Written Answers Nos. 98 - 117
98. Deputy John O'Mahony asked the Tánaiste and Minister for Social Protection when a person (details supplied) in County Mayo will receive a decision on a review of an application for carer's allowance; and if she will make a statement on the matter. [19773/15]
View answerThe claim from the person in question is currently under review in regard to medical eligibility as the care recipient has turned 16 and their domiciliary care allowance ceased.
Having examined all of the documents provided in support of the application and having weighed up the evidence a deciding officer has decided that the person being cared for is not so invalided or disabled as to require full-time care and attention as laid down in carer’s allowance legislation. The person concerned was notified of this decision on the 9th April 2015, the reason for it and of his right of review to this office. He has submitted additional information in support of his continued eligibility which will be reviewed as soon as possible. Pending the outcome of this review the carer’s allowance payments to the person concerned will continue.
99. Deputy Billy Timmins asked the Tánaiste and Minister for Social Protection the position regarding a pension matter (details supplied); and if she will make a statement on the matter. [19790/15]
View answerCredited contributions (credits) are awarded in circumstances such as unemployment or illness, to help protect the future social insurance entitlements of insured persons during periods when they may not be in a position to make paid contributions (via Pay Related Social Insurance or PRSI).
If a person is in insurable employment, they pay a PRSI contribution each week. PRSI contributions are not made when a person:
- is absent from work due to an illness; or
- is unemployed.
Where a person is unable to work due to illness or injury, they may be paid illness benefit and their contributions will continue while on this scheme.
If a person becomes unemployed, even temporarily, and does not qualify for an unemployment payment, they can sign-on for credits at their local Intreo Centre or Social Welfare Office to keep their social insurance record up-to-date.
They will get a credit for each full week of proven unemployment. They must be available for work, genuinely seeking work and capable of work.
These credits are like the PRSI contributions you pay while you are working. Credits are usually awarded at the same class as your last paid PRSI contribution.
My Department is not advised when people working in temporary positions become unemployed during the year. It would up to the people themselves to advise their local Intreo centre and seek advice on the options available to them.
Information on all of the Department’s schemes, including the availability of credited contributions, is available from all Intreo centres and Social Welfare Local/Branch offices. Information is also available on my Department’s website (www.welfare.ie) and on the Citizens’ Information website (www.citizensinformation.ie).
100. Deputy Michael Healy-Rae asked the Tánaiste and Minister for Social Protection the position regarding disability allowance back money in respect of a person (details supplied) in County Kerry; and if she will make a statement on the matter. [19804/15]
View answerDisability allowance arrears will issue to the person in question in the next few days.
101. Deputy Sean Fleming asked the Tánaiste and Minister for Social Protection if she will increase the free electricity allowance for persons with disabilities who have to use electric wheelchairs on a permanent basis and who have to recharge the batteries of the wheelchairs every night, as these additional costs should be taken into consideration in these cases; and if she will make a statement on the matter. [19807/15]
View answerMy Department pays an electricity or gas allowance as part of the household benefits package to 415,000 customers, at an estimated cost of €227 million in 2015. The allowance represents a contribution towards the energy costs of a household rather than meeting those costs in full.
The electricity allowance has a monthly value of €35 for both electricity and gas customers. The value of the allowance was protected in Budget 2015. Electric Ireland and Bord Gáis customers receive this amount as a credit on their bills. Customers who have switched to other companies receive a direct monthly cash payment. It does not increase where the customer uses more electricity, and there are no proposals for such a change. Any decision to increase the household benefits package would have budgetary consequences and would have to be considered in the context of budget negotiations.
Help will also continue to be available for people with special or additional energy needs through the exceptional needs payment scheme under the supplementary welfare allowance scheme. There is no automatic entitlement to such payments. Every decision is based on consideration of the circumstances of the case, taking account of the nature and extent of the need and of the resources of the person concerned.
102. Deputy Billy Kelleher asked the Minister for Finance if he will confirm that the international tobacco industry will not be allowed to evade the taxation of cigarettes with new tobacco products such as heated tobacco cigarettes which it is actively developing and introducing to a number of new markets in Europe and elsewhere; his plans to ensure a co-ordinated Government response to the taxation of heated tobacco cigarettes; and if he will make a statement on the matter. [19664/15]
View answerAs the Deputy will be aware, the tobacco industry has developed a number of novel tobacco products, which include heated tobacco products. At present the tax treatment of tobacco products is provided for in Directive 2011/64/EU (the 'Tobacco Products Tax Directive'), which harmonises the structures and definitions of tobacco products. Ireland has implemented this Directive through Chapter 3 of Part 2 of the Finance Act 2005. The Tobacco Products Tax Directive does not, at this time, explicitly provide for heated tobacco products, given these products are relatively new.
I am aware that products such as these products have been placed on the market in continental Europe, and that the tax authorities of our fellow Member States have taken different approaches towards taxing such products, reflecting their view of which product definition such products fall under. These products have yet to enter the Irish market, and as such have not been presented to the Revenue Commissioners by importers for the payment of duty. While a determination has yet to be made by the Commissioners as to which product definition such products would fall under in our excise law, I am confident that the Tobacco Products Tax Directive and our own legislation will allow these products to be subject to a duty of excise.
Overall, I am of the opinion that the best way forward in dealing with this matter is at a EU level by providing a definition of heated tobacco products in the Tobacco Products Tax Directive. I can inform the Deputy that the matter has been raised at EU level and officials from the Department of Finance and the Revenue Commissioners are currently engaged in technical discussions with our European partners to examine the best possible way forward with regards to a harmonised definitions and tax treatment of these types of tobacco products.
103. Deputy Willie Penrose asked the Minister for Finance if the anomaly whereby pensioners with a pension in excess of €12,012 pay the universal social charge on all of their pension, which costs them up to €1,572, is likely to be addressed under the current pay review; and if he will make a statement on the matter. [19772/15]
View answerThe Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and maintain revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced, and is applied at a low rate on a wide base.
The USC, like the Income Levy before it, does not apply to social welfare payments or payments of a similar nature. However, occupational pensions are liable to the USC, if the payment is greater than the exemption threshold, which from 1 January 2015 is €12,012 per annum. At that income point the application of the USC would result in a charge of €180 approximately per annum.
As you are aware, delivering on a commitment in the Programme for Government, the USC was reviewed by my Department in the lead up to Budget 2012. The report is available at my Department's website at www.finance.gov.ie. The issue of USC applying to occupational pensions of retired public servants who entered the public service before April 1995 was examined as part of that review. However, the Government decided not to exempt the occupational pensions of these individuals from the USC charge as it would be very costly and difficult to achieve, and it would involve all income earners with the equivalent income benefiting from the exemption. In addition, it would also undermine the principle of the USC being applied to income with few exceptions.
However, as a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge. An estimated further 87,000 individuals have been exempted from the charge as a result of the extended exemption threshold introduced in Budget 2015. This latter extension equalises the position for single individuals whose sole source of income is the State Contributory Pension with Public Service pensioners whose pension is at an equivalent level. Furthermore, I intend to continue to reform the tax system in this manner in future budgets, subject to having the required fiscal space. I would point out however, that the changes to the income tax system included in Budget 2015 mean that all those who paid Income Tax and/or USC in 2014, including pensioners, will see a reduction in their tax bill this year where income is equal.
Any review of public service pay is primarily a matter for the Minister for Public Expenditure and Reform. Notwithstanding this and the foregoing, I can assure you that the points raised have been noted and will be considered in future policy decisions on the USC.
104. Deputy Brendan Griffin asked the Minister for Finance if he will consider increasing the threshold for inheritance tax for families with one child; and if he will make a statement on the matter. [19172/15]
View answerI am advised by the Revenue Commissioners that Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.
For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.
There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.
The Group A tax free threshold of €225,000, applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
The Group B tax free threshold of €30,150, applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
The Group C tax free threshold €15,075, applies in all other cases.
Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold. In recent years these thresholds were reduced and the rate has been increased in order to maintain the yield from capital taxes in the face of falling asset prices and as part of our fiscal consolidation efforts. In addition, taxes on capital are less harmful from an economic perspective than taxes on employment.
I am aware that the property market continues to improve, with positive developments which had been restricted to the Dublin area now manifesting in other areas of the country, though not to the same extent in terms of price rises, and I recognise that this has a bearing on taxation of the inheritance and gifting of property with respect to CAT thresholds. In this light, I will be keeping Capital Acquisitions Tax thresholds and other aspects of the tax under review, particularly in the context of preparations for Budget 2016 and the consequent Finance Bill. I do not, however, have any plans to modify an individual's threshold based on the number of his or her siblings.
105. Deputy Pearse Doherty asked the Minister for Finance if he will provide the individual measures which constitute the value added tax policy gap; and if he will provide the potential revenue foregone as a result of each measure. [19189/15]
View answerAs the Deputy is aware, the Value Added Tax policy gap measures the additional revenues that could in principle be collected if a uniform rate (i.e. the standard rate, which is 23% in Ireland) applied to all consumption, thereby eliminating the effects of reduced rates and exemptions.
Ireland operates a number of reduced VAT rates and exemptions which influence the size of Ireland's VAT policy gap. In this regard, VAT in Ireland is not purely treated as a revenue collecting mechanism. Ireland's VAT rate structure has clear social (e.g. 0% on food etc.) and economic (e.g. 9% on tourism related activities) goals which are in line with the EU VAT Directive.
The cost associated with abolishing exemptions and reduced rates of VAT would depend on the level at which the standard rate is fixed. At present the standard rate is 23%. However, it would in theory be possible to radically reduce the VAT policy gap on a revenue neutral basis - e.g. the Tax Strategy Group paper on VAT prepared in advance of Budget 2015 (available on the Department's website at http://finance.gov.ie/sites/default/files/14.04%20Selective%20VAT%20Issues.pdf) estimated that a standard rate of 15% (the lowest level permitted under the VAT Directive) could be achieved on a broadly revenue neutral basis by merging the zero, 9%, 13.5% and 23% rates. However, this would involve applying VAT to food, children's clothes and oral medicines as well as raising the VAT rate on a range of other areas of consumption such as fuel and hospitality services.
The cost of maintaining zero and reduced rates in the context of leaving the standard rate at its current level of 23% is set out in the following table. This is a straight line calculation and takes no account of changes to spending behaviours.
|
Rates |
Amount |
|
Zero rate items |
€2.1 billion |
|
9% |
€1.8 billion |
|
13.5% |
€2.7 billion |
These figures are the most recent figures provided by the Revenue Commissioners which are available in its online ready reckoner (available at www.revenue.ie/en/about/statistics/ready-reckoners.pdf).
Costings related to exempted services such as transport, education and charities are not available.
106. Deputy John Deasy asked the Minister for Finance if he will increase the maximum floor area of eligible buildings under the living city initiative, in view of concerns that the cap of 210 sq. m. per project will exclude many pre-1915 properties within the designated areas. [19201/15]
View answerThe Living City Initiative is a targeted tax incentive aimed at the regeneration of houses in the parts of the inner cities which are most in need of regeneration. The residential element of the relief was initially targeted at Georgian houses but the scope was later extended to buildings which were constructed before 1915 for use as a dwelling, following an independent ex ante cost benefit analysis by Indecon Economic Consultants.
Previous owner occupier and section 23 type schemes had a maximum floor area limit of 125 square metres. The Living City Initiative limit of 210 square metres is larger than previous schemes to take account of the fact that some pre-1915 houses tended to be constructed on a grander scale.
In addition, it is important to note that "house" includes any building or part of a building used or suitable for use as a dwelling. Many of the larger houses in the Special Regeneration Areas have been split into units, for example, there may be a commercial premises on the ground floor with a residential premises on the upper floors, or a house may be divided into a number of residential apartments. In that case, expenditure incurred on the unit that the owner occupies as his sole or main residence should qualify for relief where the necessary conditions are met.
As the scheme rolls out over the coming months, all aspects of it will be kept under review. It is important to note that I do not see this as a widespread initiative, as it is targeted at regenerating those areas which are most in need of attention.
107. Deputy Micheál Martin asked the Minister for Finance the amount in fees KPMG received for providing advice before, during and after the Irish Bank Resolution Corporation was liquidated; and if he will make a statement on the matter. [19207/15]
View answerI note that I answered a very similar question for the Deputy on 30th April 2015.
I am advised that due to commercial confidentiality and sensitivities, the Special Liquidators do not propose to provide details of amounts due and paid to KPMG by Irish Bank Resolution Corporation Limited prior to the appointment of the Special Liquidators. However, any amounts owing at the date of the appointment of the Special Liquidators rank as unsecured claims.
Amounts due and payable to KPMG since the appointment of the Special Liquidators are detailed in the progress update report of 12 March 2015, which is available on the Department of Finance website at http://www.finance.gov.ie/sites/default/files/DOF_IBRC_Progress%20update%20report%20to%2031%20Dec%2014.pdf.
Total fees of €76m were paid to KPMG (KPMG Special Liquidator team: €71.4m and KPMG migration team: €4.6m) to 31 December 2014 of which approximately €4.5 million was recovered from NAMA. In addition a rebate of €5 million was agreed with KPMG following discussions at the request of the Minister.
108. Deputy Pat Deering asked the Minister for Finance when tax relief for mortgages for principal residences will end; his plans to offset the negative financial impact of such a decision on mortgage holders. [19213/15]
View answerThe Deputy will be aware that mortgage interest relief has been abolished for homes purchased since 1 January 2013. Up until 2018 however, tax relief continues to be available for interest paid on all qualifying home loans taken out on or after 1 January 2004 and on or before 31 December 2012, regardless of whether the individuals concerned are first-time buyers or non-first-time buyers.
This Government is committed to helping address the particular problems faced by those that bought homes at the height of the property boom between 2004 and 2008. In this regard, in Budget 2012, I fulfilled the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period. This was the period during which house prices peaked. This 30% rate will continue to be applicable to these first-time buyers for the remaining years that mortgage interest relief continues to be available. In the absence of this change the mortgage interest relief available would have gradually reduced to a rate of 15%.
Single individuals, married couples and civil partners that are first-time buyers, qualify for mortgage interest relief for the first seven years of their mortgage up to a maximum ceiling of €10,000 and €20,000 respectively. Thereafter relief is restricted to ceilings of €3,000 and €6,000 respectively.
The system of mortgage interest relief is designed and targeted in such a way that the relief is of greater value in the early years of a qualifying loan where the interest represents a greater proportion of the repayment. Mortgage interest relief is of lesser value to individuals whose repayments are made up of a higher proportion of principal than interest, as would generally be the case for those who move in to the eighth and subsequent years of their loans. It is worth noting that the application of the ceilings already work to reduce the relief available in a gradual manner. In addition, as the amount of interest payable reduces as a mortgage is paid down, the level of mortgage interest relief also reduces in tandem.
Given the additional relief already available to those that purchased their homes between 2004 and 2008, over and above that available to other qualifying homeowners and given that mortgage interest relief has now lapsed in terms of new qualifying loans, I am not convinced of the merits of revisiting the provisions at this stage.
109. Deputy Michelle Mulherin asked the Minister for Finance the legal challenges or investigations in place which could prolong the process leading to the conclusion of the liquidation of the Irish Bank Resolution Corporation; and if in place, if he will provide details of the challenges or investigations; and if he will make a statement on the matter. [19237/15]
View answer110. Deputy Michelle Mulherin asked the Minister for Finance the timeframe for the conclusion of the liquidation of the Irish Bank Resolution Corporation; and if he will make a statement on the matter. [19252/15]
View answerI propose to take Questions Nos. 109 and 110 together.
It is too early at this stage to advise on the likely timeframe for conclusion of the liquidation. Significant progress has been made to date in winding up the affairs of IBRC but further work remains.
A progress update report published in March 2015, which is available on the Department of Finance website, highlights the progress which has been made since the liquidation of IBRC in February 2013 while also highlighting the key tasks remaining in the liquidation.
The liquidation of IBRC can only be concluded once all assets are realised, all creditor claims have been resolved (including those subject to litigation) and all surplus funds have been distributed to creditors.
There are a number of challenges given the volume of litigation involving IBRC and the length of time it takes for each case to be heard and determined. IBRC is currently party to over 700 legal cases which are at various stages in the litigation process.
A number of significant pieces of litigation have been delayed as a result of applications by the Office of the Director of Public Prosecutions requesting that criminal cases relating to individuals in IBRC take precedence over civil cases. This has resulted in the civil actions relating to liquidation issues being delayed until 2017/2018.
In addition, and while this is not expected to prolong the liquidation, the Special Liquidators have also been issued with a Direction to investigate various transactions and to report to me by 31 August 2015.
111. Deputy Michelle Mulherin asked the Minister for Finance the total cost since the establishment of the National Asset Management Agency for advisers, consultants, lawyers, auctioneers and public relations companies; if he will provide details of the top 20 cumulative payments over the years to third party organisations and persons for their services; and if he will make a statement on the matter. [19253/15]
View answerI am advised by NAMA that the breakdowns of the costs and supplier sought by the Deputy are as set out in the following table.
Total spend on advisers, consultants, lawyers and auctioneers: inception to 2014.
Legal, consulting and advisory fees as per the published accounts for 2010 to 2014 and include invoices paid to suppliers and the movement in expense accruals.
|
Legal, Consultants and advisory |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
Actual |
Actual |
Actual |
Actual |
Actual |
Actual |
|
|
Portfolio Management fees |
5,087 |
15,992 |
6,882 |
5,549 |
3,775 |
37,285 |
|
Legal fees |
3,311 |
9,478 |
4,634 |
2,975 |
8,574 |
28,973 |
|
Due diligence (further breakdown below) |
29,605 |
44,505 |
4,086 |
- |
- |
78,196 |
|
Other internal audit fees |
- |
- |
288 |
- |
- |
288 |
|
Tax fees |
463 |
562 |
531 |
1,223 |
754 |
3,533 |
|
Cross operational organisational project |
- |
- |
- |
193 |
43 |
236 |
|
Financial adviser and consultancy fees |
5,014 |
12 |
55 |
19 |
- |
5,100 |
|
Total |
43,480 |
70,549 |
16,476 |
9,959 |
13,146 |
153,610 |
|
Less due diligence costs recovered on loan acquisitions |
(29,605) |
(34,505) |
- |
- |
- |
(64,110) |
|
13,875 |
36,044 |
16,476 |
9,959 |
13,146 |
89,500 |
|
|
Due diligence breakdown |
||||||
|
Legal |
7,062 |
7,053 |
85 |
- |
- |
14,200 |
|
Loan valuation |
9,295 |
20,900 |
2,187 |
- |
- |
32,382 |
|
Property |
4,419 |
7,607 |
513 |
- |
- |
12,539 |
|
Audit |
8,829 |
8,945 |
1,301 |
- |
- |
19,075 |
|
Total non-recurring due diligence costs |
29,605 |
44,505 |
4,086 |
- |
- |
78,196 |
Note: NAMA do not make any payments to PR firms directly; payments are made by the NTMA and recharged to NAMA via the NTMA General recharge.
Top twenty cumulative payments to suppliers: inception to 2014
|
Supplier Name |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
KPMG |
7,477 |
9,971 |
4,615 |
1,067 |
458 |
23,588 |
|
PriceWaterhouse Coopers |
8,330 |
4,341 |
1,370 |
73 |
182 |
14,297 |
|
Ernst & Young Chartered Accountants |
1,521 |
6,867 |
113 |
0 |
0 |
8,501 |
|
Alvarez & Marsal Europe Llp |
2,214 |
4,410 |
482 |
0 |
0 |
7,106 |
|
FTI Consulting Ltd |
881 |
2,676 |
786 |
0 |
0 |
4,342 |
|
UHY Hacker young Llp |
659 |
2,096 |
1,155 |
0 |
0 |
3,909 |
|
UBS Limited |
0 |
0 |
50 |
0 |
3,850 |
3,900 |
|
Jones Lang LaSalle Ltd |
824 |
2,406 |
860 |
0 |
0 |
4,090 |
|
Deloitte & Touche |
1,438 |
1,487 |
7 |
0 |
0 |
2,933 |
|
Aon Risk Solutions |
0 |
459 |
934 |
788 |
649 |
2,830 |
|
Arthur Cox |
1,033 |
669 |
568 |
311 |
224 |
2,804 |
|
McCann Fitzgerald |
0 |
262 |
273 |
634 |
1,497 |
2,667 |
|
Hogan Lovells International Llp |
2,197 |
1,046 |
144 |
0 |
852 |
4,239 |
|
Eugene F Collins |
269 |
0 |
272 |
1,888 |
25 |
2,454 |
|
Grant Thornton |
123 |
1,029 |
1,372 |
567 |
57 |
3,146 |
|
Allen & Overy Llp |
922 |
679 |
583 |
527 |
0 |
2,711 |
|
Donal O'Buchalla & Co Ltd |
329 |
873 |
2 |
0 |
0 |
1,204 |
|
Dillon Eustace |
709 |
428 |
5 |
0 |
0 |
1,141 |
|
Smith & Williamson Freaney Ltd |
110 |
788 |
165 |
0 |
52 |
1,115 |
|
Eastdil Secured LLC |
0 |
0 |
0 |
1,109 |
0 |
1,109 |
Note: Top twenty supplier payments above are the cumulative of all expense types outlined in part one of the response which includes due diligence expenses incurred at the inception of NAMA which were later recovered from the Participating Institutions.
112. Deputy Michelle Mulherin asked the Minister for Finance the timeframe for the winding down of the National Asset Management Agency; and if he will make a statement on the matter. [19255/15]
View answerAs I recently highlighted, in my response to Dáil Question 12 on 7 May 2015, I am advised that the NAMA Chief Executive, in his opening address to the Public Accounts Committee on 18 December 2014, stated that NAMA is aiming to redeem a cumulative 80% (€24 billion) of its senior debt by the end of 2016.
To date, NAMA has redeemed a total of €17.8bn, that is 58%, of its senior debt. NAMA also hopes that it will have redeemed all of its senior bonds by the end of 2018 a full two years ahead of schedule. NAMA's success is providing increasing visibility regarding the elimination of the State's contingent liability through the accelerated redemption of NAMA's government guaranteed senior notes.
The NAMA Chief Executive stated that these targets were predicated on conditions in the Irish market remaining favourable and on NAMA being in a position to retain sufficient specialist staff to enable it to generate the optimal financial return from the realisation of its residual loan portfolio.
113. Deputy John McGuinness asked the Minister for Finance if his Department has examined the option of exempting all small and medium enterprises with turnover of less than €150,000 from regulatory requirements in order to lessen the administrative and financial burden; the estimated cost of this to the Exchequer; and if he will make a statement on the matter. [19256/15]
View answerAs Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation, while the day to day responsibility for the supervision of financial institutions is a matter for the Central Bank which is statutorily independent in the exercise of its regulatory functions.
In relation to regulatory requirements, the Central Bank does not place any requirements on SMEs other than those authorised as a financial service provider. While the Central Bank has certain protections in place for SMEs, for example the Code of Conduct for Business Lending to Small and Medium Enterprises, the Central Bank does not place any requirements on SMEs.
The Central Bank's risk-based framework for the supervision of regulated firms is proportionate to the nature, scale and complexity of a regulated financial services provider while, at the same time, ensuring an adequate level of protection for consumers who avail of the financial service. In that regard, the most significant firms - those with the ability to have the greatest impact on financial stability and the consumer - receive a high level of supervision. Conversely, smaller financial service providers that pose a much lower risk are supervised accordingly.
Other regulatory requirements for this sector are primarily a matter for my colleague, the Minister for Jobs, Enterprise and Innovation. However I can advise the Deputy of the following changes which I have implemented in order to assist small to medium enterprises in lessening the administrative and financial burden.
Small businesses with a low turnover can opt to be exempt from VAT thereby avoiding the administrative burden that VAT registration entails. The current thresholds are €37,500 for services and €75,000 for goods, in a 12 month period, these thresholds increased in 2008 from €35,000 and €70,000 for services and goods respectively. Any increase in the thresholds above the level of inflation would require a derogation from EU VAT law and agreement by all 28 Member States before it could be introduced.
Businesses with an annual turnover of €2 million or less can opt to account for VAT on a cash receipts basis, where VAT is not required to be paid until payment for the supply is received.
VAT returns are generally made bimonthly, but in order to reduce administrative burdens Revenue allow half-yearly filing to taxpayers with an annual VAT liability of under €3,000, and filing three times a year to taxpayers with an annual VAT liability of between €3,001 and €14,400.
In Finance Act 2014 the special relief reducing the standard rate of Alcohol Products Tax by 50% on beer produced in small independent breweries which produce not more than 20,000 hectolitres per annum was extended to apply to small independent breweries which produce not more than 30,000 hectolitres per annum.
I would also refer the Deputy to my written reply today to his question regarding the provisions exempting small and medium enterprises from corporation tax and exempting the investors in such enterprises from capital gains tax.
114. Deputy John McGuinness asked the Minister for Finance his plans to make changes to the capital acquisitions tax and capital gains tax rules in order to facilitate seamless business succession; and if he will make a statement on the matter. [19260/15]
View answerI am advised by the Revenue Commissioners that the following measures are currently in place to facilitate business succession.
Capital Gains Tax
Capital Gains Tax (CGT) is charged at the rate of 33% in respect of gains on the disposal of assets. The first €1,270 of gains made by an individual in any year is exempt from CGT.
A relief from CGT, known as retirement relief, is available where an individual aged 55 or over is disposing of business or agricultural assets. In order to qualify for the relief, those assets must have been owned and used for business or farming purposes for a period of 10 years prior to the disposal. Retirement relief has been available since the introduction of CGT in 1975.
In the case of disposals outside the family, full relief applies where the consideration for the disposal is €750,000 or less. The threshold is reduced to €500,000 where the person disposing of qualifying assets is aged 66 or over and the disposal takes place on or after 1 January 2014. Marginal relief applies where the consideration slightly exceeds the relevant thresholds.
Where the disposal is within the family, for example, a disposal by a parent to a son or daughter, there is no upper limit on the relief except where the person who is disposing of the qualifying assets is aged 66 or over and the disposal takes place on or after 1 January 2014. In such a case, the relief is capped at €3m.
Capital Acquisitions Tax
Capital Acquisitions Tax (CAT) is the overall name for both Gift and Inheritance tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.
For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the " Group threshold"- below which gift or inheritance tax does not arise.
There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.
Group A: tax free threshold €225,000 applies where the beneficiary is a child (including adopted child, stepchild, and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
Group B: tax free threshold €30,150 applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
Group C: tax free threshold €15,075 applies in all other cases.
Where a gift or inheritance consists of business property (such as land, buildings, plant and machinery), the value of the business may be reduced by 90% for CAT purposes provided certain conditions are met, for example, minimum periods of business usage of the property both before and after the gift or inheritance. This specific relief from CAT on the transfer of businesses by way of gift or inheritance was introduced in 1994 and is known as CAT Business Relief.
The introduction of business relief was an acknowledgement by the government of the day that it wished to encourage entrepreneurial activity and also prevent the forced sale of trading entities to pay significant CAT liabilities.
As stated, business relief reduces the taxable value of qualifying business property by 90% when calculating CAT.
Therefore, when business relief applies in full, business property with a market value of, say, €1m, would be treated as worth only €100,000 when calculating CAT. This can have the effect of reducing the effective rate of CAT from 33% to 3.3% on the transfer of a business. Business relief or CAT agricultural relief may also be availed of in the farming sector
It would be inappropriate for me to discuss specific potential measures which may be reviewed as part of the Budget process. However, I am open to the consideration of proposals the Deputy or others may wish to put forward as part of the pre-Budget consultation process.
115. Deputy John McGuinness asked the Minister for Finance if he has explored the possibility of offering a rebate on value added tax as paid by the public service; and if he will make a statement on the matter. [19265/15]
View answerGenerally, activities engaged in by public bodies are outside the scope of VAT and therefore they have no entitlement to VAT deductibility on their inputs and do not account for VAT on their supplies. Where their activities fall within the scope of VAT, for example, where their services are in competition with similar services provided by taxable private sector entities, they are required to register and account for VAT.
The provision of a VAT rebate scheme in relation to non-taxable services provided by public bodies would confer no benefit on the exchequer in that any cost reduction for a public body would be matched by an equivalent reduction in net tax revenues. In addition, competition between public and private sector bodies would be distorted as public bodies engaged in the provision of non-taxable services would have a cost advantage over private sector bodies engaged in the provision of similar non-taxable services.
The VAT treatment of public bodies generally is a complex policy issue, which is being examined currently at EU level. I look forward to considering whatever proposal emerges.
116. Deputy John McGuinness asked the Minister for Finance if he has examined exempting corporation tax due on small and medium enterprises; if he has explored exempting capital gains tax for all investors in small and medium enterprises; the effect of this on Exchequer revenue generation; and if he will make a statement on the matter. [19266/15]
View answerI would like to inform the Deputy that measures have been introduced in the Taxes Acts in recent years which benefit small and medium enterprises.
A 3-year tax relief for start-up companies commencing a new trade was introduced in 2009, and extended in subsequent Finance Bills, as a support to encourage new business development. The relief is granted in respect of the profits of a new trade and chargeable gains on the disposal of any assets used for the purposes of the new trade. The relief is granted by reducing the corporation tax on profits relating to the trade to nil where the total amount of corporation tax payable by the company for an accounting period does not exceed €40,000. Marginal relief is granted on a tapering basis where the total amount of corporation tax liability for the accounting period is between €40,000 and €60,000.
The qualifying period has been extended in subsequent Finance Acts, and the relief is now available to qualifying companies commencing to trade up to and including 2015. As part of one of the early extensions of the relief, in Finance Act 2011, the basis on which relief is computed was changed to link the reduction in corporation tax to the amount of employers' PRSI paid in an accounting period, subject to a limit of €5,000 per employee and an aggregate limit of €40,000. The purpose of this change was to better target the relief at companies generating employment.
Subsequent amendments have also extended the relief to provide that, where a start-up company does not have sufficient profits to claim the relief in a given year, any relief unclaimed in the first three years can be carried forward into future years for use against future corporation tax liabilities.
The total annual cost of the relief is €6m, and it was due to expire at the end of 2014. However in last year's Finance Bill it was extended to the end of 2015, in order to allow for a review of the operation of this measure to take place in 2015 to ensure that it meets the policy objectives of creating jobs and activity in Ireland and provides value for money for the Irish taxpayer.
I would also mention that certain small enterprise grants made under section 10(5) of the Údarás na Gaeltachta Act, 1979 and section 21(5)(a) (as amended by the Industrial Development (Amendment) Act, 1991) of the Industrial Development Act, 1986 are not liable to corporation tax under TCA, section 223.
Capital Gains Tax
Capital Gains Tax (CGT) is charged at the rate of 33% in respect of gains on the disposal of assets. The first €1,270 of gains made by an individual in any year is exempt from CGT.
The Finance Act 2014 provides relief from a future CGT liability for entrepreneurs who, on or after 1 January 2014 and on or before 31 December 2018, invest the proceeds of an earlier disposal in respect of which CGT was paid in new business ventures, which are subsequently sold.
A qualifying enterprise for the purpose of the relief is defined as an enterprise which, at the time of the making of the initial risk finance investment, is a micro, small or medium-sized enterprise, as defined in Article 2 of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 and which:
- has not been carrying on any business, trade or profession, or
- has been carrying on a trade, business or profession for less than 7 years.
The relief is in the form of a tax credit against any capital gains tax liability on the future disposal of chargeable business assets of the qualifying enterprise made more than 3 years after they were acquired. The tax credit will be the lower of:
- the CGT paid on the earlier disposal where all the consideration on the disposal, apart from any CGT paid, is invested in chargeable business assets (or a proportionate amount where less than the full amount is reinvested), and
- 50 per cent of the CGT payable on the disposal of chargeable business assets.
Chargeable business assets are assets used wholly for the purposes of a new business carried on by an individual or new ordinary shares issued on or after 1 January 2014 in a qualifying company in which the shareholder is a full-time working director. The assets must have been acquired at a cost of not less than €10,000. In the case of investment through a company, each shareholder must own not less than 15% of the shares in the qualifying company carrying on the new business (or in a holding company which owns 100% of the ordinary share capital of a qualifying company carrying on a new business) and must be a full-time working director in the qualifying company. Assets held as passive investments do not qualify for the relief.
If the proceeds of a disposal of chargeable business assets are in turn reinvested in another new business, CGT relief can be claimed on the same basis as outlined above. At the time of its introduction, the CGT entrepreneur relief was estimated to cost €20m in a full year.
I have no plans to introduce full exemptions on the lines of those referred to by the Deputy.
117. Deputy John McGuinness asked the Minister for Finance if his Department has explored applying a relief similar to the United Kingdom’s entrepreneurs' relief; the cost of implementing same; and if he will make a statement on the matter. [19267/15]
View answerAs the Deputy will be aware, my Department carried out a review of the Employment and Investment Incentive (EII) and Seed Capital Scheme (SCS) in advance of the recent Budget. Part of that review included a public consultation process. A report on this review was published on Budget Day and is available on the Budget website.
One of the options considered in the review was the introduction of a scheme similar to the UK EIS as there is a perception that the UK scheme is far more generous than the EII. However, the level of relief available under the UK scheme of 30% is less than the EII which provides up to 40% relief. The main advantage of the UK scheme appears to be the availability of CGT relief.
I would point out that I have introduced a scheme for entrepreneurs where CGT liability is deferred if they re-invest qualifying gains made in a company into another company.
As a result of the review carried out on the EII and SCS, I decided to make some amendments to the schemes. The EII will be amended as follows:
- The annual company limit is being increased from €2.5 million to €5 million and the lifetime limit from €10 million to €15 million;
- The minimum holding period for shares is being increased by 1 year to 4 years;
- Medium-sized companies in non-assisted areas will be included;
- Internationally traded financial services where certified by Enterprise Ireland will qualify;
- Hotels, guest houses and self-catering accommodation will remain eligible for a further 3 years; and
- The operating and managing of nursing homes will be included for 3 years.
These measures are subject to approval from the European Commission.
The SCS has been re-branded as "Start-Up Relief for Entrepreneurs" (SURE), which Minister Bruton and I launched last week. The scheme has been simplified and will be advertised and marketed by Local Enterprise Offices.
