Personal Tax Matters

There are currently four taxes on income – income tax, PRSI, the health levy and the recently introduced income levy. Each tax is individually calculated. The Commission recommends that there should be a simple system for the collection of taxation on income. The Commission is recommending that there should be a three rate tax structure but has no disclosed what the third rate shall be.

Residence Rules

• The Commission is recommending that the existing tax residency rules (which are based on the number of days physically present in Ireland) incorporate some additional criteria for determining residence in the case of an Irish Citizen. This additional Criterion shall include permanent home, centre of vital interest and centre of personal interest tests.

Childcare

• The Commission recommends the abolition of capital allowances for childcare facilities, the income tax exemption for childcare service providers and the exemption of employer provided childcare from the BIK charge.
• It also recommends subjecting child benefit to income taxation.

Housing

• The Commission recommends retaining mortgage interest relief for first time buyers only and the abolition of tax relief for rental payments on private rented accommodation and for local authority charges.
• The Commission recommends abolishing the rent a room scheme, noting that this relief was enacted when rented accommodation was in short supply.
• It also recommends the retention of the capital gains tax exemption on the disposal of a principal private residence.

Employee Taxation

• The Commission recommends that income tax relief for ex-gratia termination payments should continue but the amount of the exempt payment should be limited to € 200,000 and the rules for Standard Capital Superannuation Benefit and top slicing relief should be simplified.

• The Commission recommends that the income tax exemption for approved profit sharing schemes (APPSSs) should continue while removing the PRSI, health contribution levy and income levy exemptions.

• The Commission recommends discounting the income tax exemption for approved share options and that the taxable value of option gains should be liable to both employer and employee PRSI and to the health contribution levy and the income levy.
• The Commission recommends that the single lifetime deduction of up to € 6,350 available to an employee who subscribes for shares in an employer company be removed.

PRSI

• The Commission is recommending that the employee PRSI ceiling € currently € 75,036) be abolished.

• The Commission is recommending that the PRSI base be widened to include items such as investment income (e.g. rents and dividends) and profits from the exercise of share options.

• The Commission is also recommending that, subject to the payment of a minimum annual PRSI contribution are that pension contributions made by self employed individuals, who will qualify for relief from PRSI and reading losses should be deductable for PRSI purposes.

High Earners

• The Commission is recommending that existing restrictions on the use of certain tax reliefs apply to those earning over € 250,000 (rather than the current level of € 500,000) and should apply on a graduated basis on those earning between € 200,000 and € 250,000.

 

 

Karl Foley

Press Officer
John McCarrick and Associates
11 Dunville Avenue, Rathmines
Telephone:01 4960102
Fax: 01 4973717
Email: info@jmccarrick.com

 

 

 

« Go back to News Headlines