The Finance Bill for 2010 was published on 4 February 2010. The most significant items included were
Income Tax
High Earners Restriction on Specified Reliefs
This restriction targets high earners making use of certain tax reliefs, mainly property related.
The threshold for this restriction is reduced to €125,000.
The threshold for adjusted income is reduced to €400,000. It was €500,000
This aims at increasing the taxtake on high earners to an average 30%.
Levy on Non-resident Irish Domiciled Individuals
An annual levy of €200,000 will apply t0 individuals who have
an Irish Income Tax liability under €200,000
worldwide income over €1m
Irish property valued over €5m. Borrowings do not reduce the property value
Example
Property Valued €6m
Mortgage €5m
Value for Levy €6m
Health Expenses
The requirement for a hospital to be on a specified list has been removed. Now the taxpayer only has to prove that the treatment was necessary.
Certain treatments will be ineligible
- cosmetic surgery unless for sound medical reasons
- treatments deemed to be against public policy
Pensions
There are no changes to the tax treatments of contributions and payments. However, one tax planning opportunity has been removed.
Previously, money held in a PRSA did not incur the deemed 3% distribution imposed on an ARF. Now, after the date when an annuity could have been bought, funds left in the PRSA will incur the deemed distribution.
Example
Fund in PRSA €500,000
Date transferable to annuity 1/1/2011
Deemed distribution to PRSA holder 2011 €15,000
Taxed at marginal rate
Remittance Basis
There are three significant changes to the remittance basis of taxation. This is where the taxpayer’s foreign income is taxed only when remitted to Ireland.
The changes are
Irish citizen’s not ordinarily resident
This would apply where an Irish citizen moved abroad for three years and the returned. They would not be ordinarily resident. They will no longer qualify for the remittance basis.
Proof of domicile
Revenue will now seek proof of non-domiciliary status. It will be critical to maintain a link with the original country of domicile e.g. by keeping a grave plot, club memebership.
Seconded employees
When an employee was seconded to Ireland they will now get the remittance if
- They have been transferred from an European Economic Area or Double Tax Agreement country. Previously the EEA was excluded
- They work here for one year. Previously it needed three years.
Rental Income
Capital allowances for the year must be used before losses forward
Service Charges
The tax credit for service chrges is abolished.
Capital Taxes
Capital Acquisitions Tax
there is a new pay and file system for CAT
