Budget 2012 - USC Changes

From 2012 the USC exemption limit will be raised from €4,004 to €10,036 per annum. The other major change to the calculation of the Universal Social Charge is that it will now be calculated on a cumulative basis removing the need for refunds at the end of the tax year.

Budget 2012 - Employer PRSI Calculation Change

Budget 2011 abolished PRSI relief in the case of the employee element of PRSI in relation to the employee pension contributions and provided for the abolition of half of the PRSI relief in the case of the employer element of PRSI. In Budget 2012 the relief from employer PRSI on employee pension contributions is now fully abolished. This means that employer PRSI will increase for any employee who makes a pension contribution.

There are no changes in 2012 to the PRSI thresholds and rates.

Budget 2012 - The Highlights

The main points as regards taxation of Budget 2012 are as follows

• 12.5% corporation tax rate remains cornerstone of economic policy
• Introduction of Special Assignee Relief Programme
• Enhancement of R&D tax credit regime targeted at SME’s
• Removal of Employer PRSI relief on pension contributions
• Increase in standard rate of VAT from 21% to 23%
• No change in income tax rates, bands, or credits
• No increase in employee PRSI or USC
• USC exemption level rises to €10,036 from €4,004 in 2011
• Increase in CGT, CAT and DIRT rates to 30%
• Stamp duty on non-residential property reduced to 2%
• Sick Pay Tax Exemptions changed
• PRSI may widen to include rental income

Government Announce €3.8bn in cuts and tax increases in Budget 2012

The Government announced on Friday that spending cuts and tax increases totalling €3.8 billion will be introduced in Decembers budget. €1.6bn will be in the form of tax increases, however the Minister for Finance Michael Noonan has stated that there will be no changes to income tax rates, bands or credits next year, with revenues coming from other sources. Changes to the VAT rate, property charges including the €100 household charge and carbon charges were possible areas for taxation, the Minster said yesterday.

Upcoming Budget Changes - Budget 2012

After a meeting with Revenue earlier this week, updating of the EuroPayX and PayDay payroll software is proceeding. Incorporating all the amendments due to the change in the calculation of Universal Social Charge to cumulative basis from week one. This not only means changes to the calculation of Universal Social Charge but also to the following:

• P60 will now show Universal Social Charge details, negating the requirement to produce a year end USC certificate.
• The P2C Tax Credit import is being modified to import the extra cumulative information for USC
• P45's will now also include USC cumulative information, also it will no longer be possible to return a P45 for any employee without a PPS number.
• Numerious other changes to screens and reports within the payroll software

As more information becomes available updates will be posted.

Budget Day 2012 Announced

It has been announced that the Irish Budget 2012 will be on Tuesday 6th December 2011.

Change to calculation of Universal Social Charge from 2012 Announced

Revenue today announced a change in the method of calculation of the Universal Social Charge. From January 2012 it will be calculated on a cumulative basis as per PAYE. USC thresholds will be managed in the same way as Cut-off points are for PAYE. Follow the link below for further information

http://www.revenue.ie/en/practitioner/ebrief/2011/no-542011.html

PRSI Refunds - Share based Remuneration/PRSA's

This sets out the arrangements for refund of PRSI paid on certain share-based remuneration.   These arrangements may also be availed of in respect of PRSI incorrectly deducted and remitted in the 2011 tax year, on employer contributions to their employees’ Personal Retirement Savings Accounts (PRSAs).

Press Release on SHARE BASED REMUNERATION

The Minister for Social Protection, Joan Burton T.D., today (23^rd August) announced that employers should cease deducting and remitting employer PRSI on share-based remuneration, with immediate effect. The previous Government imposed employer and employee PRSI on all share-based remuneration.   As part of this Government’s Jobs Initiative announced in May of this year, it was decided to abolish the employer element of PRSI on share-based remuneration entirely.   This decision recognises that this charge on employers needlessly increased the costs of doing business in Ireland and has the potential to negatively affect current employment levels and future investment decisions.   As some employers may have continued to deduct employer PRSI on share-based remuneration, it has been agreed, in consultation with the Minister for Finance, to provide this clear indication of the Government’s commitment to alleviating the unnecessary costs to employers.

Latest News on Share Option Schemes

During a meeting this morning with the Department of Social Protection it has been stated that the law has yet to be enacted to change the way share option schemes are calculated. This means that for the present share option schemes should be calculated with employers PRSI where applicable and that no refunds may made.

The Department of Social Protection (DSP) remind everyone of the following with respect to Share-based Remuneration.

Irish Payroll (A History of PAYE)

Pay As You Earn (PAYE) is the name given to the income tax system for employees in Ireland and was introduced on 6 October, 1960.The evolution of PAYE over the past 50 years is also the history of Irish payroll systems from paper to computers.

Devised by Sir Paul Chambers, PAYE was introduced into the UK in 1944 following trials in 1940 and 1941. The financial strain that the Second World War placed upon the UK meant that it needed to collect more tax from more people.

Latest PRSI Notes

For details on the operation of PRSI from 2nd July 2011, please consult the Department of Social Protection (DSP) website at http://www.welfare.ie/ and in particular the Advanced Notice of PRSI Rates at http://www.welfare.ie/EN/Publications/Advance_jul2011/Documents/anprsi2011_july.pdf

SEPA (Single Euro Payments Area) Ready Software from Ardbrook

The first thing to say is that Ardbrook software is SEPA ready. So, if you want to move today from your current EMTS payments to SEPA payments we can help with the transition.

What is SEPA?

Parking Levy Shelved

It has been reported in the Irish Independent that plans to charge employees €200 for parking their car at their workplace have been shelved. According the Independent a goverment source said "It's definitely been put on the back burner now. In fact, I can't see it coming in at all.

Jobs Initiative

The Irish Minister for Finance, Michael Noonan, introduced a Jobs Initiative yesterday, designed to improve Irish economic competiveness and stimulate job creation. The Jobs Initiative included a number of measures dealing with business and employment taxes, including:

• Commitment to keeping the 12.5% Corporation Tax Rate
• Abolition of Employer’s PRSI charge on share based remuneration
• Temporary halving of the lower rate of Employer’s PRSI
• Amendment of the R&D tax credit regime to enhance flexibility in how companies can account for the credit
• Introduction of a new lower rate of VAT of 9% in respect of tourism-related services
• Air Travel Tax reduced to zero

The measures introduced in the Jobs Initiative have to be self-funding, and as widely flagged, the Minister has introduced a temporary levy of 0.6% on the capital value of pension funds to fund the above measures.

Revised USC Frequently Asked Questions

Revised USC FAQs dated 15th March 2011 have been published on the Revenue website at www.revenue.ie/en/tax/usc/universal-social-charge-faqs.pdf

Annual membership fees of a professional body

Finance Act 2011 – change to section 118(5E) Taxes Consolidation Act 1997

For the tax years 2004 to 2010, Section 118(5E) TCA 1997 provided that expenses incurred by an employer on behalf of an employee in connection with the payment (or reimbursement) of annual membership fees of a professional body were exempt from tax where such membership was regarded as “relevant to the business” of the employer.

Share-Based Remuneration - Finance Act 2011 Changes

The Budget and Finance Act 2011 made several changes to share-based remuneration, in particular charging certain gains made by employees to universal social charge (USC) and to PRSI. These changes also impact on employers who are to be responsible for deduction and payment of most of the relevant charges.

EuroPayX - Irish Language P60's

EuroPayX irish payroll package has now improved its support for the Irish language by including Irish Language versions of the P60 and Levy cert prints. This complements our already available Irish language payslip stationery. We would be insterested to hear any suggestions as to how to improve the Irish language support within EuroPayX, you can do so by making comments or by emailing us @ info@ardbrook.ie

New Programme for Government

The programme for government of the new Fine Gael / Labour government has been published and contains some proposals that will effect taxation

Ardbrook Website given a Facelift!

Ardbrook's website http://www.ardbrook.ie/ has been given a facelift! This, we hope, will make it easier to locate infomation regarding our irish payroll products and our electronic payments software. So if you find any problems on the new website, just post a comment below so that it can be corrected.

Changes to the operation of Relevant Contracts Tax (RCT)

On Budget day, 7 December 2010, the Minister for Finance announced that significant reforms would be made to the Relevant Contracts Tax (RCT) scheme to enhance its effectiveness, reduce opportunities for fraud and help decrease the administrative burden for businesses and Revenue. The Finance Act (enacted on 6 February 2011) gives a legislative base to the reform of the RCT scheme. The provisions are contained in Section 20 of the Act. In essence, the Finance Act amends the Taxes Consolidation Act in Chapter 2 of Part 18 by inserting twenty-two new sections after Section 530. These sections comprise a new scheme of RCT, which will replace the current scheme on a date yet to be decided.
The key elements of the new scheme as outlined in the Act are:

EuroPayX - Attach documents to Employee Records

In our EuroPayX irish payroll product it is now possible to link related documents to an employees record. These documents can be in any format such as word, excel or pdf, they can even be scanned from source material enabling you to access an employees complete record from within your payroll software.

Universal Social Charge (USC) Amendment

As a result of the recent enactment of the 2011 Finance Act, there has been a significant change to the USC For an individual holding a current Full Medical Card the maximum rate of USC is now 4% instead of the previous 7%. The employer must satisfy themselves that the employee hold such a card before implementing the change. This change is backdated to 1 January 2011.

Special Contributors to PRSI

Following consultations between the Revenue Commissioners and the Department of Social Protection (http://www.welfare.ie/EN/Topics/PRSI/Pages/specindex.aspx), it has been decided that PRSI should be returned through normal P30/P35 procedures in cases subject to PAYE Exclusion Orders. Heretofore, PRSI for these employees were remitted separately to the Special Collections Section in Waterford.

P35 Refunds and P35 Amendments

P35 Refunds

To avoid delays in the processing of refunds that arise from the end of year P35 paper returns, taxpayers and their agents should note that:

New changes proposed to USC

The minister for finance Mr Brian Lenihan has said that he will introduce the following changes to the implementation of the Universal Social Charge

• Medical card holders will not have to pay USC at the top 7% rate only at the lower rates
• The self-employed will pay an extra 3% surcharge on earnings over €100,000.00

We will post further details as they become available.

WORKING TIME ACT – TIME FOR A CHANGE?

Working time legislation has been in place since 1997. The basic thrust of the regulations is that workers may not work more than an average of 48 hours a week, are entitled to daily and weekly rest periods, and to 4 weeks’ paid holiday. Of course, no legislation, particularly coming from Europe, is ever quite so simple. The average hours are calculated over a 4 month period; young workers can only work 40 hours a week, certain sectors of workers are excluded; and the definition of what constitutes work is open to disagreement.