Budget 2012 Live Updates

Michael Noonan, Minster for Finance is now delivering his Budget 2012 speech to Dáil Éireann.

The Minister has announced the following Tax measures:

Corporation Tax

• No change in the 12.5% Corporation Tax rate.
• A special Assignee Relief Programme to attract multinationals’ executives to Ireland
• New Foreign Earnings deductions for individuals developing markets abroad
• International financial services sector boosted by measures to be announced in Finance Bill
• First €100,000 of Research & Development expenditure to be allowed for R&D credit.
• Corporation Tax exemption for new companies extended for a further 3 years.

Farming

• Farm transfers to the next generation are to be incentivised
• Significant fall in the rate of stamp duty for farmland and other commercial property
• Retirement relief for CGT to be modified – no detail of this measure included in the Budget Speech.
• Farm partnerships to be encouraged by 50% Stock relief for participating farmers and existing 100% Stock relief for young farmers
• The 9% rate of VAT to apply to Open Farms

Air Travel Tax

• Government are ‘prepared to negotiate’ with Aer Lingus and Ryanair to incentivise tourist routes into Ireland

Construction Sector

• Stamp duty for commercial property to be cut to 2% overnight – the previous top rate was 6%
• The current rates for residential property will apply
• CGT exemption for properties bought between tonight and the end of 2013 – if they are held for 7 years.
• Commercial properties – NAMA can now approve rent reductions in certain cases, even in cases where ‘upward only rent review’ clauses apply
• Those who bought homes at the end of the property boom will gain by an increase in mortgage interest relief to 30% for those homeowners
• First time buyers will get 25% mortgage interest relief for property purchases in 2012

Property Reliefs

• Detailed policy measures to be made in Finance Bill
• s.23 Reliefs to small scale investors will not be cut
• Surcharge of 5% will apply to sheltered income where one’s income is over €100,000

Income Tax

• No increase in Income Tax bands, rates or credits.
• Universal Social Charge to be changed to help low paid seasonal & temporary workers – the exempt income level rises from €4,004 to €10,036
• the USC will be collected on a cumulative basis in 2012

Value Added Tax

• The Standard rate of VAT will rise by 2% to 23%
• The other rates of VAT remain unchanged

Capital Taxes

• Capital Acquisitions Tax & Capital Gains Tax go from 25% to 30%
• Standard Exemption for Capital Acquisitions Tax (parent-child transfers) cut from €332,084 to €250,000

Investment Income

• Deposit interest retention tax (DIRT) increased from 27% to 30%
• PRSI will cover rental and investment income from 2013

Approved Retirement (ARF) Funds

• ARF ‘imputed distribution’ charge increased to 6%
• ARF tax on death of a child over 21 goes to 21%
• Citizenship condition on domicile levy is scrapped
• Carbon Tax goes up from €15 to €20 per tonne – a 33% increase. This increase does not apply to home heating oil or solid fuel.
• Double income tax deduction for Carbon tax for farming
• VAT Refunds on farm buildings will include wind turbines

Other

• The income tax relief on pension contributions remains unchanged – tax relief will remain at the marginal rate of tax.
• A household charge of €100 per household is being introduced. Certain limited waivers will apply.
• Motor Tax increases to raise €47 million
• A new export refund scheme will apply to exports of motor cars
• The existing tax exemption for the first 26 days of disability benefit per annum is to be abolished. The Minister described this as ‘an incentive for absenteeism’

Excise Duty

• Alcohol excise duty is unchanged.