Budget 2016 - RBK Presentation by Fiona Murphy.pptx [Read...
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Budget 2016 Wednesday, 14 th October 2015 Fiona Murphy Taxation Director Russell Brennan Keane 1
Transcript of Budget 2016 - RBK Presentation by Fiona Murphy.pptx [Read...
Budget 2016
Wednesday, 14th October 2015
Fiona MurphyTaxation DirectorRussell Brennan Keane
1
Budget 2016 –Focus on GrowthFocus on Growth
2Budget 2016
Economic & Tax Context
Current Landscape:Current Landscape:
Irish Economy Unemployment currently y• Fastest growing
economy 2015• 4.3% growth 2016
at 9.5% and falling (2012 – 15%)
Latest Exchequer returns • Substantially ahead of
budget
Risk• Small / open economy• Recovery is fragileg
• Broad and growing tax base
y g
3Budget 2016
Ireland’s Personal Tax Regime – Pre Budgetg g
The Different Tax Doors into the Tax SystemThe Different Tax Doors into the Tax System (Single Person)
Enter Income Enter PRSI at
Enter USC
Enter Income Tax at €16,501
€18,305
at €12,013
4Budget 2016
Ireland’s Personal Tax Regime – Pre Budgetg g
Marginal Tax – The CalculationMarginal Tax The CalculationIf you pay the marginal rate of tax, this is the breakdown;
Tax Breakdown – the different elements
PAYE Person< €70,000
PAYE Person> €70,000
Self‐ Employed Person
Income Tax 40% 40% 40%
USC + 7% + 8% + 11%
PRSI + 4% + 4% + 4%
Total Marginal Rate = 51% = 52% = 55%No Income Tax
Total Marginal Rate = 51% = 52% = 55%
5Budget 2016
Business Wish List
Reduced USC rates
Income tax bands
Share option schemes
Travel & subsistence expenses
Self‐employed v employed
Entrepreneurs;
Knowledge Development Box
Inheritance tax / family home Entrepreneurs;
> Reduced CGT
Inheritance tax / family home
> Rollover relief
6Budget 2016
Personal Tax
What Happened?
7
Income Tax Changesg
Marginal Tax Rate 40% No change
Standard Rate Tax Band €33 800 No changeBand €33,800 g
Thresholds up ratesUSC Thresholds up, rates down
No Income TaxTax Credits Home Carers, Earned
Income Credit
8Budget 2016
Ireland’s Personal Tax Regime – After Budgetg g
Marginal Tax – The CalculationMarginal Tax The CalculationIf you pay the marginal rate of tax, this is the breakdown;
Tax Breakdown – the different elements
PAYE Person< €70,000
PAYE Person> €70,000
Self‐ Employed Person
Income Tax 40% 40% 40%
USC + 5.5% + 8% + 11%
PRSI + 4% + 4% + 4%
Total Marginal Rate = 49 5% = 52% = 55%No Income Tax
Total Marginal Rate = 49.5% = 52% = 55%
9Budget 2016
USC
< €13,000 exempt
Reduced rates introduced
Exemptions for over > 70 and medical card remain
Income in excess of €70 045 – no change Income in excess of €70,045 no change
No Income Tax
10Budget 2016
USC Rates & Bands
Income Range Current Rate
Income Range (Incomes of €13,000 or less are exempt, otherwise)
New Rate
€0 ‐ €12,012 1.5% €0 ‐ €12,012 1%
€12,013 ‐ €17,576 3.5% €12,013 ‐ €18,668 3%
€17,577 ‐ €70,044 7% €18,669 ‐ €70,044 5.5%
No Income Tax
11Budget 2016
USC Rates & Bands
Income Range Current Rate New RateIncome Range Current Rate New Rate‐ No Change
€70 045 ‐ €100 000 8% 8%€70,045 ‐ €100,000 8% 8%
PAYE income over €100,000 8% 8%
Self‐employed income over €100,000 11% 11%
No Income Tax
12Budget 2016
USC – “The Cap Effect” 2016p
The Cap Effect
€902 €902 €902 €902 €902 €902€900
€1,000
p
€527
€677
€600€700€800
ing
€377
€300€400€500
Tax Savi
€0€100€200
No Income Tax
I13Budget 2016
Income
Tax Credits
E d I C ditEarned Income Credit
> “PAYE Credit” for self employed
> 2016 ‐ €550 per annum
Home Carers CreditHome Carers Credit
> Increased from €810 to €1,000
I i f €7 200 (2015 €5 080)> Income not in excess of €7,200 (2015‐ €5,080)
Home Renovation IncentiveNo
Income Tax
> Extended to 31st December 2016
14Budget 2016
Other Measures
Mi i WMinimum Wage
> Increased to €9.15 per hour
PRSI ‐ Employee
> Low income earnersLow income earners
> Tapering relief max. tax credit of €624 p.a.
PRSI ‐ Employer
> Income above €376 per week at 10.75%No
Income Tax
15Budget 2016
Business Tax
What Happened?
16
Corporate Tax Ratesp
12.5% ‐ here to stay12.5% here to stay
Start‐up exemption
K l d D l t B Knowledge Development Box
No Income Tax
17Budget 2016
Start-Up Companies Reliefp p
Extended to new start‐ups in 2016, 2017 or 2018
Relief from Corporation Tax for the first 3 years
‘New Business’ – qualifying trades
Full relief profits < €320k Full relief profits < €320k
Marginal Relief
Linked to Employers PRSI
No Income Tax
18Budget 2016
Knowledge Development Boxg p
Announced in last year’s budget
Consultation Process followed
What we know;> 6.25% Corporation Tax Ratep
> Applies to income from ‘certain patents’ and copyrighted software
> Linked to R&D activity in Ireland
Further detail in Finance Bill
19Budget 2016
Knowledge Development Boxg p
Enhance our existing regime
Capital Allowances
Who will benefit;> Multinational companies
> Irish headquartered companies and
12.5%Knowledge> SME’s R&D Tax
Credit
Knowledge Development
Box
No Income Tax
20Budget 2016
Employment & Investment Incentive Schemep y
Budget 2015 changes – now EU approved;
Effective from Midnight
Budget 2015 changes now EU approved;
Effective from Midnight
Annual funding cap ‐ €5m
Lifetime maximum €15m
Qualifying activities of companies include;> Operation and management of nursing
No Income Tax
homes
> SME – all locations
21Budget 2016
Self Employed
What Happened?
22
Farmingg
Agri Taxation Review
Extension of stock relief Extension of stock relief
> Young trained farmers
> R i t d f t hi> Registered farm partnerships
> General
f Extension of Stamp Duty exemption to 2018
No Income Tax
> Young trained farmers
New succession transfer proposal
23Budget 2016
Farm Succession Partnership Modelp
Encouraging farm transfers
Establish farming partnerships
Tax credit of €5k for 5 years
Split in accordance profit sharing Split in accordance profit sharing ratio
F th d t il i Fi Bill Further detail in Finance Bill
No Income Tax
24Budget 2016
Propertyp y
No incentives introduced
No reduction in VAT rate
LPT l i d LPT revaluation date
postponed to 2019
No Income Tax
25Budget 2016
New Entrepreneur CGT Reliefp
Disposal of Business – Lifetime limit €1m
CGT at 20%
Effective from 1 January 2016y
Relief simplified
Questions;
> Replace existing relief introduced last year?
No Income Tax
> First €1m @ 20% ‐ balance @ 33%?
26Budget 2016
The Self Employed Story - Recapp y y p
Difference No. 1
USC S h f 3% €100 000USC Surcharge of 3% over €100,000
Difference No. 2Difference No. 2
The PAYE tax credit
Difference No. 3No
Income Tax
PRSI differential
27Budget 2016
Other Measures
What Happened?
28
Capital Acquisitions Tax (CAT)p q ( )
Group A tax free threshold increased:Group A tax free threshold increased:
Before From 14th October 2015
Group A €225,000 €280,000
Increase of €55,000
Saving €18,150
Focus on family home (parent / child) not far enough?No Income Tax
Focus on family home (parent / child) – not far enough?
No change in underlying CAT rate
29Budget 2016
VAT
No changes
9% rate to be retained for now
N h i VAT No change to construction VAT
rates
No Income Tax
30Budget 2016
Excise Duties
Cigarettes – 50 cent increase
Motor Tax for commercial vehicles capped at €900 per Motor Tax for commercial vehicles – capped at €900 per
annum
No Income Tax
31Budget 2016
Bank Levyy
Extended to 2021
New methodology to calculate rate
€750m raising measure
No Income Tax
32Budget 2016
Supporting Retailerspp g
Interchange Fees
> Reduction in fee for debit cards
> To be passed on to consumerTo be passed on to consumer
Contactless payments cards limit increased
Reduction in Stamp Duty on debit cards
No Income Tax
33Budget 2016
Social Welfare Measures
Free GP care for under 12’s
Early childhood scheme extended
I i S i l W lf Increases in Social Welfare rates
NAMA consultation on housingg
No Income Tax
34Budget 2016
€750m – Where is it coming from?g
One income raising measure – cigarettes
Balance?
€75m expected from increased;p ;
> Revenue audit / investigations
> Debt collection
No Income Tax
35Budget 2016
Conclusion
36
Election Tax Promises
Abolish USC
f Reduce marginal rate of Income
Tax to 50% for all
Complete Tax Equalisation for
self employed
Other measures to support job pp j
creators – CGT?
37Budget 2016
Conclusion
Positives
USC – Savings equate to a “weeks wages” USC – Savings equate to a weeks wages
Divide between self‐employed / employee reduced
Knowledge Development Box
Negatives
× Income Tax rate 55% No Income Tax
× Income Tax rate 55%
× Entrepreneurial relief – is it enough?
38Budget 2016
“ i b h f“Certainty about the future.
No booms no busts”No booms, no busts .
No Income Tax
39Budget 2016
Thank You
Fiona MurphyTaxation DirectorRussell Brennan KeaneT: +353 9064 80600E: fmurphy@rbk ieE: [email protected]: www.rbk.ie
No Income Tax
Disclaimer
While every effort has been made to ensure the accuracy of information within this publication is correct at the time of going to print, Russell Brennan Keane do not accept any responsibility for any errors, omissions or misinformation whatsoever in this publication and shall have no liability whatsoever. The information contained in this publication is not
40Budget 2016
intended to be an advice on any particular matter. No reader should act on the basis of any matter contained in this publication without appropriate professional advice.
