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The government has set out over 270 actions to create 100,000 new Irish jobs by 2016

The goals set are of the new 100,000 jobs to be created 20,000 are targeted in manufacturing and 30,000 in internationally traded services with the balance of 50,000 coming from indirect spin-off jobs

The action plan notes that there is no greater challenge facing Ireland than getting people back to work.  The plan states the intention to make Ireland “the best small country in the world in which to do business by the centenary of the 1916 rising”.

For the Key Actions see here

The plan addresses seven principal areas:

1 Building competitive advantage – Innovation, Costs, Skills & Infrastructure

2 Supporting indigenous start‐ups

3 Assisting indigenous business to grow

4 Attracting inward entrepreneurial start‐ups

5 Developing and deepening the impact of FDI

6 Developing employment initiatives within the community

7 Exploiting sectoral opportunities, including;

• Manufacturing
• Health/Lifesciences
• Green Economy
• Agri‐Food
• ICT Hardware and Software
• Cloud computing
• Digital Games
• Tourism
• International Financial Services
• Business Process Outsourcing/Shared Services
• Education Services
• Construction
• Retail/Wholesale       
• Arts, Culture and Creative Enterprise

Stressing the importance of action and implementation, the Taoiseach said he would “personally oversee” the implementation of the plan.

The action plan reiterates the governments main focus on restoring the Irish economy and  brings positive measures towards a sustainable recovery. 

The 2012 Finance Bill was published on 8^th February, confirming the measures announced in the budget and adding a few more.  The Bill and Explanatory Memorandum are available on the department of Finance website here

The following highlights some of the measures included in the Bill.

Business Incentives – 

Key benefits for businesses include:

• A new tax initiative to promote Irish sales efforts in high growth BRICS countries,
• The introduction of a “Special Assignee Relief Programme” enabling companies to attract key people to Ireland and
• Measures to allow companies reward key employees who have been involved in R&D and innovation.

Property Relief Measure –

a) a 5% USC surcharge on the use of property incentives

b) a restriction of property-based capital allowances, restricting carried-forward relief claimed by passive investors in accelerated capital allowances projects

Changes to Self-Assessment -

Chargeable persons will now be obliged to calculate the tax due/refundable as part of their return.  A Revenue Assessment will only issue where Revenue disagree with the calculation or a paper return is submitted by 31^st August.  Tax payment deadlines remain unchanged.  These changes will apply for tax year 2013 onwards.

Third Level Fees –

The amount ineligible for tax relief has increased by €250 to €2,250 for full-time courses and by €125 to €1,125 for part-time courses.

Revenue Powers –

Revenue can now require a Statement of Affairs from a taxpayer who has unpaid tax liabilities.

Collector General is given the power to require a person in business to give the CG a security in relation to fiduciary taxes.  The CG can decide what is appropriate as a security in both amount and form. 

Stamp Duty –

A Self Assessment system will be introduced for Stamp Duty. 

Share Based Pay –

Following changes to the tax treatment of share based remuneration by employers, the Bill provides for employers to withhold or sell enough shares to meet any USC or PAYE liability they may have on the share awards.

CAT Deadline –

The Bill moves the CAT pay and file date back to 31 October.

Charities Update

The ICTR also announced a major breakthrough on donations for tax relief and discussions to resolve the VAT Compensation issue for charities.  The government has new proposals simplifying rules on tax relief for donations:

The government proposal involves:

• a new composite rate of tax relief on charitable donations of ‘around 30%' to replace existing higher and standard rates.
• a tax relief scheme on donations that will no longer be subject to the “higher earner” limitation on the amount of cumulative tax relief that can be claimed by individual taxpayers in any tax year. Instead the donations scheme will be capped at €1m.
• the benefit of the tax relief in all cases now going to the charity (i.e. from now on PAYE and self-assessed taxpayers will be treated the same with charities benefiting from the tax refund in all cases).

The proposals are subject to a three-month consultation period, beginning immediately, during which charities and others may make comments and suggestions to fine-tune or improve the proposals. It is intended that the specific terms will be formally announced in next December’s Budget and become operative from January 2013.

Progress on VAT

The Minister for Finance has also signaled his attention to address the long-running issue of VAT Compensation for charities.

VAT costs a number of charities in excess of one million euro annually and the government has agreed that the issue must be addressed

ICTR expects that the process of discussing a solution will begin during 2012 

The Minister for Finance Michael Noonan and Minister for Justice Alan Shatter have released details of the Personal Insolvency Bill

The proposed bill will allow individuals to emerge from bankruptcy after 3 years rather than the current 12.  In Northern Ireland & Britain the insolvency period is 1 year and the government want to ensure individuals aren’t incentivised to file for bankruptcy abroad.

Mr. Shatter said “When enacted this legislation will be one of the key legislative instruments for addressing the financial difficulties of general insolvency; mortgage debt and negative equity”

Other elements of the bill are aimed at a rebalancing of interests between lenders and borrowers. These include the introduction of a debt relief certificate to allow for the full write-off of qualifying unsecured debt up to €20,000 after a one-year moratorium period.

A debt settlement arrangement for the agreed settlement of unsecured debt of more than €20,000 is also in the proposed bill.

The third measure, the personal insolvency arrangement, would cover mortgage debt.  IT has been speculated that this will last some six or seven years.

The bill is at draft stage and proposals from interested parties before 1^st March will be considered.

The final bill should be published before the end of April.  This is a positive development to an archaic area of existing legislation. 

A draft of the current bill can be found here:

http://www.justice.ie/en/JELR/20120125-PersonalInsolvencyBill.pdf/Files/20120125-PersonalInsolvencyBill.pdf

2012 sees the introduction of the Household Charge announced in December’s budget.  The charge will be €100 but before you rush out to pay there are some exemptions & waivers available.  For example, individuals living in certain unfinished housing estates will be entitled to a waiver for 2012 and 2013. 

Exempt from the charge are:

• Mobile Homes
• Residential properties that form part of the trading stock of businesses and have not been sold or been the source of any income since construction
• Residential Properties owned by Government departments, the Health Service Executive, Local Authorities or Voluntary Housing bodies
• Residential properties that are liable to commercial rates
• Residential Properties that are in a discretionary trust or owned by an approved Charity

Waivers are available where:

1. One has to vacate their home due to long term mental or physical infirmity,
2. One is entitled to Mortgage Interest Supplement on the liability date (1 January) in any year
3. People living in certain unfinished housing estates will also be entitled to a waiver for the years 2012 & 2013. If you have a query in relation to the estates which qualify for the waiver you can contact the Planning and Housing Policy Section at one of the following numbers: (053) 911 7398, (053) 911 7402, (053) 911 7397, (053) 911 7399

NB: If a waiver applies it is still necessary to register on the household charge website (details below)

If none of the waivers or exemptions apply then the owner of the property must pay the charge. This charge is in addition to the NPPR charge.

If the residential property is let subject to a lease for in excess of 20 years, the person to whom it is leased must pay the charge

PAYING THE CHARGE

The liability date will be 1 January in each year. The tax, if paid in one installment, must be paid by 31 March in the year.

It is possible to pay the charge in 4 quarterly  installments. To avail of this, one must set up a direct debit mandate by 29 February 2012.

Fines and interest will be applied to late payments.

Further Information

The details above set out the main points of the charge. Further information, detailed analysis and a payment facility can be found at www.householdcharge.ie

The power of positive thought is a not to be underestimated, so instead of dwelling on the harshness of the budget and getting bogged down in the doom and gloom of our economic frailties, we would like to draw your attention to some of the positive developments that may provide you with opportunities in the year ahead. As any good entrepreneur knows to be successful you must stay positive, keep sight of your goals, take any opportunity you can and overcome the obstacles that hold others back.

“Action is a great restorer and builder of confidence. Inaction is not only the result, but the cause, of fear. Perhaps the action you take will be successful; perhaps different action or adjustments will have to follow. But any action is better than no action at all.” – Dr. Norman Vincent Peale (Author of “The Power of Positive Thinking”)

New Company Tax Exemption
The three year tax exemption for new companies has been extended. If you’re starting a new venture and meet the criteria you could operate for 3 years without paying and corporation tax. This provides an excellent opportunity to roll up funds in a tax-free environment.

Research & Development
The Irish R&D credit system is one of the most favourable in the world. Following the budget, the first €100,000 of qualifying R&D expenditure will benefit from the 25% tax credit on a volume basis. There is also increased availability for the credit where a company outsources some of their R&D. Finally, the R&D credit may now be used to reward key employees involved in the R&D process. For full details of the R&D credit look out for our blog on this subject which will be published in the near future.

Stamp Duty
Stamp Duty is a tax on transactions. The rate for non-residential property has fallen from 6% to 2%, representing a drop in tax rate of 67%. This makes the cost of transactions much more attractive. For example buying a warehouse for €1.5m would have cost €90k in stamp duty before the budget, but now the cost is just €30k.

Mortgage Interest
Mortgage Interest relief for the “negative equity generation” of purchases who bought in 2004-2008 has been increased to 30% for first time buyers and 15% for non-first time buyers.

Mortgage interest relief continues to apply to purchasers up to 31st December 2012. With the depressed property market and the availability of mortgage interest relief 2012 could be a good year to get on the property ladder for those in a position to do so.

The relief will be granted until 2017.

It could’ve been worse!
A number of potential changes were flagged up pre-budget, including

• reducing relief on pension contributions to the standard rate
• increasing income tax rates / reducing tax bands / reducing tax credits
• complete removal of legacy property reliefs
• removal of capital gains tax reliefs such as retirement relief

Although there were negative moves in the areas of pensions, property reliefs and capital reliefs, it could have been a lot worse. It is important to recognise what reliefs are still available and plan around them. With harsh budgets predicted for the next 4 years as the country gets its finances back in order we have a window of opportunity to utilise the benefits that are still around.