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Budget 2010

Budget 2010. October 2008. April 2009. December 2009. Budget Strategy . Objective Rebuild Nations Self Confidence Restore International Reputation How Bold – Decisive – Innovative Steps Conclusion Worst is Over Return to Growth in 6 – 9 Months. €4 Billion Question ?.

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Budget 2010

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  1. Budget 2010

  2. October 2008

  3. April 2009

  4. December 2009

  5. Budget Strategy • Objective • Rebuild Nations Self Confidence • Restore International Reputation • How • Bold – Decisive – Innovative Steps • Conclusion • Worst is Over • Return to Growth in 6 – 9 Months

  6. €4 Billion Question ?

  7. Signalled Changes • Taxation of child benefit X • Introduction of carbon tax  • Introduction of property tax 2010 • Review taxation exempt income / reliefs  • CAT/CGT Business Reliefs X • Pension Contributions / Lump Sums ? • Reduce VAT/Excise  • Car Scrappage 

  8. Personal Tax

  9. Income Tax Rates • No Changes • Reminder • Income Tax • PRSI • Health Levy • Income Levy

  10. Simplify and Reform Tax System • Reform and Fairness • Social Contribution • Low Rate • Broad Base • Income Tax • Progressive Rates • 2011

  11. IT, PRSI, Health Levy & Income Levy Employee >€75k €75k-€175k €175k+ Income Tax 41 41 41 PRSI 4 - - Health Levy 4 5 5 Income Levy 246 51%50%52%

  12. IT, PRSI, Health Levy & Income Levy Self-Employed >€75k €75k-€175k €175k+ IT 41 41 41 PRSI 3 3 3 Health Levy 4 5 5 Income Levy 246 50%53%55%

  13. International Comparisons: Overall marginal tax rates for employees on €80,000

  14. Why No Tax Increase? • Reached Limit of Taxation • Heaviest Burden on Higher Earners • Income Levy : Gross • High Earners Cap

  15. High Earners Cap • Introduced 2007 • Restricted Specified Reliefs • Aim - Effective Rate 20%

  16. How It Worked 2009 • 20% Effective Rate • Restricted Relief to Higher of: • €250,000 OR • 50% of Income 2010 • Now 30% Effective Rate • Entry Point €125,000 • Full Restriction if Income > €400,000 • Finance Bill Clarification

  17. High Earners Cap - Example 2009 2010 €’000€;000 Income 600 600 Specified Reliefs 400 400 Allowed 300 150 Restricted 100 250 Taxable 300 450 Tax @ 41% 123 185 Effective Rate 2009 20% 30%

  18. Tax Exiles

  19. New Irish Domicile Levy • Non Resident Domiciled Individuals • Worldwide Income > €1m • Irish Located Capital > €5m • Annual Levy €200,000 • Details in Finance Bill

  20. Mortgage Interest Relief • Budget 2009 • Relief to cease for loans over 7 years • Interest Relief now until 2017 • Home Owners in Negative Equity • New Loans before 1/7/2011 • Loans from 1/7/2011 to 31/12/2012 (Restricted)

  21. Residential Rental Property • Reminder – current position • Tax deduction for interest reduced to 75%

  22. Investments/Savings • Existing 25%/28% Tax • New National Savings Product • National Solidarity Bond • 5/7 Years • 2010 • Details to be announced

  23. Pension • Overhaul Imminent • No Immediate Change • Frame Work Policy to Review • Likely Outcome • Max Tax Tree Lump Sum €200k • Excess Taxable? • SSIA Type Scheme • No Tax Relief

  24. Child Benefits • Children’s Allowance • 10% cut to allowance • Future Taxation / Means Test ? • Incentive in 2009 • Preschool – Free Year • Effective 1/1/10

  25. Business Taxation Ireland Inc

  26. Business Taxation • Corporation Tax • 12.5% tax rate unchanged • International Brand • Employers • Employers PRSI unchanged (8.5 – 10 ¾ %) • Employer Job Incentive Scheme • Details to be announced

  27. New Company Set Up • Introduced 2009 • Profits < €320k per annum • 3 Year Period • Extended set up’s in 2010.

  28. Smart Economy • Irish Economic Focus • Research & Development tax credits • Qualifying R & D • 25% cash refund • Intellectual Property • Awaiting Innovation Taskforce Report

  29. Support Motor Industry • Car Scrappage Scheme • Car over 10 years old • €1,500 off VRT • Emissions band A or B • Environmentally Friendly • Extension of VRT Relief to 2012 • VAT Margin Scheme

  30. Supporting Retail Sector • VAT Rate • Reduced from 21½% to 21% from 1/1/10 • Excise Reduction on Alcohol

  31. Supporting Agriculture • Waste Management Capital Allowances • No Income Levy • Forestry & Bio Energy

  32. Supporting Other Industries • Construction • Retrofit • Tourism • Railway Scheme • Other • Energy Efficient • Extends to Catering/Hospitality

  33. Supporting Financial Services • Incentives to develop International Funds Industry Hub • Changes expected in Finance Bill

  34. Incentives to Protect Employment • Training Fund • Food Industry • Employment Job Incentive Scheme

  35. Employment Subsidy Scheme • Enterprise stabilisation fund • Assist Irish export companies in difficulty • Second round now open • Eligibility extended Non Export • Minimum of 10 full time employees • Jobs at risk / Commit to retain jobs • Tight Deadline/ Immediate Application

  36. Getting Credit Flowing • Review Committee NAMA • External Review Process • Review Banking Policies • Particular Focus on Retail, Car, Tourism & Agriculture

  37. New and Other Taxes

  38. Carbon Tax • €15 per Tonne on Fossil Fuels • Effective Midnight 9/12/2009 • Petrol 3.5% Increase • Diesel 4.6% Increase • Effective 1/5/2010 • Home Heating …. 8.7% • Commencement Order • Coal & Briquettes

  39. Other Taxes • Site Valuation Tax • Residential Property • Establishing Ownership Register • Valuation Database • Water Charges • Based on Usage

  40. Capital Gains Tax (CGT)& Capital Acquisitions Tax (“CAT”) • No changes currently • Rate 25% • Finance Bill?

  41. Stamp Duty • No changes currently

  42. Anti Avoidance • Clearly Signalled • Tax Avoidance Schemes • Strengthening Revenue Power

  43. Conclusion

  44. Tax Planning in the Current Environment

  45. Current Environment • Existing Legislation • Finance Bill / Finance Act • Maximise available remaining tax reliefs • Secure tax savings • Improve cashflow • Window of Opportunity

  46. Cashflow Saving Tax Tips • Preliminary Tax • If profits decreasing – base on current year • Move to a cash receipts basis for VAT • Review direct debits for PAYE / VAT • Directors loan v Salary • Use of a Redundancy Rebate

  47. Losses • Ability to Use Losses • Losses arising • Land write downs / restricted • Capital allowances claims – obsolete assets • Stock / Bad Debt provisions • Inter group loans – write off / down • Use • Carried back to prior year (company) • Offset against other Income (Personal)

  48. Tax Based Funding/Reliefs • Pensions • Seed Capital Relief • Start ups • Tax relief on investments up to €600k • Set against Income Tax bill in prior 6 years • Refund of income tax • Business Expansion Scheme • Tax relief of €150,000 pa for individuals • Qualifying company can secure €2m • Lack of other tax incentives for individuals

  49. Opportunities with Reduction in Asset Values • Take assets out of company • Re-organise company structure • Transfer assets to children

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