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Supplementary Budget 2009

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Dublin Chamber of Commerce Budget Submission. Retain Corporate rate at 12.5 ... Car Dealers. VAT Margin Scheme. Second Hand Cars Acquired from 1st July. VAT on Margin ... – PowerPoint PPT presentation

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Title: Supplementary Budget 2009


1
(No Transcript)
2
Supplementary Budget 2009
Tax Planning in the Current Environment
3
What a difference 6 months can make…
4
Leadership Vision …
5
The Rumours…
  • Income levy increase
  • Income tax rates increase
    X
  • New high tax rate
    X
  • Reduce tax credits
    X
  • Pension changes
    X
  • Increase in the rate of CGT / CAT
  • Residential property tax
    X
  • Reduce VAT rates
    X
  • Employee PRSI cap increased
  • Employers PRSI rate reduced
    X
  • Excise duty increase

6
Dublin Chamber of Commerce Budget Submission
  • Retain Corporate rate at 12.5
  • No increase in Employers PRSI
  • Reduce 13.5 VAT rate to 10 X
  • Reduce excise on alcohol X
  • Introduce residential property tax X
  • Introduce wealth tax X

7
Objectives 6 Steps to Economic Revival
  • Stabilise public finances
  • Restore damaged banking system
  • Regain lost competitiveness
  • Protect jobs and retrain unemployed
  • Stimulate economic confidence
  • Restore reputation internationally

8
Fairness is Cornerstone
  • Principle
  • Everyone must give according to means

9
Personal Tax
10
Rates
  • No change

11
Income Levy
  • Rates doubled
  • Entry points reduced

12
Income Levy
  • Current Position
  • 0 to 100,100 1
  • 100,100 - 250,120 2
  • 250,120 3
  • Effective 1 Jan 2009

Yesterdays Budget 0 - 75,036 2 75,037 -
174,980 4 174,980 6 Effective 1 May
2009?
Husband and wife separately assessed
13
Income Levy
  • Not due if
  • Income lt 15,028 pa
  • Entitled to medical card
  • If over 65 and income lt 20k pa
  • On gross income before capital allowances,
    losses, pension contributions
  • On exempt income such as patent, forestry,
    artists exemption
  • Trading and rental income net of expenses
  • Deposit interest exempt

14
Income Levy Example
  • John, single
  • Self employed net profit 90,000
  • Less Pension AVC (15,000)
  • Less Capital allowances (18,000)
  • Taxable Income 57,000
  • Annual impact of levy 75,036 _at_ 2 1,501
    14,964 _at_ 4 599
  • 90,000 2,100
  • Pre Budget 900

15
Preliminary Tax Impact
  • Preliminary Tax 2009 due on lower of
  • 90 of tax for 2009
  • Or
  • 100 of 2008 tax plus income levy on 2008 income
  • Johns 2008 tax liability 13,896
  • Plus income levy 2,100
  • Revised 2008 liability for PT purposes 15,996

16
Employee PRSI Health Levy
Employees PRSI - Employees PRSI Ceiling (4)
from 52,000 to 75,036 Health Levy
Yesterdays Budget 0 - 75,036 4 75,036
5 Effective 1 May 2009
  • Current Position
  • 0 to 100,100 2
  • 100,100 2.5

17
New Marginal Tax Rate
  • On income over 175,000
  • Top rate of income tax 41
  • Income levy 6
  • Health levy 5
  • 52

18
What does this mean for Employees?
19
Mortgage Interest Relief
  • Ceases for loans over 7 years

20
Residential Rental Property
  • Tax deduction for interest reduced to 75
  • Potential effect - 13 additional tax

21
DIRT
  • Increase to 25 on ordinary deposit accounts
  • Increase to 28 on other savings products (life
    assurance / investment funds
  • Effective 8 April 2009

22
Pensions
  • Clear signal changes to tax free lump sum in
    2010 Budget
  • Public service early retirement scheme
  • No standard rating of pension contributions

23
Childcare Benefits
  • Early childcare supplement
  • 50 from 1 May 2009
  • Abolished from 31/12/2009
  • Free pre-school year
  • Child benefit allowance will be reviewed in 2010
    Budget

24
Capital Allowances
  • Termination of allowances on private hospitals
    and nursing homes
  • Transitional arrangements
  • Child care and palliative care facilities
    relief still available

25
Business Taxation
  • Ireland Inc

26
Business Taxation
  • 12.5 corporation tax rate unchanged
  • Reminder
  • Manufacturing tax rate of 10 ceases on 31
    December 2010
  • Employer PRSI unchanged at
  • 8.5 on salary 18,512 pa
  • 10.75 on higher salaries

27
Incentive to Protect Employment
  • Enterprise stabilisation fund
  • 100 m fund 50m 2009 50m 2010
  • Assist indigenous companies in difficult business
    environment
  • Particular focus SME and exports
  • Not in financial difficulty at 1 July 08
  • Remain financially viable

28
Smart Economy
  • Measures to support Smart Economy through
    investment and incentives
  • R D target of 2.5 of GNP by 2013
  • Tax relief on acquiring intangible assets
    including intellectual property

29
Capital Gains Tax
30
Capital Gains Tax (CGT)
  • Current Position
  • 22 since 15 October 08
  • Yesterdays Budget
  • Increase to 25
  • Effective 8 April 09

31
Capital Acquisitions Tax
  • Rate increased from 22 to 25
  • Effective from midnight 7 April
  • Thresholds
  • Pre 8 April 8 April
  • (Parent to Child) 542,544 434,000
  • (Relations) 54,254 43,400
  • (Strangers) 27,127 21,700

32
Property
33
Dealing in Residential Development Land
  • Special 20 rate abolished
  • Taxable at marginal rate for individual - 2009
  • Taxable at 25 for company - accounting periods
    from 1 January 2009
  • Trading losses set off restricted maximum value
    20
  • If not claimed by 7 April 09

34
Stamp Duty
  • Trade-In Scheme
  • No stamp duty payable on traded in property
  • As payment / part payment
  • In exchange for new house / apartment
  • Stamp duty due when swapped house sold

35
Property - Commercial
  • Current Position
  • Stamp Duty rate still 6
  • Stamp duty deferral for resting on contract
    still available

36
VAT Other
37
VAT Rates
  • No changes

38
Car Dealers
  • VAT Margin Scheme
  • Second Hand Cars Acquired from 1st July
  • VAT on Margin
  • Second Hand Cars Acquired before 1st July
  • Taxed on resale price
  • Spread Payments if resold before 31st December

39
Excise
  • 25 cent increase on cigarettes
  • 5 cent increase on diesel

40
Future Tax Cuts to be Reviewed
  • Taxation of child benefit
  • Introduce carbon tax
  • Introduce property tax
  • Review tax exempt income / reliefs

41
Other Possibilities
  • Tax mobile phone texts!
  • Rock concerts!
  • Electronic tag high worth tax exiles!

42
Supplementary Budget 2009
43
Tax Planning in the Current Environment
44
Current Environment
  • Tax certainty rates / reliefs
  • Next budget due Dec 09
  • Commission on Taxation Report
  • Fundamental changes to tax regime
  • Maximise available remaining tax reliefs
  • Secure tax savings
  • Improve cashflow

45
Losses
  • Losses arising in your company?
  • Land write downs / restricted
  • Capital allowances claims obsolete assets
  • Stock provisions
  • Bad debt provisions
  • Inter group loans write off / down
  • General trading losses
  • Can be carried back to prior year
  • Obtain a refund of tax paid
  • Prepare accounts and return early to get refund

46
Cashflow Saving Tax Tips
  • Preliminary tax
  • If profits decreasing base on current year
  • VAT refund on bad debts
  • Move to a cash receipts basis for VAT
  • Review direct debits for PAYE / VAT
  • Less frequent filing of VAT / PAYE
  • Directors current account

47
Tax Opportunities for Companies
  • Research Development tax credits
  • Qualifying R D
  • 25 cash refund
  • What costs qualify?
  • What is R D?
  • Sectors benefiting
  • Software, pharma, food, plastics, medical
    devices, electronics, biotech, manufacturing etc

48
Tax Based Funding
  • Seed Capital Relief
  • Start ups
  • Tax relief on investments up to 600k
  • Set against Income Tax bill in prior 6 years
  • Refund of income tax
  • Business Expansion Scheme
  • Tax relief of 150,000pa for individuals
  • Qualifying company can secure 2m
  • Lack of other tax incentives for individuals

49
Redundancy Planning
  • Some elements taxable, others not
  • Maximise after tax payments to staff

50
Tax Savings for New Start Ups
  • Taxation exemption for new companies
  • Commence new trades in 09
  • Profits of 960k over 3 years
  • Existing companies?

51
Opportunties with Reduction in Asset Values
  • Take assets out of company
  • Re-organise company structure
  • Transfer assets to children Inheritance Brats

52
Opportunities for Family Businesses / Companies
  • Low valuations opportunities to transfer assets
  • CAT threshold for children 433k
  • Significant tax reliefs remain
  • Retirement Relief extract 1.5m cash tax free
    (if husband wife qualify)

53
Company Pension Schemes
  • Significant pension fund can be built for company
    directors (5 shareholding)
  • Cap on employer contributions
  • Currently based only on size of fund needed to
    provide for directors retirement
  • Based on age, years of work and salary
  • Salary cap to be introduced?
  • 25 tax free lump-sum likely to be reduced

54
Conclusion
  • Act before next budget
  • Tax certainty for now
  • Claim tax reliefs applicable
  • Maximise savings and manage cashflow

55
Contact Details
  • Jackie Masterson
  • Taxation Partner
  • jmasterson_at_rbk.ie
  • 090 6480600
  • Fiona Molloy
  • Taxation Director
  • fmolloy_at_rbk.ie
  • 090 6480600

56
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