The Report Stage of the Finance Bill took place on Tuesday 6 and Wednesday 7 March. As flagged in section 1.01 of the March issue of tax.point, the de minimis thresholds for medical expenses claims have been removed.

The following is a summary of the Report Stage Amendments:

Health Expenses

In the Finance Bill, as initiated, it was proposed to remove the €250 health expense threshold where a claim for health expenses was made by an individual in relation to expenses for more than one person (i.e. one threshold would apply €125, irrespective of the number of persons involved in the claim). We flagged at Committee Stage that the Minister had planned to revisit this issue at Report Stage. The result is that the de minimis threshold of €125 will now also be removed.

Amendment of income from patent royalties

Previously the exemption applied to income from a qualifying patent, where the work leading to the patent was carried out in the State. This restriction to work in the State is contrary to EU law (see Section 1.34 for further information) and the Report Stage amendment proposes that the work must have been carried out in the EEA (i.e. an EU Member State or Iceland, Liechtenstein and Norway).

In addition, the amount of income qualifying for exemption is being restricted to €5,000,000, subject in certain circumstances to companies being allowed to allocate the exempt amount between connected persons, where the exempt income has been aggregated amongst connected persons. This proposal will have effect from 1 January 2008. Of course the restrictions in relation to High Earners introduced in the Finance Act 2006, will continue to apply.

Restructuring aid for sugar beet growers

Recipients, who are carrying on a trade of farming, may elect in writing that payments made under the EU temporary scheme for the restructuring of the sugar industry be treated as received in equal instalments for the year it is received and 5 succeeding years. This means that the full amount received will not be taxable in its entirety in the year of receipt and hence the tax credits in the succeeding years may be available to offset against any tax payable.

Home care services exempt from VAT

Services closely related to medical care which are undertaken by or on behalf of the Health Service Executive (“HSE”) or by home care providers recognized by the HSE are being added to the First Schedule of the VAT Act and hence such services will be exempt from VAT.

The Finance Bill 2007 was signed into law by the President on 2 April 2007.