Minister for Finance, Michael Noonan, TD, yesterday announced his budget for 2013. While the big ticket items such as new Local Property Tax, additional Excise Duties and the changes to the PRSI allowance had been signalled well in advance, there were still plenty of new items included in the budget.
Some of the main areas of interest from yesterday's budget are now set out below. We also attach link to Revenue's Budget Summary for your review, which will outline the changes highlighted below in further detail.
Personal Tax Changes
The key personal tax measures announced by Minister Noonan concern an increase in the USC rate for individuals aged 70 or over and changes to the tax relief available on charitable donations and termination payments. The Budget documents also contain details of other measures which may impact individuals such as the extension of the Employment and Investment Incentive and an increase in the tax charge on preferential loans.
SME Sector
Mr Noonan also announced measures that he hopes will support the domestic economy. These include the enhancement of the 3 year relief from Corporation Tax which is currently available for start up companies, a further increase to the annual threshold for allowable R&D expenditure to €200,000 and an increase in the de minimus level of undistributed passive income which may be retained by a close company without giving rise to a surcharge.
VAT
The annual turnover threshold for the cash receipts basis of accounting has been increased from €1 million to €1.25 million.
Pensions
Tax rules on pensions are set to be amended to restrict tax relief to pension schemes which deliver income of more than €60,000 per annum. It was also announced that taxpayers will have the facility to make a once-off withdrawal of up to 30% of the value of the pension fund derived from Additional Voluntary Contributions.
Capital Taxes
A number of unexpected increases were introduced.
Savings
Increase to the rate of Deposit Interest Retention Tax (DIRT) and Exit Taxes were announced. DIRT has increased from 30% to 33%.
Local Property Tax (LPT)
Residential property owners will be liable for this taxed based on the self assessed market value of their property on 1st May 2013. A rate of 0.18% on the first million with the balance above that at 0.25% will apply.
Conclusion
Listed above are just some of the key points of Mr Noonan’s budget for 2013. If you are unsure as to the impact this Budget, has had on your own personal position, please feel free to contact our qualified tax professionals who may be able to assist you in better managing your tax affairs, meeting your compliance obligations and improving your overall tax efficiency in light of yesterday's amendments.