BUDGET
SUMMARY 2006
INCOME TAX
In his Budget Statement on
Tax Credits
The table below outlines
increases for 2006.
Changes
to other Reliefs are as follows:
Changes to Standard Rated Reliefs are as follows:
Tax Rates and Tax Bands
There are no changes to the tax rates of 20% and 42%.
The standard rate tax band has been widened. The table
below sets out the tax rates and bands.
Exemption Limits
The exemption limits for persons aged 65 years and over have been increased as indicated in the table below:
The limits for Single/Widowed persons aged under 65 and Married couples aged under 65 remain unchanged at €5,210 and €10,420 respectively.
Marginal Relief will continue to apply where income does not greatly exceed the relevant exemption limit.
The above exemption limits are increased by €575 for
each of the first two dependent children and by €830 for the third and
subsequent children.
Childminding
Relief
A new
childminding relief is being introduced. Where an individual minds up to three
children in the minder’s own home, no tax will be payable on the childminding
earnings received provided the amount is less than €10,000 per annum. If the
childminding income exceeds this amount, the total amount will be taxable, as
normal, under self-assessment. An individual will be obliged to return their
childminding income in their annual tax return. Full details of the scheme will
be set out in the Finance Bill.
Remittance
Basis of Taxation
With
effect from
PENSIONS
The
annual earnings limit of €254,000 will be adjusted annually in line with an
earnings index from the tax year 2007. A number of changes have also been
announced to the amount of a pension lump sum that may be taken tax-free.
FARMING
TAXATION
Farm
Pollution Control
The
entitlement to claim relief on capital expenditure at the rate of 33⅓% per annum over 3 years
continues. Alternatively a person may claim the lesser of €50,000 (increased
from €31,750) or 50% of qualifying expenditure with effect from
Leased
Land Exemption
The
exemption for income derived from certain leases of farmland is being increased
from
VAT
The VAT
registration thresholds for small businesses are being increased from €25,500
to €27,500 in the case of services and from €51,000 to €55,000 in the case of
goods – effective from
STAMP DUTYCompanies Capital Duty
The Finance Bill 2006 will provide for the abolition
of the 0.5% companies capital duty on the issuing of share capital for
transactions effected on or after
Young
Trained Farmer Relief
The
Finance Act 2003 provided for full exemption from stamp duty on the transfer of
land to young trained farmer for a 3 year period until
The
exemption is also to be expanded to apply to the transfer of the EU Single Farm
Payment Entitlement to a young trained farmer where the land associated with
that Entitlement is also being transferred to the young trained farmer.
CAPITAL
GAINS TAX
The
Minister announced the following changes:
Retirement
Relief
The EU
Single Farm Payment Entitlement will qualify as an asset for the purpose of
Retirement Relief provided the farmer in question fulfils the ownership and
usage requirements in relation to the land which will be disposed of at the
same time as that Entitlement.
Anti-Avoidance
Measure
The
deferral of CGT on the disposal of an asset to a spouse, a separated spouse or
a former spouse will not apply to disposals on or after
CAPITAL
ACQUISITIONS TAX
Measures
in relation to the treatment of the EU Single Farm Payment Entitlement for
Agricultural Relief purposes will be outlined in the Finance Bill 2006.
PRSI & HEALTH CONTRIBUTIONS
From
Class A
(
Employees earning €300 p.w. or less, will be exempt from PRSI and those earning €440 p.w. or less, will be exempt from the Health Contribution of 2%.
For employees earning in excess of €300 p.w. the first €127 p.w. will continue to be free of PRSI. The weekly rate of €26 for employees on a modified PRSI rate also remains unchanged.
Class S
(Self-Employed)
Self-Employed
persons are exempt from the Health Contribution of 2% where the annual income
is €22,880 or less. Minimum annual PRSI contribution remains at €253.
CORPORATION
TAX
Restriction
of certain interest relief
The
Minister announced his intention to introduce measures to restrict the use of
the interest relief provisions of Section 247 TCA 1997 in the context of
transactions between related companies – the measures will affect transactions
effected on or after
This
section provides for interest relief on monies borrowed by companies who
acquire ordinary share capital of trading or rental companies (or holding
companies of such companies). The relief is also available where companies
on-lend monies in certain circumstances to the types of companies referred to
above, or where the monies are used to pay off certain other loans.
Leasing –
treatment of losses in the leasing of long-life assets
The Finance Bill 2006 will contain
measures to alleviate certain restrictions on the offset by companies of losses
arising from capital allowances on the leasing of long-life plant or machinery.
The measures will include extending the scope of income against which these
losses can be offset, allowing losses on the lease of long-life plant and
machinery to be offset against income from similar leasing activities and
measures relating to the tax treatment of leases that are denominated in a
foreign currency.
CAPITAL
ALLOWANCES & TAX INCENTIVE SCHEMES
Capital
Allowances (and Expenses) for Business Cars
The car
value threshold is increased from €22,000 to €23,000.
Property-based
tax incentive schemes
The following schemes will not be continued: Urban Renewal, Rural Renewal, Town Renewal and the special reliefs for hotels, holiday cottages, student accommodation, multi-storey car parks, third level educational buildings, sports injury clinics and the general rental refurbishment scheme. The period during which qualifying construction expenditure can be incurred is being extended to end July 2008 subject to conditions. This extension is only available for those projects that have already satisfied the terms of the particular scheme.
The tax reliefs for investment in childcare facilities, private nursing homes and private hospitals are to be continued. Private psychiatric hospitals can now qualify for tax relief.
The Park-and-Ride (excluding the residential and commercial elements) and Living-Over-The-Shop schemes are being continued but in a more focused way.
The detailed provisions will be contained in the 2006 Finance Bill, subject to the appropriate approvals being obtained from the European Commission.
RESTRICTION OF RELIEFS
Restriction on the use of Tax Reliefs
by High Income Taxpayers
A new measure is being introduced with
effect from
Tax relief to Individuals for Interest
on Loans taken out to acquire shares in, or to lend to, Property Rental Income
Companies is being abolished for all new loans
taken out after
Exemption
of Stallion and Greyhound Stud Fees
The
exemption from tax of stallion and greyhound stud fees will end as of
VEHICLE REGISTRATION TAX
The
Minister announced the introduction of a VRT relief of 50% for new flexible
fuel vehicles – vehicles capable of operating on high-grade biofuels –
introduced for a two year period, with effect from
The Minister
announced the following changes:
Mineral Oil
Tax
A reduction
in mineral oil tax for non-auto kerosene and Liquid Petroleum Gas (LPG) –
effective from
Reductions as
follows (per 1,000 litres):
Kerosene
(non-auto) - from €31.74 to €16.00
LPG
(non-auto) - from €20.86 to €10.00
Betting Duty
A reduction
in Betting Duty from 2% to 1% - with effect from
Excise Relief
for Biofuels
A 5 year
scheme of targeted excise relief will commence in 2006.
EXPENDITURE MEASURES
Social Welfare Weekly Rates
Maximum weekly personal rates for all old age and
related pensions will be increased by €14, with proportionate increases for
pensioners on reduced rates, from the first week of January 2006. In addition, there is a further special
increase for all non-contributory pensioners aged 66 and over (see item on
Retired and Older People below).
Other maximum personal rates will be increased by €17 per week, with proportionate increases for cla |