is always liable to Irish Tax In most cases, the taxable amount

Gross Rental Income

less

Allowable Expenses

less

Capital Allowances

equals

Taxable Rental Income.


The following are examples of the type of expenses that may be claimed for:

  • Water rates, Ground rent, Service charges, Waste Collection charges etc
  • Management & rent collection costs,
  • Legal fees relating to drawing up of leases of collection of unpaid rent
  • Accountancy fees relating to drawing up of leases or collection of unpaid rent
  • Accountancy fees relating to the computation of rental income
  • Mortgage interest paid ‘on monies borrowed for the purchase, improvement or repair of the property (Only 75% of interest allowable where the property concerned is residential)
  • Repairs, decorating and General Maintenance
  • Cleaning & related costs
  • Local Authority Property Registration Fees
  • Cost of any unreimbursed services or goods provided to tenants by the landlord i.e. electricity,

FMB Chartered Accountants are experts in Taxation and can assist you in the minimisation of taxation arising on your rental income. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.



CAT Planning

David McArdle - Wednesday, October 30, 2013

Thresholds may change in the Finance Act – consider gifting to children.


If you receive a gift, you may have to pay Gift Tax on it. If you receive an inheritance following a death, it may be liable to Inheritance Tax. Both these taxes are types of Capital Acquisitions. The benefit (the gift or inheritance) is taxed if its value is over a certain limit or threshold.

Different tax-free thresholds apply depending on the relationship between the disponer (the person giving the benefit) and the beneficiary (the person receiving the benefit). There are also a number of exemptions and relief’s that depend on the type of the gift or inheritance. At FMB we have successfully advised many individuals in relation to utilising relief’s and exemptions from CAT which has allowed a significant reduction or complete avoidance of tax on certain capital transactions.

If you receive a gift or inheritance from your spouse or civil partner, you are exempt from Capital Acquisitions Tax. The tax applies to all property that is located in Ireland. It also applies where the property is not located in Ireland but either the person giving the benefit or the person receiving it are resident or ordinarily resident in Ireland for tax purposes.

Groups Thresholds

Gifts and inheritances can be received tax-free up to a certain amount. The tax-free amount, or threshold, varies depending on your relationship to the person giving the benefit.

Group A: This applies where the person receiving the benefit is a child of the person giving it. This includes a stepchild or an adopted child.

Group B: This applies where the beneficiary is the:

  • Parent
  • Grandparent
  • Grandchild or great-grandchild
  • Brother or sister
  • Nephew or niece of the giver

If a grandchild is a minor (under 18 years of age) and takes a gift or inheritance from his or her grandparent Group A may apply if the grandchild's parent is deceased.

FMB Chartered Accountants are experts in Taxation. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.


Taxation of Pensions

David McArdle - Monday, October 28, 2013
The closing date for relief on personal pension contributions for the 2012 tax year is 14th, November, 2013.

The relief available on contributions is linked to the age of the contributor and an overall income threshold. The relevant information is as follows:

 Age
% of Net Relevant Earnings

 Up to 30 years  15%  
 30 but less than 40  20%  
 40 but less than 50  25%  
 50 but less than 55  30%  
 55 but less than 60  35%  
 60 years or older  40%  

Individuals who are engaged in specified occupations and professions – primarily sports professionals – qualify for a minimum 30% deduction irrespective of age.

There is an earnings cap of €115,000 per annum for each individual. Therefore, for example, an individual aged 42 years who earns €200,000 per year can make a maximum tax allowable pension contribution of €28,750 per annum i.e. €115,000 x 25%

Budget 2014 Information

There is no change in tax relief on pension contributions this year, but from 2014 relief will be limited to a fund which will provide a final annual pension of €60,000. How this is to be calculated is not yet clear, but we would expect this to equate to retirement fund value of approximately €1.5m. In the meantime, the Standard Fund Threshold has also been reduced from €2.3m to €2m.

There will be a once-off option to withdraw up to 30% of the value of funded Additional Voluntary Contributions (AVCs) made to supplement retirement benefits. Withdrawals will be liable to tax at an individual’s marginal rate. The option to withdraw will be available for 3 years from the passing of Finance Bill 2013.

FMB Chartered Accountants are experts in Taxation. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.













  
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