Budget 2013

KIERAN COUGHLAN – TAX MANAGER

• Backdrop• Measures to improve job creation• Property tax• Taxation measures• Measures to improve credit• Changes in social welfare benefits• Pensions• Other matters• Road tax• Implications for contractors• Summary

Backdrop

Reductions in Exchquer deficits • 2009 Deficit €22,694m 11.8%

GDP• 2010 Underlying Deficit €16,700m 10.7% GDP• 2011 Underlying Deficit €9,400m 9.4% GDP• 2012 Deficit 8.2% GDP• 2013 Deficit 7.5%GDP• 2014 Deficit 5.1%GDP• 2015 Deficit 2.9%GDP

2013 Measures to improve job creation

• Corporation tax exemption for start ups to be extended• EI to be granted extra €139m to assist exporting companies• €175m Venture capital fund for start ups• Doubling of initial amount qualifying for R&D tax credit• Extending the Foreign Earnings Deduction for work related travel to

certain countries beyond the BRICS,• Luas Broombridge project• 520 construction jobs in Oberstown detention facility• Energy efficiency fund – private funds to be supported by Government• Continuation of reduced rate VAT for hospitality industry• Tax measures for development of hangers and ancillary services

Property Tax

• 0.18% for houses up to €1m, additional 0.25% for excess over €1m• Half rate Property Tax for 2013• No NPPR for rental properties after 1/1/2014• To be collected by Revenue• Revenue will also collect any unpaid household charge (increases to

€200 for household charge not paid by 1 July 2013)– Amount can be paid direct debit in July 2013, – Or deducted by employer

• Exemption from property tax for 3 years for first time buyers and purchasers of new properties

• Deferral available for very low income persons (€15k/€25k)

Property Tax - Examples

Assessable Value 2013 Rate2014-15 Rate (per annum)

€50,000 €45 €90€125,000 €113 €225€175,000 €158 €315€225,000 €203 €405€275,000 €248 €495€325,000 €293 €585€375,000 €338 €675€425,000 €383 €765€475,000 €428 €855

Etc. Etc. Etc.Homes over €1m

€1,000,000 €900 €1,800€1,100,000 €1,150 €2,050

Taxation measures

• No increase in income tax• No increase in universal social charges (except for pensioners earning

more than €60,000)• No increase in rate of PRSI• DIRT up 3% to 33%, CAT/CGT up 3% to 33%

However• Extension to USC, PRSI on all income of self employed for 2013 • Extension to USC, PRSI on all income of employees for 2014 • USC increasing from 4% to 7% for pensioners earning more than

€60,000• Employee exemption of €127 per week to be abolished – this will cost

an employee an additional €264 per year

2013 – Measures to improve credit?

• Local enterprise offices - a new one stop shop for those looking for advice…

• National Pensions Reserve fund to provide credit…• Credit Review office staff to be increased…• Nama to provide funding to purchasers…

• Questionable how successful these will be?

Changes in social wefare benefits

• No change to jobseekers, or disability payments• Maternity benefit to become taxable from 1 July 2013• Jobseekers benefit duration to be reduced by 3 months• Household benefits package (TV, Phone to be restricted)• Reduction in child benefit by €10 per month (but also previous reductions

announced) - 4 children €696 per annum drop! • Low income households – child care places for low income workers and some

disadvantaged areas• Medical card holders, increase by €1 to €1.5 per prescription• Increase in monthly thresholds from €132 to €144 for drugs repayment scheme• GP card to replace Medical Card for pensioners earning between €600 to €700

per week (single), & €1,200 to €1,400 per week (married)• No cut to fuel allowance but…carbon tax?

Pensions

• Tax relief to continue at up to 41% for employees and 52% for company contributions

• Overall cap where the pension scheme can deliver income of up to €60,000 per annum

• Pensions levy not to be continued into 2014• Option to withdraw up to 30% of funds invested in AVC’s, withdrawal

taxable at marginal rates

Other matters

• Student contribution to be increased by €250 per year for each year 2013 to 2015.

• Carbon Tax of €10/€20 from 1 May 2013/2014 – effect is same as reduction in fuel allowance but affects wider

• No top slicing relief for termination payments made after 1/1/2013 where the payment exceeds €200,000.

• VRT up approx 2% on value of car

Excise• Pint 10cent• Spirits 10cent• Wine €1 per bottle• Cigarrettes 10cent• Rollies 50cent

Road Tax

Road Tax Class - Pre 2008 carsRoad Tax Old Rate

Road Tax New Rate Difference

1L €185 €199 €14

1.4L €384 €413 €29

1.6L €506 €544 €38

1.9L €660 €710 €50

2L €843 €906 €63

Road Tax Class - Post 2008 CarsRoad Tax Old Rate

Road Tax New Rate Difference

A A0 €160 €120 -€40

A A1 €160 €170 €10

A A2 €160 €180 €20

A A3 €160 €190 €30

A A4 €160 €200 €40

B B1 €225 €270 €45

B B2 €225 €280 €55

C €330 €390 €60

D €481 €570 €89

Implications for contractors

• No negative tax implications from Contracting• No impact on income tax, PRSI or USC• Pension relief continues at up to 52% for contributions from company

• In fact contractors have been sheltered from the cuts faced by regular employees – €127 per week PRSI exemption applied only to employees

Overall consensus

• Taxes by the back door• No great incentives introduced• Repetition of previously introduced “positive tax measures”• No debt forgiveness• Cuts in social welfare at the periphery