(i) Income Levy – Notes for Guidance and Implementation Arrangements for Employers

1. Income Levy General provisions

1.1 What is the income levy?

The income levy, due to come into effect on 1 January 2009, is a levy payable on gross income before any relief for any capital allowances, losses or pension contributions.

1.2 Who is liable for the income levy?

All individuals are liable to pay the income levy if their gross income exceeds the threshold of €18,304 p.a., or they exceed the income exemption limit of €20,000 p.a. for an individual over 65 years – or €40,000 p.a. for an over 65 married couple.

1.3 Are there exempt categories?

Yes

• Where an individual's income for a year does not exceed €18,304 p.a.
• For over 65's where their annual income does not exceed €20,000 p.a. for a single individual or €40,000 p.a. for a married couple
• Full Medical card holders – see section 2.4
• Social Welfare payments are also excluded

1.4 What income is exempt from the income levy?

• all social welfare payments including social welfare payments received from abroad
• payments that are made in lieu of social welfare payments such as Community Employment Schemes paid by the Department of Enterprise and Employment or Back to Education Allowance paid by the Department of Education. [Appendix A contains examples of these types of payments]
• income below €18,304 p.a.
• income subjected to DIRT,
• and the income sources listed in Appendix B

1.5 Will the income levy apply to non-domiciles?

If they have income from Ireland or income sourced from Ireland they will pay the income levy on it the same way as they currently pay income tax on it.

1.6 I am a non-resident director – will I be liable to pay income levy?

Directors fees paid by an Irish company to a non-resident director will be subject to the levy.

1.7 What are the rates and thresholds of the income levy

Income Thresholds	Rate of Income Levy
Income up to €100,100 p.a.	1%
Income between €100,101 and €250,120 p.a.	2%
Income in excess of €250,120 p.a.	3%

1.8 Is the higher % being charged on all earnings or just on the earnings over the relevant threshold?

The 2% levy is charged on income earned between €100,101 p.a. and €250,120 p.a. and the 3% is being charged on income earned in excess of €250,021 p.a.

1.9 How is the income levy collected?

Employers are responsible for deducting the income levy from their employees’ salaries. Self-employed individuals will make a payment of income levy along with their preliminary tax payment, and any balance will be collected when the final assessment issues

1.10 What income is liable for the income levy?

The levy is payable on gross income before relief for any capital allowances, losses or pension contributions.

1.11 Will redundancy payments be subject to the income levy?

Redundancy payments will be exempt to the same extent as they are for income tax.

Statutory redundancy payments are exempt from tax. Statutory redundancy payments amount to 2 weeks pay per year of service plus a bonus week subject to a maximum payment of €600 per week.

In addition ex gratia redundancy payments in excess of the statutory redundancy amount are also free from income tax up to certain limits. These limits are up to €10,160 plus €765 per complete year of service in excess of the statutory redundancy. The basic exemption as outlined above can be further increased by up to €10,000 if the person is not a member of an occupational pension scheme.

2. PAYE taxpayers and the income levy

2.1 Are the first €18,304 p.a. earnings exempt (i.e. will the 1% levy be on income greater than 18,304 p.a. and less than €100,101 p.a.)?

No – once your income is greater than the minimum threshold above, you pay the levy on the full amount of your income.

2.2 I'm over 65 years and my income is €25,000 is the first €20,000 exempt?

Once your income exceeds the €20,000 p.a. threshold (385 per week / €1,667 per month), you are liable to pay the levy on the full amount of your income on a week1 / month 1 basis. Your income for income levy purposes is determined after excluding any social welfare or similar type income.

2.3 My spouse and I are over 65 – are we exempt from the income levy

You are exempt provided your gross income from all sources to which the levy applies is less than €40,000 p.a. for the year of assessment. Gross income for this purpose does not include income from social welfare or similar type payments.

2.4 I have a medical card – do I pay income levy on my wages

Persons entitled to a full medical card are specifically excluded from the income levy.

The exemption exists for people who hold a full medical card. It does not exist for people who hold a GP only medical card. The individual does not need to hold the full medical card for the full year to qualify for the exemption. For example, the card may be issued to the individual in December but the individual is still entitled to the exemption for the full year in question.

2.5 Given that my employer records my Social Welfare illness benefit after 6 weeks for tax purposes will I now have to pay the income levy on this benefit?

No. Social Welfare payments are not subject to the income levy.

2.6 How much per week can I earn before I become liable for the income levy

There is a lower threshold of €18,304 p.a. or €352 per week where the income levy will not apply.

2.7 What happens when I exceed the weekly minimum threshold of €352?

Where the income exceeds the weekly minimum threshold of €352 the full income is subject to the income levy.

Where the income levy has been applied for particular pay period(s) throughout the year but the minimum threshold of €18,304 p.a. has not been exceeded at week 52 then no liability to the income levy arises. In this situation and provided you were in continuous employment with an employer throughout the year in question (for the full 52 weeks) your employer should make an adjustment at week 52 and refund all income levy deducted. Where you have not been in continuous with an employer throughout the year in question Revenue, rather than the employer, will deal with any refund of income levy due.

2.8 I earn €50,000 per annum – what rate of income levy will I pay

An individual who is earning €50,000 p.a. will have a liability to the income levy at a rate of 1%.

2.9 I earn €80,000 and my spouse earns €120,000 – what rate will we pay?

You will pay at 1%. Your spouse will pay 1% on income up to €100,100 p.a. and 2% on income in excess of that.

2.10 If I get a bonus of €6,000 will the income levy apply at the 3% rate?

The income levy is calculated on a weekly threshold of 1% for income up to €1,925, 2% from €1925 to €4,810, and 3% thereafter. An employee who gets a payment in an individual week in excess of the 1% or 2% thresholds will pay the income levy at the higher rate(s) on a week 1 basis.

Where the income levy has been applied for particular pay period(s) throughout the year but you are ultimately liable at either a lower rate or are exempt because you have not exceeded the thresholds at week 52, you will have overpaid the income levy. In this situation, and provided you were in continuous employment with an employer throughout the year in question (for the full 52 weeks), your employer should make an adjustment at week 52 and refund any overpayment of income levy deducted. Where you have not been in continuous with an employer throughout the year in question Revenue, rather than the employer, will deal with any refund of income levy due.

2.11 Do you have to pay the income levy on an Occupational Pension?

Yes, the income levy will be applied to occupational pensions subject to the age exemption thresholds. The levy is applied on income above certain thresholds for the over 65's. The threshold being applied in the case of over 65's is €20,000 p.a. for a single individual. For a married couple it is €40,000 p.a. with full transferability. The employer will apply the €20,000 threshold in each pay period. Married individuals can apply to Revenue at the end of the year for any additional threshold transfer up to the maximum of €40,000.

The income levy is not charged on contributory or non-contributory State pensions. This means that a pensioner aged 66 or over and single can have income of almost €32,000 p.a. before they are subject to the income levy (€11,976 State pension and €20,000 occupational pension). A pensioner married couple aged 66 or over can have income of almost €63,000 p.a. before they are subject to the income levy (€22,703 contributory State pensions and €40,000 occupational pension).

2.12 Will the income levy effect tax credits?

The levy is a separate charge to income tax and there are no deductions or credits due against it. It is collected from gross income at the progressive rates. Excess or unused tax credits cannot be used to reduce an individual's liability to the levy.

2.13 Am I allowed a deduction for pension contributions

No deductions for pension contributions are allowed from gross income.

2.14 My medical expenses are greater than my taxable income. Can I set the excess expenses against income levy or reduce my liability to reduce my liability to it?

Excess medical expenses which have not been set against income tax liability cannot be used to reduce liability to the income levy.

2.15 Are married couples who are jointly assessed allowed double the threshold limits?

No. The thresholds apply to each spouse individually and cannot be combined where one spouse is below the thresholds and the other above.

2.16 Short-term working arrangement Job Seekers benefit is not taxable. Will I now have to pay the 1% levy on it?

All payments from the Department of Social and Family Affairs, and payments made by other Departments which are similar to social welfare payments are exempt from the levy.

2.17 Should I pay the 1% income levy on travel expenses, etc?

Any expense payments which are only a recompense for expenses incurred in the performance of duties, are not subject to the levy. Allowances which are in the nature of pay and are part of an individual's gross income are subject to the levy.

2.18 If I change employment during the year and earn €50,000 with my first employer and €100,000 with my second employer will the 2% automatically kick in?

The 2% levy will apply where an individual's income for a year of assessment exceeds €100,100 p.a. Each employer is responsible for collecting the levy by reference to the gross income arising in their employment. Details of the levy are not carried forward from one employment to another. In circumstances where, in the aggregate of the income arising between the two employments, there is an underpayment of the levy, Revenue will identify this and make arrangements for the collection of the underpayment from the employee concerned.

2.19 Is it true that although I am exempt from income tax, I will have to pay the income levy?

An individual who has no liability to tax based on their entitlement to tax credits or by use of losses or capital allowances may still have a liability to income levy.

Similarly an individual whose income consists of exempt source income from occupation of certain woodlands, profits from stallion fees, stud greyhound services fees and farmland leasing, along with patent royalty income and earnings of certain writers, artists and composers, will be subject to levy on any or all of these income sources.

3. Self assessed taxpayers and the income levy

3.1 How will the income levy be collected?

Self-employed taxpayers have responsibility for operating the levy in respect of all income sources. They will make a payment of income levy along with their preliminary tax payment, and subject to the correct amount of preliminary tax being paid, the balance is payable when the return is filed.

3.2 I am self-employed – how do I calculate gross income for purposes of the income levy

Gross income is determined after deduction of legitimate expenses directly associated with the performance of the trade. This is in accordance with the normal principles of commercial accounting.

3.3 Can expenses be deducted?

Legitimate expenses directly associated with the performance of the trade can be deducted before the levy is applied. This is in accordance with the normal principles of commercial accounting.

3.4 Am I allowed to deduct capital allowances?

No deductions for capital allowances are allowed from gross income.

3.5 Am I allowed to deduct losses?

No deductions for losses are allowed from gross income

3.6 Are exempt sources of income liable forthe income levy?

An individual whose income consists of exempt source income from occupation of certain woodlands, profits from stallion fees, stud greyhound services fees and farmland leasing, along with patent royalty income and earnings of certain writers, artists and composers, will be subject to income levy on the sources above – subject to the relevant thresholds.

4. Employers and the income levy

4.1 As an employer, what are my responsibilities in relation to the collection and remittance of the income levy?

• Identify “Gross Income” as defined
• Deduct the levy from this income at the appropriate rates
• Pay the total amount of the income levy deducted from your employees on form P30 to the Collector General – levy amount to be included with figure for PAYE on form P30
• At end of year give the following details on form P35L

• – Total amount of income levy for each individual
• – Particulars of the amount of income levy paid at each rate
• – Total income on which income levy is based

4.2 Who is responsible for deducting and returning the income levy?

Employers have responsibility for operating levy in relation to payments they make to their employees. They will deduct and pay the income levy to the Collector General on behalf of employees.

4.3 I am an employer – when do I pay this levy?

Employers should pay the income levy to the Collector General at the same time and in the same manner as the deductions under the PA YE system.

4.4 If the employer is responsible, what will the penalty be if the income levy is not correctly administered?

Penalties similar to those that apply where the employer fails to operate PA YE correctly will apply for failure to operate the levy.

4.5 Will there be an interest charge for late payment of the income levy?

Yes. Interest will be payable on late payments of the income levy to the Collector General.

4.6 If all earnings are taken into account, how does an employer know what an employee may earn in another employment to determine which income levy % should be applied?

The employer is only responsible for deducting levy from income, including notional pay, which he or she is paying to an employee. They are not required to take account of income arising from other sources.

4.7 Are social welfare payments added to income to determine whether the income levy will be charged or not?

Social welfare payments are exempt from the levy.

4.8 Is calculation of the income levy different from calculation of PAYE & PRSI?

• The calculation is separate to PA YE and PRSI and is based on gross income as defined.
• The income levy is collected on a stand-alone basis for each employment
• The income levy is collected on a week-one basis within each employment

4.9 For employers using Direct Debit, should their amounts be increased, to take account of the income levy?

Yes, Direct Debit amounts should be revised to take account of levy payments.

4.10 What records should employers keep regarding the income levy?

Employers should keep the following records in relation to the income levy for each employee for each year:

• Amount of emoluments liable to income levy
• Amount of income levy deducted from each payment made
• Total amount of income levy deducted

4.11 Should pay-slips record the income levy details separately?

Yes. Details of the income levy should be recorded separately on payslips.

4.12 What revisions to forms will be made to cater for the income levy?

Forms P35 will be revised to allow for the reporting of end of year details of the income levy (and parking levy where appropriate). Forms P60 will also be revised. Details of the amendments to these forms will be circulated to employers shortly.

4.13 Income Levy Certificate on cessation of employment

When an employee ceases employment the employer should issue an Income Levy Certificate to the employee together with form P45. The information detailed on this certificate will be for ‘this employment only’. Where an individual had more than one period of employment with the same employer in the year the certificate will state the income levy information in respect of the latest period of employment only. Employers can use the Income Levy Certificate template which will be available soon on www.revenue.ie.

The following information is required on the certificate:

• Employee name
• PPS Number
• Payroll / Works No. (if applicable)
• Date of commencement (if after 1 January)
• Date of cessation
• Year
• Gross Income for income levy
• Amount of income levy deducted
• Employer name and address
• Employer registered number
• Capacity of signatory (secretary / director / owner)

The signature on the certificate should correspond with the signature on the form P45.

4.14 What are the weekly/monthly, etc. breakdown of the income levy thresholds?

The breakdown of the income levy threshold figures are as follows:

Annual Threshold	Weekly	Fortnightly	Monthly	4-Weekly	Bi-monthly	Quarterly
18,304	352	704	1,526	1,408	763	4,576
100,100	1,925	3,850	8,342	7,700	4,171	25,025
250,120	4,810	9,620	20,844	19,240	10,422	62,350
Over 65's
20,000	385	770	1,667	1,539	834	5,000

4.15 Where a payment is made for a period of less than, or more than, a week/month/etc., have the weekly/monthly/etc. threshold amounts to be adjusted accordingly?

No. The same standard threshold amounts, listed at 4.14 above, apply in all instances. For example, a weekly paid employee should, if a payment of salary is made in the week in which employment commences or ceases, have the full income levy threshold applied for the week, even if the payment relates to part of the week only.

Example:

An employee works for 2 days in their last week of employment and receives a gross salary of €320. Their employer will apply the full weekly threshold of €352 to this payment. As the employee's income is below the threshold they will not pay the income levy on this income. The employee commences immediately in their new employment and works for the remainder of the week, earning €650 in this first week. Their new employer will apply the full weekly threshold of €1,925 to this income and apply the 1% income levy. Employers operate the income levy on a week 1 basis and apply the full thresholds for the week or part thereof. At the end of the year Revenue will collect any underpayment of the income levy.

4.16 Circumstances in which employers/pension providers should make adjustments to the income levy liabilities

Where an employee is in continuous employment (for a full 52 weeks) with an employer throughout the year in question the employer should make adjustments to income levy liabilities in the following circumstances:

(Note: Adjustment should be made in respect of overpayment of the income levy only. Where an employer finds that the income levy has been under deducted at week 52 they are not to deduct more income levy. Revenue will deal with any underpayments arising.)

• Where the income levy has been applied for particular pay period(s) throughout the year but the minimum threshold of €18,304 p.a. has not been exceeded at week 52 then no liability to the income levy arises. In this situation the employer should make an adjustment at week 52 and refund all income levy deducted. Where the employee has not been in continuous employment with an employer throughout the year in question Revenue, rather than the employer, will deal with any refund of income levy due.
• Where a 2% (or 3%) rate of income levy has been applied for particular pay period(s) but the employee ultimately is liable for only 1% income levy because they are within the €100,100 p.a. threshold at week 52 they will have overpaid the income levy. In this situation the employer should make an adjustment at week 52 and refund any overpayment of income levy deducted. Where the employee has not been in continuous employment with an employer throughout the year in question Revenue, rather than the employer, will deal with any refund of income levy due.
• Where a 3% rate of income levy has been applied for particular pay period(s) but the employee ultimately is liable for only 2% income levy because they are within the €250,120 p.a. threshold at week 52 they will have overpaid the income levy. In this situation the employer should make an adjustment at week 52 and refund any overpayment of income levy deducted. Where the employee has not been in continuous employment with an employer throughout the year in question Revenue, rather than the employer, will deal with any refund of income levy due.
• Where an employee/pensioner is aged 65 or over an exemption threshold of €20,000 applies. Where, in the case of an individual who is aged 65 or over, the income levy has been applied for particular pay period(s) throughout the year, but the exemption threshold of €20,000 p.a. has not been exceeded at week 52, then no liability to the income levy arises. In this situation the employer/pension provider should make an adjustment at week 52 and refund all income levy deducted in the year. Where the employee/pensioner has not been in continuous employment with an employer throughout the year in question Revenue, rather than the employer/ pension provider, will deal with any refund of income levy due.
• Where an employee holds a full medical card at any time during the year they are exempt from paying the income levy. Where the income levy has been applied for particular pay period(s) throughout the year but the individual holds a full medical card then they are due a refund of any income levy they have already paid in the year. In this situation the employer should make an adjustment at week 52 and refund all income levy deducted in the year. Where the employee has not been in continuous employment with an employer throughout the year in question Revenue, rather than the employer, will deal with any refund of income levy due.

STANDARD RATE TAX BAND	2008	Proposed for 2009
Single / Widowed (without dependent children)	35,400	36,400
Single / Widowed (with dependent children)	39,400	40,400
Married Couple (one spouse with income)	44,400	45,400
Married Couple (both spouses with income)*	70,800	72,800
*The tax band of €72,800 available to married couples with two incomes in 2009 is transferable between spouses up to a maximum of €45,400 per spouse.
TAX CREDITS
Single Person	1,830	1,830
Married Person	3,660	3,660
Widowed Person (without dependant children)	2,430	2,430
One Parent Family Credit	1,830	1,830
Home Carers’ allowance	900	900
PAYE Credit	1,830	1,830
OTHER CREDITS
Incapacitated Child Credit (Max)	3,660	3,660
Dependent Relative	80	80
Blind Tax Credit
Blind person	1,830	1,830
Both Spouses Blind	3,660	3,660
Widowed Parent
Year 1	4,000	4,000
Year 2	3,500	3,500
Year 3	3,000	3,000
Year 4	2,500	2,500
Year 5	2,000	2,000
AGE TAX CREDIT
Single/Widowed	325	325
Married	650	650
STAMP DUTY – COMMERCIAL
Over Euro 80,000*	6%
(*) Lower rates apply where consideration is less than €80,000
STAMP DUTY-RESIDENTIAL
	FTB		Own/Occ	Investor
Up to €125,000	Exempt		Exempt	Exempt
Next €875,000	Exempt		7%	7%
Balance	Exempt		9%	9%
CAT THRESHOLDS
	Group threshold (after indexation)
	2005	2006	2007	2008
Class A	€466,725	€478,155	€496,824	€521,208
Class B	€46,673	€47,815	€49,682	€52,121
Class C	€23,336	€23,908	€24,841	€26,060

Queries on the income levy

• Employers

Please contact:

Employer Information and Customer Service Unit

Telephone: 1890 25 45 65

If calling from outside the Republic of Ireland please phone + 353 67 63400

E-mail: employerhelp@revenue.ie

• Employee

Please contact your local Revenue office.

Appendix A

List of Social-Welfare-Like Payments

Payments made by the Dept of Enterprise, Trade and Employment

• Community Employment Scheme
• FÁS (non apprentice payments)

Payments made by the Health Service Executive (HSE):-

• Infectious Diseases Maintenance Allowance
• Blind Welfare Supplementary Allowance
• Domiciliary Care Allowance
• Mobility Allowance

Payments made by the Dept of Education:

• VTOS Training Allowances
• Youthreach Training Allowances
• Senior Traveller Training Allowances
• Back to Education Initiative (BTEI) Training Allowances paid to Youthreach, STTC or VTOS eligible participants on a pro-rata basis.
• Vocational Education Committees’ Scholarship Scheme
• Fund for Students with Disabilities
• Student Assistance Fund
• Millennium Partnership Fund for Disadvantage

Payments made by the Dept of Agriculture:

• Farm Retirement Pensions
• Farm Retirement Workers Pensions

Payments made by the Dept of Community Rural and Gaeltacht Affairs

• Rural Social Scheme

• – Farm/Fish Assist Jobseekers Allowance or Jobseekers Benefit
• – One-Parent Family Payment, Widow(er)'s Pension or Disability Allowance
• – Adult Dependent of a recipient of the non-contributory State Pension

Appendix B

Section	Title
42	Interest on savings certificates
118	Exemption from BIK – Travel Pass, new bicycle scheme, share options
189	Payments in respect of personal injuries
189A	Special trust for permanently incapacitated
190	Haemophilia Trust
191	Hepatitis C
192	Thalidomide
192 A	Exemption in respect of certain payment under employment law
192B	Foster Care Payment
193	Income from Scholarships
194	Child benefit
194 A	Early Childcare Supplement
195 A	Exemption in respect of certain expense payments
196	Expenses of members of Judiciary
196A	State Employees: Foreign Service Allowance
196B	Employee of certain agencies: foreign service allowances
197	Bonus or interest paid under instalment savings schemes
198	Certain interest not to be chargeable
199	Interest on certain securities
200	Certain foreign pensions
201	Exemptions and reliefs in respect of tax under section 123 (Redundancy)
202	Relief for agreed pay restructuring
203	Payments in respect of Redundancy
204	Military & other pensions, gratuities and allowances
205	Veterans of war of independence
216A	Rent a Room relief
216B	Scéim na bhFoghlaimeoirí Gaeilge
216C	Childcare service relief

(ii) Parking Levy in Urban Areas – Guidance Notes

Section 1: Background and General Matters

1.1 What is the Car Parking Levy?

As announced by the Minister for Finance in Budget 2009, the levy is a charge on employees for the use of car parking facilities provided by the employer in designated urban areas. A flat rate of €200 will apply per annum.

1.2 Who is liable to pay the levy?

Each employee who has an entitlement to use a parking space provided by his or her employer is liable to pay the levy.

1.3 To which areas will the levy apply?

The levy will apply to employer-provided parking facilities in the major urban centres of Cork, Dublin, Galway, Limerick and Waterford. The specific areas in which the levy will apply will be designated by Order of the Minister for Finance following consultation with the 5 city councils.

1.4 How will the levy be collected?

The employer will deduct the levy from the employee through the payroll system and return the levy to Revenue. Deductions of the levy will be spread throughout the year in line with the frequency of salary payments.

1.5 When will the levy start?

The levy is provided for in the Finance Bill (published 20 November 2008) and will be introduced by Order of the Minister for Finance.

Section 2: Liability to Pay the Levy

2.1 In what circumstances will an employee be liable?

An employee will be liable to the levy where:

• he or she has an entitlement to use a parking space for the parking of a vehicle covered by the levy,
• the parking space is provided directly or indirectly by the employer, and
• the parking space is located in an area designated by the Minister for Finance.

2.2 Entitlement to use a parking space

Entitlement to use a parking space arises where any one or more of the following circumstances apply:

• the employee holds or has been issued with any type of authorisation to use a parking space or is given any type of permission (including arrangements or agreements with the employee) to use a parking space,
• the employee holds or has been issued with any form or means of access to a parking space;
• the employee has been allocated a dedicated parking space;
• the employee has been allocated a parking space on a shared basis or other similar arrangement,
• the availability of a parking space to the employee is on a first-come – first-served basis.

2.3 When is an employer regarded as providing a parking space to an employee?

In general, an employer is regarded as providing a parking space to an employee where the parking space is provided directly or indirectly, including where:

• the employer provides the parking space at its own premises,
• the parking space is provided at the premises of a person with whom the employer is connected, or
• the employer enters into an arrangement or agreement with an employee or some other person to provide a parking space.

The legislation also covers a situation in the public sector where the employer for the purposes of the Tax Acts i.e. the person who pays an employee's salary, may not be the provider of the parking facility. This arises, for example, in the education area where the Department of Education pays the salaries of certain teachers and other staff while an individual school provides the parking. In that situation, the Department is deemed to be the provider of the parking facility for the purposes of the legislation.

2.4 Can an employee disclaim entitlement to use a parking space?

Yes. An employee can disclaim entitlement to use a parking space by notifying his or her employer in writing or in an electronic format. Additionally, the employee should:

• return whatever form of authorisation he or she holds and any form or means of access to a parking space, and
• cease actual use of the parking space.

In such circumstances, the employer should stop deducting the levy.

2.5 What if entitlement lapses or is withdrawn ?

In circumstances where entitlement to use a parking space lapses for any reason or is withdrawn for any reason, the employer should stop deducting the levy so long as the employee returns whatever form of authorisation he or she holds and any form or means of access to a parking space, and ceases actual use of the parking space.

Section 3: Amount of Levy

3.1 What is the amount of the levy?

Subject to the situations covered below, the amount of the levy will be a flat rate amount of €200 for a full year.

3.2 Shared Parking Arrangements

A reduced levy applies where car parking spaces are shared between employees provided that the ratio of employees to each car parking space is 2:1 or more. In these circumstances, the levy for employees with an entitlement to park will be reduced to €100.

3.3 Job-sharing and Part-time work

Where an employee's normal pattern of work is on the basis of part-time or job-sharing arrangements, then the levy amount payable (per paragraphs 3.1 or 3.2 above) is reduced pro-rata but not below a minimum of 50 per cent of the amount payable.

3.4 Entitlement to use for only part of a year

Where an employee's entitlement to use a parking space applies for only part of a year, then the amount of the levy payable by the employee is to be reduced on a pro-rata basis. This is designed to cover situations such as where an employee starts or finishes work during the year. For example, if an employee's entitlement to use a space commences on 1 December in a year, then only 1/12^th of the levy will apply for that year. This would mean that a person who is given, say, a dedicated space would pay €16.66 for the month of December (i.e. €200 x 1/12^th).

3.5 Maternity leave

Where an employee is on maternity leave, the 26 week period of maternity leave to which she is entitled is disregarded for the purposes of the levy. Additionally, the 10 week period immediately prior to the commencement of maternity leave is also disregarded.

3.6 Shift work

The amount of the levy is also reduced in the case of shift workers. Anyone starting or finishing work after 9 o'clock in the evening or before 7 o'clock in the morning will have the part of the year during which they are on shift work disregarded for the purposes of calculating the levy. For example, someone doing such shift work for 3 months of the year would le liable to pay €150 (i.e. €200 less 1/4 excluded because of shift work).

Section 4: Exemptions from the Levy

4.1 Disabled drivers

An employee who has an entitlement to use a parking space will be exempt from the levy where he or she is the holder of a valid disabled person's parking permit.

4.2 Employees of the emergency services

Official vehicles required to be driven by an employee of the emergency services are excluded from the levy (see paragraph 5.2).

An employee of the emergency services who does not otherwise have entitlement to use a parking space for parking his or her private vehicle will be exempt from the levy where the use of a parking space for his or her private vehicle relates solely to a response to an emergency situation.

4.3 Retired persons

Retired persons are exempt from the levy where a space continues to be provided to them for occasional use. However, in circumstances where a retired person is engaged in employment by his or her former employer, or indeed by any other employer, the retired person will be liable to pay the levy.

4.4 Occasional permission to use a parking space

Where an employee does not otherwise have entitlement to use a parking space, permission which is occasionally given to use a space is exempt from the levy provided that the total number of days involved in any year does not exceed 10 days. For the purposes of this exemption, use of a parking space for part of a day is treated as use for a full day.

Section 5: Vehicles covered by the Levy

5.1 What vehicles are covered?

In general, the levy will apply to private cars and vans used as private vehicles (where they are not used by an employee in the performance of his or her duties). Jeeps and other vehicles constructed with rear passenger seats are also included.

5.2 What vehicles are excluded?

In general, motor bikes are excluded from the levy. Certain official cars owned or provided by the State, the Garda Síochána, the Defence Forces and certain other services such as the fire and ambulance service and the Customs service are excluded.

A van is excluded from the levy where the employee is required by the employer to use the van in the performance of his or her duties.

5.3 What is the position with company cars?

An employee who uses a company car will be liable to the levy.

5.4 What is the position with private cars used for business purposes ?

An employee who uses his or her own car in the performance of his or her duties will be liable to the levy.

Section 6: Other Employee-related Questions

6.1 What if I change employment?

Where an employee ceases employment in which he or she had entitlement to use a parking space, then deduction of the levy will cease on leaving that employment. If the employee subsequently has entitlement to use a parking space in any new employment, then parking levy deductions would commence on taking up the new employment.

6.2 What if I have two employments?

If an employee has two employments and has entitlement to use a parking space in both employments, then the parking levy will have to be deducted in both employments. (However, see paragraph 3.3 regarding part-time work and job-sharing arrangements)

6.3 What if I use my space infrequently?

If an employee has an entitlement to use a parking space, but chooses to use it infrequently, the parking levy still applies even if the use of the space arises for 10 days or less in a year. These circumstances do not come with the “occasional permission to use” exclusion in paragraph 4.4.

6.4 What if a parking space is provided in a ‘customer’ car-park?

Where the availability of a parking space to an employee is in a car-park which is normally available to, or reserved for, customers, the levy will also apply. In these circumstances, the employer is providing the parking spaces and the employee is, for the purposes of the levy, regarded as having an entitlement to use a parking space.

6.5 What if my employer provides a space in a public car park?

The parking levy will apply where an employer enters into any type of arrangement or agreement with an employee (or any other person) to provide a parking space to the employee. This includes where a space is provided in a public car-park.

6.6 What if my employer reimburses my parking fees?

The parking levy does not apply where an employer reimburses an employee for parking fees incurred for on-street parking or for parking in public car-parks. However, unless such reimbursement arises as a result of a legitimate claim for expenses incurred by the employee in the performance of his or her duties, the employer should apply PAYE to the amount of reimbursement involved.

6.7 Can I claim a tax deduction for the levy?

No. A tax deduction for the levy may not be claimed in any circumstances.

Section 7: Obligations on Employers

7.1 Will the levy impose obligations on employers?

A key objective of the legislation governing the levy has been to minimise compliance costs on employers. As a consequence, only minimal changes will apply in terms of payment and filing obligations.

The legislation imposes a legal obligation on employers to deduct the levy from employees who have an entitlement to use employer-provided parking facilities. Employers must deduct the levy from employees’ net salary payments after income tax, PRSI, the Health Levy and the new Income Levy are deducted.

Each employer should remit the levy deducted to the Office of the Collector-General at the same time and in the same manner as the employer currently remits deductions made under the PA YE system.

7.2 Are there any implications for the P30?

Employers will continue to file their P30 in accordance with their existing filing pattern i.e. whether that is monthly or quarterly. Direct Debit customers and Annual Remitters will continue their existing payment arrangements also. Direct Debit customers should review the amount of their Direct Debit payment to take account of the Car Par Levy and, if necessary, increase the amount of their Direct Debit payment.

There will be no changes to the existing Form P30. Employers will be required to include the amount of the parking levy being remitted to Revenue in the PRSI box on the P30.

7.3 Are there any implications for the P35?

The Form P35 will be revised to facilitate reporting by employers of the number of employees from whom they have deducted the parking levy and the overall amount of the levy so deducted.

7.4 Will the levy impose any record-keeping on employers?

Employers will be obliged to keep records in relation to the locations at which parking facilities are provided, and employees who have, and cease to have, entitlement to park.

In addition, the Revenue Commissioners may by way of Regulation specify such further record requirements as may reasonably be required for the purposes of the operation of the parking levy.

7.5 What if an employer makes payments to employees to cover the levy?

In circumstances where an employer makes a payment to an employee in compensation for, or in re-imbursement of, the levy then:

• there is no deduction available to the employer in respect of the payment in computing the amount of its profits which are chargeable to tax, and
• the payment should be subjected to deductions under the PA YE system in the normal manner.

7.6 What penalties apply?

A penalty of €3,000 applies where an employer fails:

• to deduct the levy from employees or remit the levy to Revenue,
• to keep the required records, or
• to provide the required details on the Form P35.

7.7 Where can employers direct queries?

The Employer Service – Lo Call 1890 25 45 65 – based in the Collector-General's Office, Nenagh will be glad to respond to queries from employers.

(iii) Tax and Duty Civil Penalties

An outline of proposed legislation in relation to Tax & Duty Civil Penalty Regime

Section 91 and Schedule 5 of the Finance (No. 2) Bill 2008 contains proposals relating to tax and duty civil penalties. The Bill proposes the introduction of a number of new provisions and makes a number of other miscellaneous and consequential amendments to the tax and duty codes.

1. Liability to a penalty

Firstly, it is proposed (by inserting a new section 1077B into the TCA 1997) that a person will be given an opportunity to have a court examine whether that person is liable to a civil penalty for contravention of tax or duty legislation. In other words, a penalty will not be imposed against the wishes of a person unless a court has determined that such penalty is, in fact, due.

			Co-operation and
Category of Default giving rise to a penalty	Base Penalty	Co-operation only	Prompted Qualifying Disclosure	Unprompted Qualifying Disclosure
Deliberate behaviour	100% of underpaid tax	75%	50%	10%
Careless behaviour with significant consequences	40% of underpaid tax	30%	20%	5%
Other careless behaviour	20% of underpaid tax	15%	10%	3%

However, there is nothing to prevent, as heretofore, a person agreeing with, and paying, a penalty without court intervention.

This new provision as regards a liability to a penalty applies to both existing unsettled cases and new cases as regards tax geared and fixed penalties where agreement cannot be reached as to the liability to a penalty.

2. Recovery of a penalty

Secondly, it is proposed that a new section 1077C will be inserted into the TCA 1997 to provide that where a person is found by a court to be liable to pay a penalty, that penalty may be collected and recovered in the same way as tax is collected and recovered.

3. Recovery of a penalty in death cases

Thirdly, a new section 1077D will be inserted in to the TCA 1997 to place on a statutory footing the practice of the Revenue Commissioners as respects the recovery of penalties from the estate of a person after death. Penalties will only be recovered from an estate where the person either agreed in writing to pay the penalties or a court has determined, before the person's death, that the person was liable to the penalties.

4. ‘Tax geared’ Penalties

Fourthly, the current practice of the Revenue Commissioners as respects the level of tax-geared penalties sought in settlements arising out of Revenue audits and investigations (as set out in the Code of Practice for Revenue Auditors) is to be put on a statutory basis.

Specific provisions giving effect to this will be inserted into each tax code.

In addition, the new provision changes the behaviour giving rise to a civil penalty from ‘fraudulently’ and ‘negligently’ to ‘deliberately’ or ‘carelessly’.

The “standard” tax-geared penalty matrix (which will apply to acts or omissions after the enactment of the Bill) is summarised in the following Table —

“Significant consequences” means that the difference between the tax or duty underpaid is greater than 15% of the correct tax or duty payable for the relevant period.

Where a second qualifying disclosure is made within a 5-year period, and where the nature of the default is in either the “deliberate behaviour” or “careless behaviour with significant consequences” category, the legislation will provide that the level of mitigation will be reduced as per the Code of Practice.

5. Fixed Penalties

Finally, a range of fixed penalties are to be brought up to date and standardised and the amounts of such penalties (which have not been changed in many years) are to be increased.

6. Miscellaneous

A number of consequential amendments are also proposed to various provisions of the tax and duty codes

(iv) Research and Development

General

Introduction

The Finance Bill (as initiated) provides for the following changes in relation to tax credits for research and development.

Section 766 TCA 1997 – Tax Credit for Research and Development Expenditure (Excluding Buildings)

• The base year for the purpose of calculating incremental expenditure is to remain as 2003 for all future accounting periods.
• The rate of the tax credit is increased from 20% to 25% of qualifying expenditure.
• Any unused credit may be offset against any corporation tax of the preceding accounting period.
• Any excess still remaining may be paid to the company by the Revenue Commissioners in 3 instalments. The first instalment to be paid will amount to 33 per cent of the excess. The remaining balance will then be used to first reduce the corporation tax of the next accounting period and if any excess still remains, a second instalment amounting to 50 per cent of that excess will be paid to the company. Any further excess will then be used to reduce the corporation tax of the following accounting period and if an excess still remains, that amount will be paid to the company as the third instalment.

Section 766A TCA 1997 – Tax Credit on Expenditure on Buildings or Structures Used for Research and Development

• The rate of the tax credit is increased from 20% to 25% of specified relevant expenditure. The full amount of the credit may no?w be claimed in the accounting period in which the relevant expenditure is incurred.
• Provided the research and development activities carried on by the company in the building or structure represent not less than 35% of all activities carried on in the building or structure in a “specified period” of 4 years, the credit may be claimed in respect of the proportion of use of the building for research and development activities.
• Any unused portion of the tax credit may be used in the same manner as outlined above for section 766 TCA 1997.
• The claw back provision will now apply where the building or structure is sold or ceases to be used by the company for research and development activities or for the purpose of the same trade that was carried on by the company at the start of the “specified relevant period”.

Section 766B TCA 1997 – Limitation of tax credits to be paid under section 766 or section 766A

A limit applies to the amount payable by the Revenue Commissioners under both section 766 and 766A. The amount cannot exceed the greater of;

• The corporation tax payable by the company for the 10 years prior to the accounting period preceding the period in which the expenditure was incurred,
• or
• The amount of PAYE, PRSI and levies, which the company is required to remit in the period in which the expenditure was incurred.

eBrief No. 63 of 2008

Finance (No.2) Bill 2008 – Research and Development

Finance (No.2) Bill 2008 provides for a time limit in respect of claims made on or after 1 January 2009 under sections 766 and 766A Taxes Consolidation Act 1997. Such claims must be made within 12 months from the end of the accounting period in which the expenditure on research and development/relevant expenditure, giving rise to the claim, is incurred.

Revenue wishes to advise practitioners and other interested parties of the option available to them to lodge protective claims to repayment on or before 31 December 2008, in respect of research and development expenditure incurred in periods ending on or before 31 December 2007. The normal provisions in relation to a repayment will then apply to such claims.

Specific details in relation to the claim should be submitted shortly thereafter.

Any queries should be addressed to:

Isolde Hampson

Corporate Business & International Division

New Stamping Building

Dublin Castle,

Dublin 2

(v) Incentive to Pay and File Electronically

Section 89 and associated Schedule 3 of the Finance No. 2 Bill 2008 implement the Budget day announcement to encourage take up of the Revenue Online Service (ROS) by providing a general extension to existing deadlines for filing returns and paying tax where they are made electronically. This follows the making of Regulations by the Revenue Commissioners introducing mandatory e.filing/paying for larger companies and Government agencies in two phases, commencing 1 January 2009. The new incentive is available to anyone who makes the relevant returns and associated tax payments via ROS, whether voluntarily or under the new mandatory regime. The amendments in Schedule 3 make the necessary changes to the Taxes Consolidation Act 1997 and the Value-Added Tax Act 1972 to extend and align the existing time limits to the 23rd of the month, for the following returns and payments:

Corporation Tax:	Preliminary Tax, Annual CT1 Return and Balancing Payment.
Relevant Contracts Tax:	Monthly RCT 30 Return and RCT due.
Value Added Tax:	VAT 3 Return and VAT due.

In the case of Employer PAYE/PRSI, the extension in the return filing/payment deadline is being made by way of an amendment to the PAYE Regulations, which will be made before the end of 2008, rather than in the Finance Bill.

As a result of the changes, with effect from 1 January 2009, where returns and payments are made electronically, the return filing and payment deadlines will be extended by two days for corporation tax, four days for value-added tax and nine days for relevant contracts tax and employer PAYE/PRSI.

Where a return and associated payment are not made electronically by the new extended deadlines, the amendments also provide for the extended time limits to be disregarded so that, for example, any interest imposed for late payment will run from the existing due dates and not from the later (extended) dates.

This pro-business initiative is aimed at encouraging a greater take-up of Revenue's ROS service which is a modern, secure and easy method for making returns and paying tax. The returns/payments involved are those that will be of benefit to the largest number of businesses and will give the greatest incentive to taxpayers to use ROS. Furthermore, under this measure all of the returns/ payments involved will have the same effective due date which should simplify return filing and paying generally as only one date – rather than the existing three separate dates – will need to be remembered.

(vi) Stamp Duty – Late Stamping of Instruments

The Finance (No.2) Bill 2008, published on Thursday, 20 November 2008, includes a provision offering an incentive where instruments were not presented to Revenue for stamping within the time allowed under existing legislation.

The incentive is aimed at granting an opportunity to those taxpayers who wish to regularise their affairs before the introduction of eStamping in 2009.

A penalty (other than interest) will not be payable on an instrument executed before the enactment of the Act in respect of which duty has not been paid before that date, where the instrument is presented for stamping and the duty and interest on such instrument is paid before the expiration of the period of 56 days commencing on the enactment of the Act.