The Budget and Your Property

The 4 Year Plan/Budget - 7^th December 2011

The Government has released its four year plan and the December 2010 Budget marks the beginning of it’s implementation.

The following is a summary of the changes to be introduced over the next four years which may affect your business and personal property.

 Executive Summary The principal implications of the government’s four year plan are as follows:

• Tax bands and credits to be reduced by 16.5% by 2014.
• Significant reforms of Capital Acquisitions Tax (CAT) and Capital Gains Tax (CGT)
• Abolition and restriction of many reliefs
• Introduction of a site value tax
• A 1% increase in the standard VAT rate in 2013 and 2014 i.e a rate of 23% in 2014

CAT

·          The base for capital acquisitions tax (CAT) is to be broadened and the level of reliefs and exemptions applicable to be reduced (the current rate of Capital Acquisitions Tax of 25%).

·          The current tax-free thresholds are to be reduced for example currently a parent can give a gift to a child to the value of €414,799.00 tax free which may be reduced. Other relationships have different thresholds. 

CGT

·          The base for capital gains tax (CGT) is to be broadened and the levels of reliefs and exemptions will be reduced.

·          In place of the single rate of CGT, a new system with differing rates for different level of gains will be introduced from 2012.

Stamp Duty

·          Reliefs and exemptions from Stamp Duty are to be abolished or greatly reduced.

Site Value Tax

·          As an interim measure a fixed Site Tax of €100 is to be introduced in 2012.  It will be applicable to all residential property.

·          A value–based Site Tax is to be introduced in 2013 to fund local Government

VAT

·          The standard rate of VAT is to be increased by 1% in 2013 to 22%.  The rate will be further increased to 23% in 2014.

Business Taxes 

·          There is to be No Change to the 12.5% Corporation Tax Rate
There have been proposals for Reform of BES
The Employer Exemption from PRSI Scheme for Exemption to be Extended to 2011

Carbon Tax

·    Carbon tax is to double by 2014. It is proposed that over the next four years price of carbon will be doubled to €30 per tonne by way of a €10 increase in 2012 and €5 increase in 2014.

Abolition of  Tax Expenditures

·          The following expenditures are to be abolished in 2011

o        Tax exemption for patent royalties

o        Investment allowance for machinery and plant and for exploration expenditure

o        Approved Share Option Schemes

o        The accelerated allowance for capital expenditure on farm buildings for pollution control

o        The tax exemption for payments to National Co-operative Farm Relief Services Ltd Significant Restrictions to Share Schemes and Artists Exemption

 

A number of other expenditures will be curtailed or restricted as follows:

• PRSI, Health and Income Levy charge on Approved Profit Sharing Schemes
• Ex-gratia termination and pension lump sum payments in excess of €200,000 to be taxed PRSI, Health Levy charges for Unapproved Share Options
• PRSI, Health Levy charge for Share Awards
• Artist’s exemption for Income Tax (Exemption restricted to €40,000 earnings)

If you have any questions in relation to how this might impact on your business or property please contact Linda Harney or your usual contact partner at Donegans.