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.

Stamp Duty: Good News for Forestry & Farm Owners

January 21, 2013

A recent Appeal Commissioners case has forced Revenue to extend the Stamp Duty exemption on commercial forestry and woodlands.

Up to now, the sale or lease of a commercial woodland property has enjoyed a partial exemption from Stamp Duty. Growing trees, managed commercially, were exempt from Stamp Duty sale or lease transactions, but this exemption did not apply to gifts of such properties.

Today’s Revenue eBrief confirms that the exemption will now apply to gifts of commercial woodlands.

Stamp Duty Exemption on Commercial Woodland

You should note that the exemption only applies to growing trees within a commercial forestry plantation, and not to the value of the underlying land.

For example, where a semi-mature mixed plantation is valued at €4,000 per acre, comprising a land value of €1,000 per acre, and trees at €3,000 per acre, Stamp Duty will only be charged on the land value of €1,000, and not on the much higher value of the growing trees.

Incidentally, the eBrief also confirms that the existing Stamp Duty relief on farm land transfers to “Young Trained Farmers“, which was due to expire on 31 December 2012, is being extended into 2013, pending the enactment of the 2013 Finance Act.

This is in line with a commitment given by Finance Minister Michael Noonan in his Budget 2013 speech last month.