Contractors – Renew 2011 Payments Cards Now!

December 15, 2010

Contractors in the construction, forestry and meat processing trades must observe Relevant Contracts Tax (RCT) on payments to subcontractors.  If a contractor holds an RCT Payments Card for a subcontractor, they can make payments to the subcontractor without deducting tax, otherwise 35% tax must be deducted on all payments, and paid over to Revenue.

RCT Payments Cards due for Renewal at year-end

Payments Cards are renewable annually and contractors who currently hold 2010 Payments Cards for subcontractors, should now apply to Revenue as soon as possible to renew all such Payment Cards for 2011.

All payments to subcontractors must be paid net of 35%  unless the contractor making the payment holds a current RCT Payments Card for the subcontractor. This applies even if the subcontractor holds an up-to-date C2 certificate.

All 2010 Payments Cards expire on 31 December 2010 and it is up to the contractor to apply for new payments cards for 2011.

Form RCT46A can be used to renew a 2010 Payments Card for an ongoing contract, while Form RCT46 may be used to apply for a Payments Card for a new subcontractor.

There are heavy penalties for non-operation of RCT on subcontractor payments, and failure to observe RCT rules can cost contractors dearly.  Therefore, contractors should take extreme care to ensure that they are in full compliance at all times.


High Earners can beat Budget 2011 Pension Blues

December 10, 2010

High earners can beat a Budget 2011 cut in pensions tax relief if they top-up their pensions before 31 December next.

This week’s Budget cut the earnings ceiling for tax relief on personal pension payments, from €150,000 to €115,000. This means that, from 1 January 2011 onwards, the tax relief claimed by a high-income earner in respect of pension payments is limited to the first €115,000 of their earnings.

Liam Ferguson, of Ferguson and Associates has kindly confirmed to me that this lower ceiling relates to ALL contributions physically made in 2011. This includes contributions made by 31 October 2011, which can be backdated to the 2010 tax year for tax relief purposes.

So if you are in a high income bracket, and you leave it until next October to pay a Personal Pension contribution for 2010, the lower ceiling will apply to your contribution.

However, if you top up your pension by 31 December 2010, before the higher €150,000 earnings ceiling expires, you can still avail of the higher ceiling.

21 days left to act…


Budget 2011 – Business Measures

December 7, 2010

The Budget includes a range of measures affecting the Business sector including  changes to Relevant Contracts Tax, a revamp of the Business Expansion Scheme and the scrapping of several business tax reliefs.

Budget 2011 Cuts - Brian Lenihan Minister for Finance

Relevant Contracts Tax

The Relevant Contracts Tax (RCT) system, which applies to construction, forestry and meat processing contractors, is being reformed.

The current RCT withholding tax rate of 35% is being replaced by a two-tier system, in an effort to combat the black economy.

  • A lower rate of 20% will apply to subcontractors ‘registered for tax with an established compliance record’
  • The existing rate of 35% will apply to ‘subcontractors not registered for tax’.

The RCT monthly repayment system is being abolished, and will be replaced by an offset system.

In addition, Principal contractors will be subject to a stronger RCT reporting system in order to ‘enhance compliance and reduce the opportunities for fraud’.

Employment and Investment Incentive

The Business Expansion Scheme is to be revamped and renamed as the ‘Employment and Investment Incentive’, with a big increase in the amount that companies can raise under the Scheme.

Relief for Energy Efficiency Measures

A new scheme is to be introduced to encourage people to make their homes more energy efficient. Tax relief will apply to expenditure up to €10,000. This will be allowed at the standard rate of income tax.

Tax Reliefs Abolished

The following Tax Reliefs will be abolished, with effect from 1 January 2011 unless otherwise stated.

  • Tax Exemption for Patent Royalties
  • Tax relief on Loans to invest in certain companies.
  • Accelerated capital allowances for Farm Pollution Control.
  • Tax exemption from BIK for Employer Provided Childcare.
  • Abolition of tax relief on subscriptions to professional bodies.
  • Capital expenditure on Mining plant & machinery and plant
  • Approved Share Options Scheme (from 24 November 2010)
  • Tax relief for new shares purchased by employees.
  • Tax exemption relating to National Co-Operative Farm Relief Services Ltd.

Budget 2011 – Stamp Duty on Residential property

December 7, 2010

The 2011 Budget includes major changes to Stamp Duty on residential property transactions.

Budget 2011 Cuts - Brian Lenihan Minister for FinanceThe main change is the introduction of a new flat rate of 1% for transfers of residential property to 1% on properties valued up to €1 million, and a 2% rate on properties valued over €1 million.

The following Stamp Duty reliefs and exemptions are abolished.

  • First time buyer relief
  • Exemption for new houses under 125 sq m in size
  • Relief on new houses over 125 sq m in size
  • Consanguinity relief from for residential property transfers between close relatives.
  • Exemption for residential property transfers valued under €127,000
  • Stamp Duty ‘site to child’ relief

 

The changes apply for contracts executed on or after 8 December 2010. Transitional measures will apply to contracts currently in progress that are completed by 30 June 2011.

 



Budget 2011 – Income Tax Credits and Bands

December 7, 2010

The following Income Tax Credits & Bands were unveiled in today’s Budget.

In general Tax Credits and Bands have been cut by 10%.

Budget 2011 Cuts - Brian Lenihan Minister for Finance

Income Tax Credits & Bands  – Budget 2011
2011 2010
Employee Tax Credit 1,650 1,830
Personal Tax Credits
– single 1,650 1,830
– married 3,300 3,660
Widowed person bereaved in year of assessment 3,300 3,660
One Parent Family Tax Credit 1,650 1,830
Home Carer Tax Credit 810 900
Dependent Relative Tax Credit 70 80
Incapacitated Child Tax Credit 3,300 3,660
Blind Persons Credit
– single 1,650 1,830
– married (both blind) 3,300 3,660
Additional credit for certain widowed persons 540 600
Widowed Parent Tax Credit:
year 1 3,600 4,000
year 2 3,150 3,500
year 3 2,700 3,000
year 4 2,250 2,500
year 5 1,800 2,000
Age Credit
– single 245 325
– married 490 650
Standard Rate Bands from 1 January 2011
Single/Widowed 32,800 36,400
Married One Income 41,800 45,400
Married Two Incomes 65,600 72,800
Max income transferable between spouses 41,800 45,400
One Parent/Widowed Parent 36,800 40,400
Age Exemption Limits
Single 18,000 20,000
Married 36,000 40,000

 

 


Budget 2011 Latest

December 7, 2010

The 2011 Budget has been announced by Brian Lenihan, Minister for Finance.

Budget 2011 Cuts - Brian Lenihan Minister for Finance

The key tax measures announced by the Minister in his Budget Speech are as follows:

  • Income Levy & Health Levy to be replaced by a new Universal Social Charge.
  • Tax Bands and Credits to be cut by 10%
  • Nine tax relief schemes are to be abolished
  • Restrictions on the carry forward of property-based capital allowances and Section 23 reliefs.
  • Capital Acquisitions Tax tax-free thresholds to be cut by 20%
  • D.I.R.T. tax increases to by 2% from 25% to 27%.
  • Pension Tax relief employee PRSI & levy relief to be abolished.
  • No change to 12.5% Corporation Tax rate.
  • Employer PRSI relief on employer Pension contributions to be cut by 50%
  • Business Expansion Scheme to be revamped & renamed – a new investment limit of €10 million will apply up to 2013.
  • Accelerated Capital Allowances scheme for energy efficient equipment is to be extended.
  • Major revamp of Residential Stamp Duty with a 1% flat rate on transactions  up to €1m, 2% thereafter. All current Residential Stamp Duty exemptions & reliefs to be abolished – changes apply from tomorrow 8 December, transitional arrangements for contracts in progress, once they are completed by 30 June 2011.
  • Major changes to Relevant Contracts Tax with a cut from 35% to 20% for contractors with an established compliant tax record. Existing rate of 35% will continue to apply to other contractors.
  • Travel Tax to be cut to €3 from 1 March 2011, subject to review at end of 2011.
  • Excise Duty rises of cent per litre on petrol, 2 cent per litre on auto diesel, applying from midnight tonight.
  • Internet betting to be subject to Betting Tax as applies to Betting Shops.

The Minister’s speech is now online.