Finance (No.2) Bill 2013 was published in October (see the November issue of tax.point) and moved to Committee Stage at the end of November. A number of amendments were proposed to the Bill at Committee Stage and the key amendments are as follows:

Start your own Business Scheme

The start your own business scheme was an initiation to encourage individuals who have been unemployed to start their own business. The commencement date for the Start your own Business Scheme was brought back to 25^th October 2013.

Single Persons Tax Credits

The Finance Bill announced that the single person child carer will be available only to one person and will replace the one-parent family care. Committee stage amendments allow claimants to relinquish their credit in favour of another carer where certain conditions are met.

Tax Relief on Loans to Acquire an Interest in a Partnership

The amendment confirms that refinanced loans will continue to qualify for relief from income tax on a phased out basis similar to existing loans drawn down before 15^th October 2013. This amendment applies where the new loan is not greater than the original loan.

Magdalene Laundry payments

There were some Committee stage amendments in relation to payments made to individuals who were admitted to and worked in a Magdalene Laundry. The committee amendments confirms that the exemption from tax also applies to certain state pensions and other payments made by the Minister of Social Protection to those qualifying individuals.

VAT Exempt Supply of Water

The current VAT exemption that applies to water supplied by local authorities will be extended to include supplies by Irish water.

Disallowances of Input VAT where Invoices Remain Unpaid Post 6 Months

The Finance Bill introduced provisions whereby under certain circumstances, a person could not continue to claim for input VAT on an invoice that they had not discharged within the last 6 month.

The Committee stage amendment relates to allowing Revenue to impose a fixed penalty of £4,000 where a supplier fails to provide Revenue with information requested regarding outstanding debtors.

Capital Gains Tax Debt Write Off

The Finance Bill provided for a provision which effectively seeks to reduce the allowable base cost of an asset where there has been a debt write off. This treatment aligns the base cost to the economic cost.

Following representations made by Chartered Accountants Ireland, the Committee stage amendments confirm that the provisions do not apply to debt forgiveness between connected companies or assets which are exempt from CGT.

Double Tax Relief for Companies

There have been Committee stage amendments to change the scope of notional credits available to Irish Parent and Holding Companies on dividends they receive from their EU subsidiaries.

Bank Levy and Bank Losses

A Committee stage amendment ensure that banks who will benefit from the removal of the restriction of bank losses will be subject to a higher levy reflecting the potential loss of Revenue to the state.

High Earning Restriction (H.E.R.) and Foreign Credits

The Finance Bill made amendments to the manner of calculating the Irish effective rate of tax.

The Bill provided that the calculation will be computed by including the restriction as taxable income which would have the effect of increasing the Irish effective rate and the foreign tax credit.

The committee stage amendments confirm the amendment will affect all returns filed after 31st January 2008.

Retirement Relief

The Finance Bill extended the relief to include disposal of leased land to third parties where the leases were for 5 years or more.

The disposal of leased land also qualifies for the enhanced retirement relief to family members. The enhanced retirement relief provides for no disposal limit where the individual is between 55 and 66 years of age.

Pay and File consultation for Income Tax

As well documented, there was proposal to change the existing pay and file dates for Income Tax.

The Minister for Finance announced last month that there will be no immediate changes to the Pay and File deadline in 2014 and no committee stage amendments have been provided for. This is a very welcome announcement as a change to pay and file could have serious financial consideration for tax payers in Ireland, particularly those operating in the SME sector.

The provisions may be continued in next year’s Finance Bill but on a positive note, no changes to the pay and file dates will occur before 2015 and Chartered Accountants Ireland will continue to represent members’ interest on this.

Reform of the Appeals Process

The department of Finance have commenced a consultation process regarding the reform of the Appeals process. A consultation document has issued which outlines the intended changes to the existing appeals system and the public consultation will end on 16^th January 2014.

Summary

Overall the Committee stage amendments addressed many of the issues that were mainly brought up at the Tax Administration Liaison Committee “TALC” and through various representations with Revenue. The postponement of the potential amendments to the Pay and File dates is however a very welcome clarification.

Paul Dillon is Tax Partner with Duignan Carthy O’Neill Chartered Accountants

Email: pauldillon@dcon.ie

Tel: 01 668 2404