Supplementary Budget 2009

Minister Brian Lenihan has delivered his second budget in less than 6 months on 7 April 2009. This has been the toughest budget this country has seen in quiet some time.

Budget Highlights

Income levy rates doubled.
First €75,036 2%
Next €99,944 4%
Remainder 6%

Health levy rates double to 4% and 5% and the higher rate threshold is reduced to €75,036.

Employees PRSI ceiling has increased from €52,000 to €75,036.

No change to Employers’ PRSI

Increase in CGT and CAT rates from 22% to 25%.

Decrease of 20% in the tax free CAT thresholds.

Threshold Changes	Gifts and Inheritance taken up to 7 April 2009	Gifts and Inheritance taken after 8 April 2009
Group A - Parent to Child	€542,544	€434,000
Group B - Related Persons	€54,254	€43,400
Group C - Unrelated Persons	€27,127	€21,700

The government intend phasing out Mortgage Interest Relief.
From 1 May 2009 relief will only be available in respect of interest paid over the first 7 years of a qualifying loan of a person’s home.

There have been no changes to the VAT rates.

There has been an increase in the cost of 20 cigarettes by 25c

There has been a 5c increase in the cost of diesel.

The Minister has stated that there are more tax increases to come.

Should you require any clarification on any of the budget points please contact Edel Walsh at O’Connor Pyne
021 481 0080
ewalsh@oconnorpyne.com

Income Tax

Are you satisfied that you are availing of all of the income tax reliefs and exemptions that you are entitled to?

As the tax system moves towards a full tax credit system, tax relief is granted by tax credits at the standard rate of 20%. However if your tax credits exceed the tax which you have to pay you are not entititled to a refund. Only the actual tax paid to revenue can result in a tax refund.

We have outlined below all of the available relief’s:

• Single Credit
  
• Married Credit
  
• Widowed Credit
  
• Single Parent Credit
  
• Age Credit
  
• PAYE Credit
  
• Blind Persons Credit
  
• Incapacitated Child Credit
  
• Dependant Relative Credit
  
• Home Carer’s Credit
  
• Widowed Parent Credit
  
• Mortgage Interest Credit
  
• Medical Insurance Credit
  
• Service Charges
  
• Rent Paid by Persons aged 55 or over
  
• Rent Paid by Persons aged less than 55 years
  
• Fees paid to Private Colleges
  
• Fees for Training Courses
  
• Donations to Eligible Charities
  
• Donations to Certain Sports Bodies
  
• Approved Gifts i.e. Universities/Colleges
  
• Gifts to Designated Schools
  
• Trade Union Subscriptions
  
• Dental Insurance
  
• Heritage Donations
  
• Relief for Premiums under Qualifying Long-Term Policies

What are the other ways we can shelter taxable income?

We have outlined below the ways that you can shelter your taxable income at the marginal rate and ultimately reduce you income tax liability.

• Maximise pension contributions to Revenue approved limits.
  
• Investing in a qualifying business expansion scheme **
  
• Investment in qualifying films
  
• Seed Capital Relief

Unrestricted interest relief is available to individuals who have borrowed money to invest in shares in a trading company subject to certain conditions.

• The company must be a private trading company.
  
• Individual is at least a part-time director or part time employee and owns over 5% of the ordinary share capital.

** O’Connor Pyne & Co has extensive expertise in assisting companies who are looking to be a qualifying business expansion scheme company. We also assist individuals who are looking to invest in qualifying BES companies.