Unusually for Approved Retirement Funds, this product comes with an income guarantee for life, backed by an international insurer with a AA rating from Standard & Poors .

The Canada Life “Lifelong Income Benefit” ARF plan has the following features:

• Guaranteed minimum income
• Income lock-in potential
• Access to fund
• Choice of funds
• Enhanced death benefit compared with traditional ARFs

So you know what you are getting now, not just for the next five years, but for the rest of your life. This is a new concept in ARFs and eliminates the uncertainty about future income which is a feature of ARFs to date. Where the fund performs well, there is potential for the initial guaranteed income to increase.

The performances of each of the three funds are as follows from inception (29th September 2011) to 23rd February 2012:

• LIB Conservative Fund 3.8%
• LIB Moderate Fund 7.9%
• LIB Advanced Fund 12.0%

People with existing ARFs can choose to transfer their full ARF, or a portion of it, to this Canada Life guaranteed income ARF.

The value of your investment can go down as well as up, but given Canada Life’s financial strength and investment track record we have no hesitation in recommending this product to our clients.

If you would like to receive further information, or to arrange a meeting with a Canada Life advisor, please contact either Declan Long or Claire Condron at this office.

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1. Finance Bill 2012
2. CGT and CAT Planning

The trainee position is full time and has a minimum requirement of either 400 Leaving Certificate points or a 2.1 Level 8 degree from a recognised university. After a probationary period, the person recruited may be enrolled with Chartered Accountants Ireland as a trainee accountant.

The book-keeping position is part-time. Candidates must demonstrate initiative, have recent relevant experience of using accounting software and of filing VAT and other returns through ROS and must be able to communicate effectively with clients.

Please send your resumé and a brief covering note via email to info@longaccounts.ie

No related posts.

For more information on this go to www.nppr.ie.

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A child includes:

• A child of your own
• A stepchild
• A formally adopted child
• An informally adopted child or any child (who is not a child of yours) of whom you have custody and that you maintain at your own expense

 A child will be regarded as being dependent if he or she is:

• Born during the tax year, or is under 18 at the beginning of the tax year,
• Over 18 and receiving full-time education or undergoing a full-time training course for a minimum of two years or
• Permanently incapacitated either physically or mentally from maintaining himself or herself and had become so before reaching 21 or had become permanently incapacitate after reaching 21 but while her or she had been receiving full-time education or undergoing a full-time training course.

 The one parent family tax credit cannot be claimed if:

• You are entitled to the married tax credit or
• You are living together with another person as man and wife

 Relief due

One tax credit will be given for a year of assessment regardless of the number of dependent children residing with you during the year.  The credit is not apportioned between claimants.  Each qualifying claimant can claim the full credit provided that the necessary conditions are met.

How to claim

In order to claim the credit a form OP1 must be completed and submitted to Revenue.  This form can be found on www.revenue.ie.

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2. Credit Unions Interest Reporting
3. Personal Tax Credits and Reliefs

Where there is a change in RCT rates, Revenue will advise both the subcontractor and the principals invovled. 

Subcontractors can request a review of the RCT rate applied to them via ROS or by contacting their local Revenue Office.

For more information on this see Revenue website at http://www.revenue.ie/en/practitioner/ebrief/2012/no-142012.html.

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2. Reduction in VAT rate for certain goods and services
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Academic Year            Cap

2007/2008                   5,000

2008/2009                   5,000

2009/2010                   5,000

2010/2011                    5,000

2011/2012                    7,000

It should be noted that relief is not available in relation to:

• any part of the tuition fees that are met directly or indirectly by grants, scholarships, etc,
• administration, registration or examination fees,
• with effect from the 2011 tax year the first €2,000 of each claim is disregarded for relief, where any of the students in respect of whom the claim is being made is in full-time education,
• Where all students concerned are in part-time education, the first €1,000 is disregarded.

For the tax year 2011 and subsequent tax years, tax relief is allowable in respect of tuition fees including the Student Contribution.

Examples

Parent with 1 child in 3rd level education

Student – Full time in college

2010                                                    Amount                  2011                                     Amount

Student fees                                      €5,000                   Student fees                      €5,000

Tax relief             €5,000 @ 20% = €1,000              Tax relief             €5,000 – €2,000 @ 20% = €600

Student in part time education

2010                                                    Amount                  2011                                    Amount

Student fees                                      €5,000                   Student fees                      €5,000

Tax relief             €5,000 @ 20% = €1,000              Tax relief             €5,000 – €1,000 @ 20% = €800

Parent with 3 children in 3^rd level education

Students in full time eduction

2010                                                       Amount               2011                                       Amount

Student fees                                      €15,000                 Student fees                      €15,000

Tax relief             €15,000 @ 20% = €3,000            Tax relief             €15,000 – €2,000 @ 20% = €2,600

Students in part time education

2010                                                       Amount               2011                                       Amount

Student fees                                      €15,000                 Student fees                      €15,000

Tax relief             €15,000 @ 20% = €3,000            Tax relief             €15,000 – €1,000 @ 20% = €2,800

In order for the tuition fees to be allowable they must be paid to an approved college.  A full list of approved colleges and approved under graduate and post graduate courses can be found at www.revenue.ie.

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2. Retirement Annuity Relief
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Stamp duty

As announced in the Budget:

• The rate of stamp duty on non-residential property is 2% from 7th December 2011;
• Consanguinity relief will not be available on the transfer of non-residential property from 31st December 2014;
• Transitional relief applies to deeds signed before 1st July 2012 if there was a pre-budget contract.

Capital Gains Tax

Retirement relief from CGT on disposals of business or agricultural assets has been amended. The ceiling for relief will remain at €750,000 for those aged between 55 and 65 years. However for disposals made on or after 1st January 2014 by taxpayers who are aged 65 or more, the ceiling will be reduced to €500,000 (with provision for marginal relief).

CGT new property relief

The relief announced in the Budget for gains on disposal of properties acquired between 7th December 2011 and 31st December 2013 has been introduced.

The relief applies to land or buildings in the EEA (including Ireland) where the property is owned by the purchaser for at least 7 years from the date of acquisition.

The relief exempts the portion of the gain for 7 years from CGT. So for example, if a property is held for ten years, then 7/10 of the gain will be exempt. Anti-avoidance provisions have been included to prevent arrangements which are made solely to secure a tax advantage.

Capital Acquisitions Tax

Rates and thresholds

The CAT rate is 30% from 7th December 2011.

The class (a) threshold has been significantly reduced while the other two thresholds have been slightly increased.

Indexation has been abolished from 2012.

Changes have been made to the effective date of creation of discretionary trusts.

A loan associated with the purchase, repair or improvement of an off-farm main residence may now be deducted when establishing whether agricultural relief is available.

A claw-back of agricultural relief will no longer apply if the beneficiary ceases to be resident in Ireland.

The CAT filing date has been changed to 31st October, to bring it into line with other forms of taxation.

Student fees

Tax relief for fees paid for third-level education has been reduced.

The first €2,250 (previously €2,000) of fees paid for full-time courses is now disregarded while for part-time courses the first €1,125 is disregarded (previously €1,000).

5% charge for certain property investors

As announced in the Budget, a 5% charge has been introduced for large-scale investors (those with total income of €100,000 or more) by way of an additional USC charge on the amount of aggregate income which has been sheltered by a “specified property relief”.

New capital allowance provisions apply to passive investors (i.e. not active partners or traders).

Where the tax life has already ended, capital allowances can continue to be claimed until the end of 2014 and will then be lost. If the tax life ends in 2015 or later years the capital allowances cannot be claimed after the year in which the tax life ends. Unused capital allowances can be offset against any subsequent balancing charge.

Mortgage interest relief

A new rate of mortgage interest relief of 30% has been introduced for first-time buyers who purchased their homed between 2004 and 2008 (inclusive). The relief can be claimed even if the property has been replaced by a second home.

Business Development Initiatives

Research and development

As announced in the Budget, and R&D credit will now be available on the first €100,000 of relevant expenditure without reference to a 2003 base year. Relief on expenditure over €100,000 will continue to be calculated by reference to the 2003 base year. The definition of expenditure on R&D has been amended to ensure that the activities are carried on by the company itself. Where a company which was claiming an R&D credit ceases to trade and another company in the same group takes over the trade, the successor company can now claim any previously unused credits.

BRICS foreign earnings deduction

Where an individual is carrying out duties of an office or employment in Brazil, Russia, India, China or South Africa and is present for a total of at least 60 days in any 12 month period (counting only days which form part of a visit of 10 days or more) they can claim an income tax deduction of a proportion of their income from that employment, up to a maximum deduction of €35,000. The deduction will be restricted where a double tax agreement claim (DTA) is also made.

Special assignee relief

The relief has been introduced for employees who are assigned to work in Ireland by an employer company located in a State which has a double tax agreement with Ireland. The employee is allowed to deduct up to 30% of their remuneration, subject to a maximum deduction of €127,500. The employee must have worked outside Ireland for the foreign employer for at least 12 months, must not have been resident in Ireland in the previous five years, and the assignment to Ireland must be for at least 12 months.

Key R&D employees’ relief

Key employees may receive income tax relief where they are engaged in R&D work. The employer company must surrender its right to claim the equivalent R&D credit. The employee can then claim an income tax deduction, which is capped to ensure that the employee pays a minimum income tax rate of 23%.

VAT

From 1st May 2012 a connected party in receipt of construction services must account for the VAT.

A security deposit may be required for fiduciary taxes by the Collector General from a person carrying on business, where they had a previous business which ceased to trade, owing taxes.

Stamp duty

The rate of stamp duty applicable to non-residential property purchases will be 2% and consanguinity relief on such property is only to apply until 31st December 2014.

A new stamp duty exemption has been introduced for company mergers.

Stamp duty will be on a self-assessment basis at a future unspecified date. The adjudication process will be abolished, a penalty of €3,000 will apply for failure to make a return and a surcharge of 5%/10% will apply for failure to make a return.

Pensions – ARFs

The annual imputed distribution applying to the assets in an approved retirement fund (ARF) has increased from 5% to 6% in respect of ARFs with asset values in excess of €2 million.

The rate of income tax applying to a “post-death” distribution from an ARF to a child is to be increased from 20% to 30%.

DIRT

The rate of DIRT increased to 30% (33% for long-term savings) from 1st January 2012.

Deposit interest from EU countries will be taxed at 30% if the income is returned on time or 41% if returned late.

A taxpayer earning deposit interest from non-EU countries will pay tax at 41% unless they are a standard rate taxpayer and the interest is returned on time, in which case the rate will be 30%.

Health insurance

An increased levy of €285 (adults) and €95 (under-18) applies to all health insurance contracts with effect from 1st January 2012.

Other measures

Exit tax: The rate for investment funds and similar products has been increased by 3%;

USC:      The level at which USC applies increased from €4,004 to €10,036 with effect from 1st January 2012;

PRSI:      Employer’s PRSI relief of 50% on employee pensions has been abolished;

                PRSI will be charged on unearned income (rent, investment income) from 2013.

Domicile levy:   The levy will apply to all tax exiles, not just Irish citizens.

CT relief for start-up companies:              The relief has been extended to 31st December 2014.

VAT:      The standard rate of VAT increased from 21% to 23% from 1st January 2012

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2. Companies Bill 2012
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Until now, the credit amounted to 25% of the qualifying expenditure on “incremental” research and development during the accounting period. For 2012, the credit, up to a maximum of €100,000, will be allowed against all expenditure. Above €100,000 the incremental basis will still apply. The credit is in addition to the 12.5% corporation tax relief, thus bringing the total tax relief on expenditure up to €100,000 to 37.5%.

Where there are insufficient profits in the current year to absorb the expenditure, the credit may be offset against the prior year’s liability. Any excess which is still unutilised may be carried forward indefinitely against future profits. Alternatively, the unused credit may be repaid over a period of three years.

Where expenditure is sub-contracted outside the company to an unrelated third party, the credit is currently restricted to 10% of total costs, or 5% if sub-contracted to a third-level institution. The Budget proposes to increase this to the greater of 10%/5% respectively, or €100,000. This will assist SMEs in particular, as they are less likely than large companies to have in-house R&D expertise.

It is also proposed to introduce a scheme to facilitate making tax-free payments to company employees. Details are not yet available.

The Finance Bill will contain the proposed legislation to give effect to the measures announced in the Budget. Commentators have suggested that, while the above changes are welcome, we are still behind other countries in our incentives for research based activities. It is suggested that the €100,000 cap should be removed altogether, so that the 2003 base expenditure no longer has to be exceeded before expenditure (in excess of €100,000) qualifies.

 Research and development expenditure may seem irrelevant to most entrepreneurs, but the definition includes “systematic, experimental or investigative activities directed at producing new or improved materials, products, devices, process systems or services” can qualify for the tax credit.

It may be worthwhile for company directors to review their activities in the light of this legislation, as the benefits may be considerable. Long & Company will be happy to have an initial meeting to discuss whether your company’s activities include eligible research or development costs, on an obligation-free basis.

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1. Finance Act 2010
2. CGT and CAT Planning
3. Pensions and Saving Tax

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The household charge is not an allowable expense against rental income.

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