Revenue Unveil Measures to Tax Pension Lump Sums

April 26, 2011

Revenue have today unveiled new arrangements for taxing retirement pension lump-sums in excess of €200,000.

The 2011 Finance Act included a provision, Section 19 (4)(b), to ensure that an individual’s maximum lifetime retirement  tax-free lump sum is limited to €200,000. This applies from 1 January 2011 onwards.

In calculating the tax-free amount, any earlier lump sum received since 7 December 2005 is also taken into account.

Taxation of Retirement Lump Sums

The remainder of the lump sum(s) is now taxable. This is to be taxed in two stages:

  • The portion between €200,000 and €575,000 is taxed at the standard rate (20%) under Schedule D Case IV.  The taxpayer may not utilise any reliefs, allowances or deductions against this portion.
  • Any additional amount over €575,000 is taxed at the individual’s marginal tax rate. This element is counted as ‘profits or gains arising from an office or employment’ and will generally be subject to PAYE at source.

Revenue have today issued a new Form 790AA, which is to be used by pension administrators to notify Revenue of ‘Case IV’ tax deducted in accordance with the above procedures.

The Revenue eBrief on this matter is here.


15 November is ROS ‘Pay & File’ Tax Return Deadline

April 7, 2011

Revenue have confirmed that the 31 October 2011 Pay & File deadline for 2010 Income Tax returns is being extended for online returns to Tuesday 15 November 2011 . Curiously, this year’s deadline is a day earlier than last year’s deadline of 16 November 2010.

15 November 2011 for ROS Tax Returns

To avail of the extended deadline for 2011, an individual  (or their accountant) must file their 2010 tax return by 15 November 2011 using the online ROS system.  In addition, they must also use the Revenue online ROS system to pay the following tax balances by 15 November.

  • Preliminary Tax for 2011;  and
  • Any remaining Income Tax balance due for 2010

Unless both:

  • the return is filed on ROS; and
  • the required tax payment is made using ROS;

the existing deadline of 31 October 2011 will applies to both the payment and the return.

In accordance with existing practice, I expect that the extended 15 November deadline should also apply for the purposes of RAC, AVC and PRSA pension payments, where a taxpayer pays & files via ROS by 15 November.  This would enable such pension payments, made by 15 November 2011, to attract backdated tax relief against 2010 tax liabilities.  However, these arrangements will become not a reality until and unless confirmed by Revenue  in the meantime – certainly don’t take this for granted without double-checking between now and October.

Thankfully, the Revenue eBrief announcement makes no mention of the recent abortive plan by the outgoing FF/Green government to bring the annual Pay & File tax return deadlines a month forward. Some of us are still having nightmares over that particular bright idea.


VAT Refund Scheme boost for Farmers

April 5, 2011

Ireland’s farmers received a welcome boost today as Revenue announced an extension to the VAT refund scheme for farmers.

Farmers who are not VAT-registered can reclaim VAT paid by them on:

  • farm buildings
  • fencing and other fixed structures
  • land drainage and
  • land reclamation

VAT Refund Boost for Farmers

 

Today, a Revenue eBrief confirms that that VAT refunds may now be claimed in respect of

  • Concrete underpasses,  installed to facilitate the movement of livestock beneath a public road.
  • Hedgerows planted by a farmer for the purpose of stock proofing. This does not include hedgerows grown for decorative, ornamental or domestic shelter purposes.
  • Ploughing and re-seeding works completed as part of a land reclamation project.

 

Eligible farmers can claim VAT repayments on Form VAT58 in accordance with the  Value Added Tax (Refund of Tax) (No. 25) Order 1993, which is also online. Farmers may claim VAT refunds within four tax years of incurring the relevant expenditure.

Please note that this scheme does not apply to VAT-registered farmers, who may reclaim VAT on their regular VAT returns but are subject to VAT on sales of farming produce and livestock.