Revenue Foreign Exchange Rates: 2012 Tax Returns

February 15, 2013

If you have income denominated in currencies other than Euro, you may wonder which exchange rate you should use when preparing your tax return and calculating your liability.

Revenue have just published their official exchange rates for a range of currencies for 2012, based on Central Bank rates.

These are as follows, along with  the corresponding rates for earlier years.

Average Market Mid-Closing Exchange Rates v. €
2009 2010 2011 2012
Australian dollar 1.7727 1.4423 1.3484 1.2407
Canadian dollar 1.5850 1.3651 1.3761 1.2842
Danish krone 7.4462 7.4473 7.4506 7.4437
Japanese yen 130.34 116.24 110.96 102.49
Norwegian krone 8.7278 8.0043 7.7934 7.4751
Pound sterling 0.8909 0.85784 0.86788 0.81087
Swedish krona 10.6191 9.5373 9.0298 8.7041
Swiss franc 1.5100 1.3803 1.2326 1.2053
US dollar 1.3948 1.3257 1.3920 1.2848

These rates apply to all trading, rental, employment, investment and other income denominated in non-Euro currency.

Lloyds Accounts

A separate rate applies for conversion of Lloyds Account amounts from sterling to euro. This is based on the sterling mid-closing rate on the last market day of each  calendar year, as per the Central Bank. The rate for 2012 is Stg £1 = €1.22534.

The newly-published Revenue eBrief publishing these details is here.


Finance Bill 2013 Will Hit New Adoptive Parents

February 14, 2013

I was very surprised yesterday to learn that the 2013 Finance Act proposes to scrap the existing tax exemption for Adoptive Benefit.

This benefit is paid to a newly-adopting parent for the first 24 weeks following the placement of their adopted child.  To be eligible, the parent must have paid a certain number of PRSI contributions.

Finance Act 2013 Taxes Adoptive Benefit

The maximum weekly Adoptive Benefit payment is €262, while lower rates are paid to adoptive parents who concurrently receive other benefits. Adoptive Benefit was previously exempt from income tax, but will become taxable from 1 July 2013, in common with Maternity Benefit and maternal Health and Safety Benefit payments.

While I have no issue whatsoever with the principle of PRSI contribution-based payments being taxed, I think the timing of this particular move is rather strange.

The recent McAleese Report into the Magdalen Laundries is a grim reminder of the Irish State’s sorry history of forcing children and vulnerable adults into institutional “care” settings that failed them terribly, often with dreadful long-term consequences.

Furthermore, the government is now considering proposals for abortion legislation, while statistics indicate that each year, several thousand Irish women obtain abortions in the UK.

In this context, I would have thought that our government policies should be geared where possible to encourage prospective parents to adopt children. Yet this tax measure is nothing less than an attack on prospective parents who wish to adopt a child.

Is it too much to ask Minister Noonan to reconsider it, before the Finance Act becomes law?

For more on Adoptive Benefit, see here. For more on the Finance Bill, see here.


The Unlucky 13 Highlights of Finance Bill 2013

February 13, 2013

The 2013 Finance Bill has just been unveiled. It gives effect to the changes announced in Minister Noonan’s Budget last December, along with a raft of technical and other measures.

Here are 13 of the key new measures outlined in the Bill:

Finance Act 2013

  1. Adoptive Benefit and Health and Safety Benefit payments will become taxable with effect from 1 July 2013. This is in line with the similar measure for maternity benefit payments, which was announced in the Budget.
    Adoptive Benefit is paid to an adopting mother or a single male who adopts a child, for the first 24 weeks following the placement of the adopted child.
    Health and Safety Benefit is paid to pregnant or breastfeeding employees who are granted leave on health & safety grounds.
  2. The Budget announced a maximum lifetime limit of €200,000 for tax-free employment termination or ex-gratia payments. This new limit will also apply to ex-gratia compensation payments made on account of death or disability.   However, this won’t impact on the tax-free status of statutory termination or compensation awards.
  3. The existing Foreign Service Relief is being abolished entirely for ex-gratia payments made on retirement or removal from office. This is apparently “to ensure that Ireland does not become a retirement tax haven”.
  4. Changes are to be made to benefits-in-kind tax legislation to ensure that public sector workers pay BIK on the same basis as their private sector counterparts.
  5. The legislation on Employee Benefit Trusts is being tightened to prevent employees from receiving tax-free loans from a trust provided or funded by their employer.
  6. The thresholds for tax relief on third-level fees are being increased along with the rises in the Student Contribution.
  7. There is good and bad news in relation to tax relief on donations of heritage properties.  The tax relief scheme is being extended to include donations of buildings, outbuildings, yards or land alongside a heritage property, and lands required for provision of access to,  and visitor parking facilities at, a heritage property.   On the other hand, the tax credit for heritage property donations is being slashed from 80% to 50% of market value.
  8. The Revenue Job Assist scheme is being abolished and will be replaced, at a later stage, by a new measure to encourage employers to hire long-term unemployed workers.
  9. Losses on foreign rentals can no longer be offset against other Case III income, eg government bond interest. However foreign rental losses will continue to be offset against foreign rental profits.
  10. There are a number of technical adjustments to the CGT relief on farm & business asset disposals by individuals aged 66 or over. This relief applies to up to €3m in qualifying assets, from 1 January 2014 onwards. The €3m limit is now a lifetime limit for all disposals from 2014 onwards.
  11. The Bill empowers Revenue to inspect a property to determine its value for CGT purposes.  This will apply to shares, antiques and other types of property.
  12. The “young trained farmers” Stamp Duty relief on agricultural land transfers will apply for a further three years to 31 December 2015.
  13. A number of additional conditions are being added to the  special 100% rate of stock relief for young trained farmers.

The Finance Bill itself, its Explanatory Memorandum, and List of Items are all now online.


What’s in Wednesday’s Finance Bill 2013?

February 11, 2013

The 2013 Finance Bill is due for publication on this Wednesday, 13 February.

Finance Bill 2013

The Bill will include legislation for the various measures included in last December’s Budget, with the notable exception of the Local Property Tax, which came into being before Christmas with the passing of the Finance (Local Property Tax) Bill 2012.

It’s also quite likely, based on past experience, that the Finance Bill will contain a number of additional measures that didn’t form part of the Budget. I wonder will this year’s Bill contain any major surprises?

Once published, the Finance Bill will pass through various stages in the Oireachtas, before it is finally enacted as Finance Act 2013 in early April.


Revenue Resume Pensioners Tax Hunt

February 8, 2013

Revenue are once again pursuing pensioners with tax arrears, a year after their Chairperson apologised for causing confusion and distress to senior citizens.

Today’s Revenue eBrief to accountants announced a fresh investigation into pensioners’ tax affairs.

They confirm that they are comparing pensioners’ tax returns against Dept of Social Protection (DSP) pension payments data. They will then identify pensioners who have undeclared or under-declared their State pension income.

This exercise covers the 2010 tax year and prior years.

Tax & Pensioners

Revenue are now inviting accountants to review their pensioner clients’ tax return records to ensure their DSP pension incomes are correctly declared.  Otherwise, the provisions of the Code of Practice for Revenue Audit will apply.

These include an obligation for an individual with tax arrears to make a Qualifying Disclosure of their liability and pay the sum outstanding along with interest and penalties.

Failure to do so can leave the taxpayer with increased penalties, further interest charges and possible publication in the Tax Defaulters List.

Happily, the majority of pensioners are exempt from income tax.

If you are aged 65 or older, and your total annual income amounted to less than:

  • €20,000 (single/widowed) or
  • €40,000 (married/civil partner)

in the tax years 2007-2010, you will be fully exempt from income tax in those years.

From 2011 onwards, these limits are:

  • €18,000 (single/widowed)
  • €36,000 (married/civil partner).

If you have tax concerns in relation to your pension income, you can allay your fears by obtaining quality professional advice.


15 February is Employer 2012 P35 Return Deadline

February 1, 2013

If you employ staff, the deadline for filing your 2012 p35 Return with Revenue is 15 February, two weeks from today.

This is also the due date for paying any remaining PAYE/PRSI liability for 2012, and for issuing your employee P60s for 2012.

If you file and pay via ROS, you can avail of an extended deadline of 23 February for your P35, but please bear in mind that this extension does not extend to your employees’ P60s.

ros_online

If you need assistance with a straightforward P35 query, you can phone the Revenue P35 helpline on 1890254565, (or 016763400 if, like me, you like cheaper phone calls).  Lines are open until 8pm next week, Monday to Friday, 4 to 8 February.

If your query is more complex or sensitive, you should instead just ask your accountant.