budget 2009 perspective

Budget Budget

20092009

Breakfast BriefingBreakfast BriefingRiverside Park Hotel, 15/10/2008Riverside Park Hotel, 15/10/2008

“Nothing to fear, but fear itself!”

Budget 2009 Breakfast BriefingBudget 2009 Breakfast Briefing

�� Economic OverviewEconomic Overview

�� Impact for IndividualsImpact for Individuals

�� Impact on BusinessImpact on Business

�� Other Budget ChangesOther Budget Changes

�� Company Law DevelopmentsCompany Law Developments

�� Tax Policy & PracticeTax Policy & Practice

�� Year End Tax PlanningYear End Tax Planning

OVERVIEW

Economic OverviewEconomic Overview

Where next for the economy?Where next for the economy?

What What

goes goes

up,.....up,.....

The credit crunchThe credit crunch

Exchange Rate MovementsExchange Rate Movements

Consumer confidenceConsumer confidence

PositivesPositives

Budget 2009 Budget 2009 –– Impact for Impact for

Individual TaxpayersIndividual Taxpayers

Main ChangesMain Changes

–– Levy on All IncomeLevy on All Income

–– Restriction of Pension Contribution LimitRestriction of Pension Contribution Limit

–– Tax on SavingsTax on Savings

–– Mortgage Interest ReliefMortgage Interest Relief

Income Tax Levy

• What can you do to reduce your exposure:

• Reduce salary and maximise expenses

• Avail of e-working allowances (pay for your staff

broadband at home instead of a pay rise)

Income Levy %

Income up to €100,000 1%

Balance €100,100 2%

Payable by everyone

Main Tax BandMain Tax Band

Existing Proposed Increase

Standard Rate Tax Bands € € €

Single/Widowed Personal 35,400 36,400 1,000

Married, One Income 44,400 45,400 1,000

Married , Two Incomes 70,800 72,800 2,000

One Parent/Widowed Parent 39,400 40.400 1,000

PRSI Ceiling 50,700 52,000 1,300

No increase in tax credits

Restriction of Pension Contribution LimitRestriction of Pension Contribution Limit

Existing Proposed Decrease

Contribution Limit €275,239 €150,000 €125,239

Effect % Relief Reduction in

Tax Effect

Under 30 15% 18,786 7,890

30 to 39 20% 25,048 10,520

40-49 25% 31,310 13,150

50 to 54 30% 37,572 15,780

50 to 59 35% 43,834 18,410

60 and over 40% 50,096 21,040

Restriction of Pension Contribution LimitRestriction of Pension Contribution Limit

Impact on preliminary tax liabilityImpact on preliminary tax liability

31/10/2009 will be last year higher limit can be availed31/10/2009 will be last year higher limit can be availed

Other pension changesOther pension changes

No indexation of the Standard and Personal Fund No indexation of the Standard and Personal Fund

Thresholds'Thresholds'

Tax on SavingsTax on Savings

Deposit Interest Retention Tax 20% 23% 3%

Life Assurance policies and

investments funds

23% 26% 3%

Effective from 01/01/2009

Personal TaxationPersonal TaxationMortgage Interest Relief increased and the period over which Mortgage Interest Relief increased and the period over which ‘‘enhanced enhanced first time buyerfirst time buyer’’ relief may be claimed is the first seven years of the relief may be claimed is the first seven years of the mortgagemortgage

Existing Proposed Maximum Benefit

Single Married

Year s 1 and 2 20% 25% � €500 � €1,000

Years 3 to 5 20% 22.5% � €250 � €500

Non first time buyers 20% 15% � €500 � €1,000

Personal TaxationPersonal TaxationMarried Couple , Two Incomes earning Married Couple , Two Incomes earning €€60k, Two Children60k, Two Children

Budget 2009 Budget 2009 –– Impact for BusinessImpact for Business

Main ChangesMain Changes

Increase in VAT rateIncrease in VAT rate

Increase in CGT rateIncrease in CGT rate

3 year exemption from Corporation & Capital gains tax 3 year exemption from Corporation & Capital gains tax

for start up businessfor start up business

Capital allowance for some green technologiesCapital allowance for some green technologies

Stamp Duty reduction on commercial buildingsStamp Duty reduction on commercial buildings

Change in VAT RatesChange in VAT Rates

Standard Rate VAT 21% 21.5% 0.5%

Reduced Rate 13.5% 13.5% No Change

Flat Rate Farmers 5.2% 5.2% No Change

Changes take effect from 01 December 2008

Capital Gains TaxCapital Gains Tax

Capital Gains Tax 20% 22% 2%

Changes take effect from 15th October 2008

Corporation TaxCorporation Tax

Capital Allowances Scheme for certain energyCapital Allowances Scheme for certain energy--

efficient equipmentefficient equipment

Stamp Duty on Commercial BuildingsStamp Duty on Commercial Buildings

Aggregate Consideration Rate of Duty

Up to €10,000 Exempt€10,001 to €20,000 1%€20,001 to €30,000 2%€30,001 to €40,000 3%€40,001 to €70,000 4%€70,001 to €80,000 5%Over €80,000 6%

The reduction to 6% will provide attractive to foreign investments funds

Other Budget ChangesOther Budget Changes

Move to electronic transactionsMove to electronic transactionsExisting Proposed Increase

Stamp Duty on Cheques €0.30 €0.50 �€0.20

ATM Cards €5 €2.50 �€2.50

Debit Cards €5 €2.50 �€2.50

Combined ATM/Debit Cards €10 €5.00 �€5.00

Move to electronic transactionsMove to electronic transactions

Other Topical IssuesOther Topical Issues

VAT treatment of forfeited depositsVAT treatment of forfeited deposits

Relevant to hotels and other business which receive Relevant to hotels and other business which receive

deposits as part of their normal businessdeposits as part of their normal business

Where the deposit is forfeited and retained it is treated Where the deposit is forfeited and retained it is treated

as a cancelation charge and exempt from VATas a cancelation charge and exempt from VAT

The VAT paid on the deposit can be reclaimedThe VAT paid on the deposit can be reclaimed

VAT can be reclaimed for prior years subject to the four VAT can be reclaimed for prior years subject to the four

year rule.year rule.

VAT Reverse Charge for Principal VAT Reverse Charge for Principal

Contractors and SubContractors and Sub--contractorscontractors

More InformationMore Information

www.perspective.ie/whatsnew.htmlwww.perspective.ie/whatsnew.html

www.perspective.ie/budget.htmlwww.perspective.ie/budget.html

www.budget.gov.iewww.budget.gov.ie

Unit B4a, Enniscorthy Bus. Prk

Old Dublin Road, Enniscorthy

Co. Wexford.

michael@perspective.ie

www.perspective.ie

053 9242842

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