From 1st May 2012, a supply of construction services in the state by an accountable person to a connected person is subject to a reverse charge. This places the onus on the recipient of construction services from a connected person,rather than the supplier, to account for and pay the Vat.
This follows on from rules introduced in September 2008 when the reverse charge was brought in for construction services provided by subcontractors to principal contractors.
A connected person is determined in accordance with section 97(3) of the Value-Added Tax Consolidation Act 2010.
The supplier normally issues the invoice but, if both parties agree, the recipient can issue the invoice and give a copy to the supplier.
The invoice must contain the statement “Vat on this supply to be accounted for by the recipient” . The Vat rate and amount must not be shown but all the other information that is normally on a valid Vat invoice must be included.
The recipient must include the Vat due on supplies from the supplier with Vat on Sales under T1. If they are entitled to claim the corresponding Vat on Purchase they may do so in Box T2 Vat on purchases.
Professional advice should be sought before relying on the above outline
The Revenue have issued e-brief 12/12 to clarify certain issues relating to capital allowances and the universal social charge.
The capital allowances that are deductible are those incurred on the provision, for trading purposes, of Plant and Machinery,Vehicles used for business purposes, Certain types of buildings, such as factories or farm buildings.
Any capital allowances due to individuals that do not actively carry on a trade are not deductible
Therefore, lessors and other passive investors, such as non-active partners in a partnership trade must calculate the USC due on gross income before the deduction of capital allowances.
Capital allowances such as milk quotas,dredging,mine development, petroleum development/exploration, patent rights, scientific research and know how are not deductible.
The Revenue have issued an e-brief today with regard to the Form 11
There will be three different versions of the Income tax return forms for self assessed individuals for 2011:
Form 11 - This is the most complete version of the individual’s tax return form. There will be no printed version of this form.
Form 11E - This has been expanded and is the most complete version of the form that will be printed. The fields that have been dropped from this form are those that make the filer a mandatory e-filer such as restriction of reliefs.
Form 11S - This is a new form. It is the shortest and the simplest of the income tax return forms. It will be sent to a targeted audience of customers whoses affairs are not overly complex. There will be no printed stock version of this form nor will it be available on the Revenue website.
In Budget 2011, it was proposed that investors could only use the section 23 relief against the section 23 property itself and not as previously against their other income. Similarly the accelerated capital allowances could only be used against the property the capital allowances relate to.
The investors who bought them did so for the purpose of using the reliefs available to cover rental profit on other properties. The sudden withdrawal of the tax break would have lead to severe difficulties for some of these investors possibly pushing them to bankruptcy. Numerous submissions were made to the Department of Finance leading the proposal to be shelved for a year while a review was done.
Mr Noonan said in his Budget day 2012 speech: ” My Department has undertaken an Economic Impact Assessment of the measures proposed by the previous Government. It is quite clear that these proposals were unworkable and would have done significant and lasting damage to an already distressed property market, creating real difficulties for many ordinary people. The report also highlights the vulnerability of small investors to insolvency if they lose the reliefs”
The Economic Impact Assessment report concluded that small scale investors should not be restricted whereas large scale investors should make more of a contribution.
Mr Noonan announced that a property relief surcharge of 5% would be levied on investors who have a gross income over €100,000. This would apply on the amount of income sheltered by property reliefs in a given year.
This surcharge is essentially a higher rate of USC.
Gross income is the same as adjusted income for the purposes of the higher earners restriction.
Example (taken from Revenue website)
Taxable income (say) €80,000
Add back:
Taxable income (as above) €80,000 plus add backs equals Gross Income
Accelerated Capital Allowances
Investors in accelerated capital allowance scheme will no longer be able to use any capital allowances beyond the tax life of the particular scheme where that tax life ends after 1st January 2015. Where the tax life of the scheme has ended before 1st January 2015 no carry forward of allowances into 2015 will be allowed.
Full details will be contained in the Finance Bill.
This article looks at how Budget 2012 affects farmers in Ireland.
In his Budget Day speech, Mr Noonan said ‘Active ,energetic and profitable farming is fundamental to the agri-food sector.’
The main taxation changes that affects farmers and their families are:
INCOME TAX
CAPITAL TAXES
Full details of these measures will be set out in the Finance Bill
6th December 2011
Mr Michael Noonan announced details of tax adjustments.
Corporation Tax
Income tax
Universal Social Charge
Illness Benefit
Stamp Duty
Capital Gains Tax
Capital Acquisitions tax
VAT
DIRT
Property legacy reliefs
More detailed explanations of the above will be published in the Finance Act
5th December 2011
Brendan Howlin the Minister for Public Expenditure and reform has announced the spending measures the Government plan to cover for 2012
Here are some of the measures:
Child Benefit:
Back to school Clothing and Footwear Allowance
Jobseekers Benefit
Farm Assist
Redundancy and Insolvency Scheme
Fuel Allowance
Household benefits
Late claims
Drug payments scheme
One Parent Family
Rent Supplement
Mortgage interest supplement
2011 is nearly finished. Before the year is out, the following deadlines should be considered to ascertain whether they are applicable to your particular circumstances.
INCOME TAX
-Medical Expenses
-Bin Charges
-Charitable Donations
-Tax Credits
CAPITAL GAINS TAX
If you have disposed of any chargeable assets in the period 1st January 2011 to 30th November 2011, the Capital gains tax thereon is due to be paid by 15th December 2011. For any disposals in December 2011, the capital gains tax is due by 31st January 2012. Some examples of chargeable assets include land,property and shares.
PENSION CONTRIBUTIONS
An additional voluntary contribution can be made by 31st December 2011 and tax relief at source can be claimed which will save tax at the taxpayers top rate of tax. The tax relief is capped at €115,000 multiplied by the relevant age based percentage of earnings. Ordinary contributions made during the year for which relief has already been claimed must be deducted from this. The additional voluntary contribution is restricted to the balance.
SMALL BENEFITS EXEMPTION
An employer can provide an employee with a single tax free benefit in 2011 not exceeding €250. The benefit must be in the form of a voucher or hamper. It must not be cash. There will be no PAYE,PRSI or USC.
The Revenue has been cracking down over the last few years on the criteria for being self employed.
This has led to workers who had been self employed all along suddenly finding they must go on the payroll as the Revenue has determined they do not fit the criteria for being considered self employed.
This means a big change for the worker involved but it also has implications for the employer.
If the Revenue determine one of their workers should have been classified as employed rather than self employed they are liable for:
Most recently the Revenue issued a e-brief with regard to locum doctors who must now be treated as employees. The doctors who employed them were advised to issue supplementary P35s to cover all outstanding tax due for 2009 and ensure the position is regularized by the time the 2010 P35 is submitted.
What are the criteria to assess whether a worker is employed or self employed:
There are additional factors to consider but each case should be considered on their own points. If in doubt, professional advice should be sought.
1) At present transfer of assets by gift or inheritance are liable to:
2) Reliefs available at present:
a) Gifts if the transferor is over 55 years and has owned the asset for 10 years
b) All inheritances
3) Commission on Taxation recommendations:
4) Fine Gael proposed in their election manifesto:
5) Labour also proposed increasing yield from capital taxes.
So if you are planning to transfer assets, it would be prudent to consider doing it soon, as there is no doubt that the relevant tax rates are on the way up, the relevant thresholds are being reduced and certain reliefs and exemptions are being curtailed.
It is worth noting that asset values are at an all time low which means that the market values assessable to tax are substantially reduced. This is another reason to act now if you are considering a transfer
For more information please contact us
