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Finance Bill 2017

The Finance Bill was published yesterday. The Bill gives effect to the measures introduced in the Budget last week. Our summary of the Budget changes can be read in our Budget 2018 newsletter.The Finance Bill has also provided for a number of additional measures including:Stamp DutyThe Finance Bill provides for some transitional measures to avail of the 2% rate of stamp duty on commercial property transactions. Where a binding contract was in place before 11 October 2017 and the Deed is executed on or before 31 December 2017, the 2% rate of stamp duty will apply.The Finance Bill has also made changes to Consanguinity Relief, which reduces the stamp duty rate to 1% in respect of farm transfers within the family, by removing the upper age limit of 67.  It is somewhat disappointing that the consanguinity relief provisions have not been extended to other inter-family transfers of commercial property which may prevent early business transfers. Anti-Avoidance ProvisionsCertain anti-avoidance provisions can apply where gains or income arise to non-residents (including trusts, companies and individuals) in circumstances where Irish residents have an interest in the income or gains. In such cases, Irish tax may be imposed on Irish residents who are deemed to have an interest in the income or gains.Finance Act 2015 and Finance Act 2016 amended the relevant legislation such that the anti-avoidance legislation would not be triggered if it was proven to the Revenue Commissioners that the transactions giving rise to income or gains of the non-resident were undertaken for bona fide commercial purposes and were not part of an arrangement, one of the main purposes of which, was to avoid tax.The amendments have been deemed incompatible with EU law and therefore further amendments are proposed in Finance Bill 2017. In this regard, where the non-resident to which the income or gains accrue is resident in an EU or EEA territory, Finance Bill 2017 has removed the requirement for a taxpayer to prove that the transactions are bona fide commercial and are not part of an arrangement to avoid tax. Instead, the taxpayer must only show that the non-resident carries on “genuine economic activities” where they are tax resident.Proving genuine economic activity should be less onerous than the current requirements, however the term genuine economic activity has not been defined for the purpose of these amendments and therefore ambiguity remains. Capital Acquisitions TaxIn Finance Act 2016, significant changes were made to the Private Dwelling exemption under Section 86.  The exemption was available on gifts and inheritances of dwellings, subject to conditions.  Section 86 CATCA has been further amended in Finance Bill 2017 to provide that the Dwelling House Exemption will not be withdrawn if a donor dies within two years of a gift of a dwelling house to a dependant relative. In addition, the legislation has been amended to provide that a disponer is not required to have occupied the property as their only or main residence at the date of his or her death where the property is acquired by a dependant relative by way of inheritance. In our detailed analysis of the Finance Bill provisions (to follow in due course), we will summarise the circumstances in which Section 86 relief will be available going forward. VATThe Finance Bill clarifies the application of the VAT exemption to educational services and vocational training. In line with a Revenue eBrief issued earlier this year, it is now clear that a body providing vocational training does not need to be “a recognised body” in order to qualify for the exemption. However, it appears from the wording of the Finance Bill that only vocational training provided by a “body”, rather than an individual, can qualify for the VAT exemption.  We will provide a comprehensive overview of the Finance Bill measures in due course once we have studied the provisions in detail. Thanks to everyone who attended our recent Budget Briefing. It was another successful year and we enjoyed a great turnout. Some photos of the event can be viewed below.   [gallery ids="1081,1080,1079,1078,1077,1076,1083,1075,1073,1068,1069,1072,1084,1065,1070,1071,1064,1066,1067,1063,1061"] 

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CTS Budget 2018 Newsletter

Minister for Finance, Mr Paschal Donohoe TD, announced his first Budget earlier today in the Dáil. For the first time in over 10 years, a Budget was delivered with the Government’s books balanced. However, despite continued strong growth rates in the Irish economy, reductions in unemployment and increases in tax revenues year on year, the Minister resisted the temptation to let go of the reins. Government debt levels and personal debt levels remain high in Ireland and therefore limit the scope for tax relieving packages. Hopefully, this means that the lessons of the past have been learnt.There were modest personal tax relieving measures in the Budget but the Minister has outlined plans to amalgamate PRSI and USC in the years to come. Marginal tax rates in Ireland remain high (up to 55%) and there is a lot more work to be done by the Minister on the personal tax front in future years.The Budget was announced with the continued uncertainty that Brexit has brought to the Irish economy with a small package of measures aimed at assisting SMEs affected by Brexit. It looks like the Brexit story will continue to run for some time.The Budget was also announced with the backdrop of the continued housing crisis and increase in the number of homeless living in Ireland. The Minister has therefore introduced a number of measures aimed at stimulating property development and has adopted a carrot and stick approach. The carrot has come in the form of a reduction in the seven year holding period for the CGT relief for properties to four years, with the hope that it will incentivise land owners to release land for development. The stick is in the form of an increase in the development levy for certain vacant sites to 7% for 2020 and it remains to be seen whether this measure will result in an increase in the supply of housing.The introduction of a 6% rate of stamp duty for commercial property is likely to have a negative impact on the commercial property market and in particular it will have a detrimental effect on property transfers within families as part of succession strategies. Consanguinity Relief has been retained for farm transfers (subject to conditions) and perhaps a form of Consanguinity Relief should again be introduced for other businesses to encourage early transfers within the family.We invite you to review our analysis of the Budget in this newsletter and the Cahill Taxation team are available to deal with any queries that you may have on the details.

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Income Tax Filing Deadline

It is a busy time around the country for accountants and tax practitioners as we approach the income tax filing deadline. Income tax returns for 2016 must be filed by 31 October 2017 (14 November 2017 when paying and filing online through ROS). Failure to submit on time may result in interest and surcharges arising, so we would encourage our clients to consider their income tax position as soon as possible.Discussed below are some topics which we consider may be of note to practitioners and taxpayers when preparing 2016 income tax returns.Tax Credits & ReliefsWhile many tax credits have been phased out in recent years, there remain some tax credits and reliefs worth considering when filing personal income tax returns. Some of the credits and reliefs introduced in recent budgets are as follows:Earned Income Credit: Self-employed persons are entitled to an Earned Income tax credit since 1 January 2016. The amount of this credit in 2016 was €550. This is separate to the PAYE tax credit. Where the taxpayer qualifies for a PAYE credit and an Earned Income credit, the combined value cannot exceed the PAYE credit. Start your own Business Relief: Where an individual has been long-term unemployed (at least 12 months) and then starts their own business, they may qualify for tax relief on the profits from their business for the first two years. This is subject to a limit of €40,000 per year and the relief can only be claimed once. This scheme is due to end on 31 December 2018. Help to Buy Incentive: Certain first time property buyers, who bought or built their home since 19 July 2016, are entitled to a refund of Irish income tax and DIRT paid over the previous four years, subject to a maximum of €20,000.Some of the other credits and reliefs of note when preparing tax returns are set out in the attached  Tax Credits & Reliefs Help Sheet.Reminder of “Guillotine” ProvisionsThe capital allowance “guillotine” provisions were introduced with effect from 1 January 2015. These provisions provide for a termination of the carry-forward of unused capital allowances after the tax life of the property in question has ended. Certain allowances are permitted to be carried forward to 2016 and beyond until the tax life of the property expires.When self-assessing whether the “guillotine” provisions apply when preparing 2016 tax returns, we recommend that a review is carried out to determine the nature and content of capital allowances and losses forward to 2016. Reliefs such as Section 23-type-relief and Section 50 relief are not affected by the “guillotine” provisions so it is vital that the content of losses forward is reviewed. We have found that the review can be a fruitful exercise for clients as it can result in the preservation of allowances and losses that were thought to have been lost by the guillotine provisions. In addition a review can also highlight where allowances are no longer available, thereby preventing interest and penalties from arising as a result of incorrect claims.We should also point out that allowances that were previously “restricted” as a result of the application of the High Earners Restriction are not affected by the “guillotine” provisions. These allowances are attractive as they are available against total income. These allowances (known as Section 485F allowances) should therefore be separately identified in the Form 11 for 2016 in order to ensure maximum relief is claimed.If you require assistance when filing your own or your clients' tax returns please feel free to contact us.

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Calling all Landlords – Are you entitled to a tax refund in respect of NPPR charges paid in 2013?

As you may be aware, Revenue lost a High Court challenge last November in relation to the deductibility of the Non-Principal Private Residence (NPPR) charge against rental income.Prior to the High Court ruling, Revenue’s stated position was that the NPPR charge was not deductible on the basis that the charge was not a “rate levied by a local authority”. Revenue argued that a national charge collected locally was distinct from a local authority rate such that the NPPR charge was distinguishable from commercial rates. However, the High Court ruled that monies collected from the NPPR charge were directed locally rather than centrally and therefore were similar to ordinary rates charged by a local authority.On foot of the High Court ruling, taxpayers who were in receipt of rental income in 2013 may be entitled to amend their tax return for 2013 to include a deduction in respect of the NPPR charge paid in 2013. The inclusion of a deduction for NPPR should give rise to a refund of tax paid or an increase in rental losses carried forward. Refunds will not be available for years prior to 2013 due to the four-year time limit for claiming repayments of tax.It should be noted that Revenue have appealed the High Court decision to the Court of Appeal and therefore repayment claims will not be processed pending the outcome of the appeal.In order to submit a protective refund claim for 2013, a notification form (click here) should be completed and forwarded to Revenue before 31 December 2017 using Revenue’s MyEnquiries portal.If you require any assistance in relation to submitting a refund claim for 2013 before the 31 December deadline, please do not hesitate to contact us.

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CTS’ Budget 2018 Breakfast Briefing

The Budget for 2018 will be announced on Tuesday, 10th of October 2017 and we would like to invite you to our annual Budget Breakfast Briefing the following morning, 11th of October 2017, in the Temple Gate Hotel Ennis.Breakfast will commence at 7.30am with the presentations to follow at 8.00am.Along with the presentations from our colleagues in CTS, Professor Eoin Reeves, Head of the Department of Economics at University of Limerick will attend as a guest speaker and he will provide us with an overview of the economic climate.Please note that this is a free event so booking is essential.To secure your place today please contact Diane at info@cahilltaxation.ie or on 065 684 0630.We hope to see you there!

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Entrepreneur Relief – Not So Simple?

BackgroundEntrepreneur relief from Capital Gains Tax (“CGT”) was introduced to reduce the rate of CGT applicable to sales of businesses or shares in companies by entrepreneurs. The relief was part of the stimulus package introduced to encourage and reward those who take risks which benefit the economy. Entrepreneur relief, in its current guise, was introduced in Finance Act 2015 and came into effect from 1 January 2016.The ReliefThe relief reduces the rate of CGT to 10% (from the current standard rate of 33%) in respect of sales of qualifying assets. The relief currently only applies to the first €1 million of gains. The maximum tax relief available is therefore €230,000 per individual.The relief was not of significant value prior to 1 January 2017 as, in 2016, it only operated to reduce the CGT rate from 33% to 20%. Due to the value of the relief since the reduction of the CGT rate from 1 January 2017 to 10%, it is now necessary for advisers to reconsider traditional tax planning mechanisms and for entrepreneurs to consider their business structures to ensure that same do not preclude future claims for Entrepreneur Relief.ConditionsThe conditions for the relief vary depending on whether the assets being disposed of are shares or assets used for the purposes of a sole trade.In the case of a sole trader, the individual must have owned the assets for a continuous period of three out of the five years ending with the disposal and the assets must be used for the purposes of a “qualifying business” carried on by the individual. Broadly, a qualifying business is anything other than the holding of investments or the development or letting of land.In the case of shares in a company, the criteria may be summarised as follows:The individual must own at least 5% of the ordinary share capital of the company; The individual must have owned the shares for a continuous period of three out of the five years ending with the disposal; The shares must be shares in a company which carries on a qualifying business or in a holding company of a group where each of the subsidiary companies carry on a qualifying business; and The individual must have spent not less than 50% of their working time in the service of that company (or the group, as appropriate) working in a technical or managerial capacity and must have done so for a continuous period of three out of the five years ending with the disposal of the shares.Potential ObstaclesThe above conditions may appear certain and easily satisfied however a number of potential pitfalls exist. Some of the issues which have arisen to date include the following:The impact of interspousal transfers and whether the ownership period of one spouse can be aggregated with that of the other spouse. The potential denial of relief where there is an investment company or a dormant company in a corporate group. Whether, due to the working time requirement, an entrepreneur with multiple directorships/employments may be precluded from claiming the relief if they have not formed a corporate group. The impact of incorporation of a sole trade. Unlike for Retirement Relief, the period of trading as a sole trader cannot be aggregated with the period of ownership of shares where Section 600 relief from CGT applied on the incorporation of the sole trade. The interpretation of the word “development”. As set out above, the development of land is excluded from the definition of “qualifying business” and therefore does not qualify for relief. Does this mean that building contractors, carpenters, plumbers etc should be denied relief? It is assumed that such businesses should not be caught as long as the entity does not develop the property for sale, however the point has not been clarified. Whether Entrepreneur Relief is available if a trading company is sold and its holding company is then liquidated.ConclusionDue to the tax savings which may arise where the relief is available and the potential pitfalls, Entrepreneur Relief should be considered in detail before any business assets or shares are disposed of by an individual.In addition, the relief should be considered before any corporate restructurings, incorporations or interspousal transfers are implemented as it will be necessary to ensure that such transactions do not preclude the relief from applying to future transactions.It should be noted that Entrepreneur Relief and Retirement Relief can apply to the same transaction. As both reliefs are mandatory where the relevant conditions are met, an individual’s Entrepreneur Relief threshold could be eroded with no tax benefit arising if such a situation arises. Effectively, any gain arising would be taxed at the 10% rate under Entrepreneur Relief and then the CGT would be relieved by Retirement Relief. The structure and timing of transactions should therefore be considered for individuals approaching their 55th birthday or individuals who are over 55.Lastly, it should be noted that Entrepreneur Relief is expected to be enhanced over the next few years. The provisions may therefore be amended in the forthcoming budget.If you have any questions on the matter of Entrepreneur Relief or would like to find out whether you qualify for the relief, please contact us for further information or to arrange a consultation.

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Welcome to the Team

Annemarie O'BrienWe are delighted to announce that Annemarie O’Brien from Newport, Co. Tipperary joined our practice earlier in the year as a senior tax manager.Before joining CTS, Annemarie trained and progressed to manager level in Grant Thornton in Limerick. While training to become a Chartered Tax Adviser, Annemarie achieved first place in Ireland in her Part 2 exams.Since joining CTS in May, Annemarie has already established herself as an integral part of the practice. She has a vast knowledge and expertise across the various tax heads and is particularly strong in relation to technical queries and legislative interpretation.In her role as senior tax manager with CTS, Annemarie is heavily involved in Corporate Restructurings, Corporation Tax, VAT, Personal Tax and Succession Planning.Despite being from Tipperary, Annemarie has no sports knowledge whatsoever and Fergal's hurling commentary is lost on her! Instead she is an avid animal lover and volunteers with animal welfare groups in her spare time. Corey ScahillCorey graduated with a first class honours degree in Law & Accounting from University of Limerick in 2017 and is currently studying with the Irish Tax Institute to become a Chartered Tax Adviser.Corey has previously completed a work placement with Ernst and Young (EY) in Galway as part of his degree.A committed sportsperson from Mayo, Corey plays hurling for the Castlebar Mitchels Club and is a current member of the Mayo Senior Hurling team. He represented Ireland in the International Hurling/Shinty competition in 2016. While going to college in UL, Corey also dedicated his summers to underage coaching in his local club.  Congratulations CarolineWe are pleased to announce the promotion of our colleague Caroline Kennedy to the position of Tax Manager.Caroline joined CTS four years ago as a tax trainee after graduating from NUIG with a Bachelor of Civil Law, followed by a Masters of Law awarded by UCC. She qualified as Chartered Tax Adviser in 2016 after years of dedicated and continuous study.Caroline has progressed rapidly and has met all of the challenges she was presented with. She developed and demonstrated a strong aptitude for taxation and grew into the role of a manager very naturally.We would like to congratulate Caroline on her outstanding performance in the years leading up to her promotion.

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Deadline for Making Disclosures of Foreign Income & Assets

 Many individuals will have received a letter from the Revenue Commissioners in recent days relating to the upcoming 30 April 2017 deadline for disclosing undeclared offshore assets and income. Who is affected by the deadline? The matter was discussed at length at a recent joint Revenue/Irish Tax Institute conference. The effect of not complying with the deadline on “onshore” liabilities was in particular discussed. Non-compliance with the 30 April 2017 deadline not only affects “offshore” income and gains but also adversely affects domestic, i.e. onshore matters. For this reason, it is important that all taxpayers carry out a review of their tax position to determine whether the 30 April 2017 deadline is relevant.An example will best illustrate the wide application of the new provisions. Example An individual makes an error in the calculation of their Irish trading income which results in additional assessable income of €25,000. The same individual was also in receipt of US pension income in the sum of €20,000 which has not been declared in their tax returns. The foreign pension income increases the individual’s tax liability in the year by greater than 15%. The individual makes a disclosure to Revenue in relation to both the Irish and offshore liabilities on, say, 1 June 2017.As a result of the new legislative changes, both the Irish and offshore liabilities will be subject to a 75% penalty (assuming full co-operation by the taxpayer) and statutory interest rates.  The settlement will also be published in the quarterly Tax Defaulters’ List if the liabilities are in excess of €35,000.If the disclosure was made on or before 30 April 2017, the penalties would be capped at 10%, statutory interest would be capped (currently at circa 88%) and there would be no publication in the quarterly Tax Defaulters’ List.To assist individuals, Revenue have sent letters (see sample letter here) to all self-assessed taxpayers as a reminder to undertake a review of their tax returns and consider whether they need to make a disclosure in advance of the deadline. Revenue also issued a press release in relation to the offshore deadline in the past days which is available here.We at CTS previously discussed the changes to offshore disclosures in great detail in our December Newsletter which is available here. Definition of “Offshore” It is important to note that the definition of “offshore” applies to all countries except the Republic of Ireland (Northern Ireland is regarded as “offshore”). Offshore assets and income will therefore not be limited to tax havens traditionally associated with the word “offshore”, such as the Isle of Man or the Cayman Islands.We attach at Appendix 1 a sample list of items which will be regarded as “offshore matters” for the purposes of the new offshore regime. Summary The wide-reaching application of the new provisions (perhaps unintentional?) needs to be considered urgently by all taxpayers with offshore assets and income.Owing to the potential adverse consequences arising in relation to offshore matters post 30 April 2017 and the impact of non-disclosure in relation to "onshore" matters, it is important that all taxpayers review their affairs thoroughly to determine whether the changes affect them and to take immediate action if required.If you feel that the above may affect you or if you would like to discuss the proposed changes please feel free to contact us.

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Congratulations Kevin

We are pleased to announce the promotion of our colleague Kevin Lambe to the position of Tax Manager.Kevin joined CTS in March 2012 as a trainee and qualified as a Chartered Tax Advisor in 2014. Congratulating Kevin on his promotion, Managing Director Fergal Cahill commented that "Kevin has developed and demonstrated a strong aptitude and flair for taxation and his technical knowledge has evolved considerably during his time in Cahill Taxation".In his role as a Tax Manager, Kevin will have responsibility for the firm's technical knowledge centre and has particular expertise in Personal Tax Planning, Revenue Audits and Disclosures, Business Sales and Acquisitions. Kevin is also our in-house expert on all things VAT related.Congratulations to Kevin!

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Kerry Co-op – Patronage Shares

The Revenue Commissioners have launched an investigation into the issue of so-called “patronage shares” by Kerry Co-op. Revenue letters have recently been received by up to 400 milk suppliers in the South West region inviting them to make a Qualifying Disclosure in relation to the Kerry Co-op shares within 21 days.The shares in question were issued to farmers based on the volume of milk supplied to Kerry Group. Revenue is seeking Income Tax, USC and PRSI on the value of the shares received by the farmers. Revenue’s position is that the shares should have been included as part of the farmer’s trading income due to the business relationship between the farmers and Kerry Group. Revenue has placed a valuation on the shares of €65 per share in 2011, €75 per share in 2012 and €90 per share in 2013. The tax demands issued by Revenue to individual farmers are understood to range from between €15,000 to €30,000. It is believed that the matter came to Revenue’s attention due to the existence of a “grey market” in which the patronage shares are being traded at prices as high as €220. While Kerry Co-op shares theoretically have a nominal value, Kerry Co-op owns approximately 14% of Kerry Group plc, which is valued at around €1.6bn. Kerry Co-op are contesting Revenue’s interpretation of the tax treatment applying to the Co-op shares and are seeking to bring a test case before the Tax Appeal Commissioners in relation to the matter. It is hoped that if this test case is brought, farmers affected may not be required to make payments until this test case is determined, although this has not yet been confirmed. Revenue are expected to write to farmers affected by this investigation in the coming days. It is likely that Revenue will broaden its investigation in time to include the issue of patronage shares by other Co-ops. If any of our clients are potentially affected by the above and require our assistance please let us know.

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Beneficial Ownership Register

In addition to the Companies (Accounting) Bill 2016, the Department of Finance has just published the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (“the 2016 Regulations”) which creates a requirement for companies (including companies limited by guarantee) to maintain a beneficial ownership register.This places an obligation on corporate and other legal entities incorporated within the State to hold adequate, accurate and current information of their beneficial ownership, including details of the beneficial owner’s name, date of birth, nationality and residential address.A “Beneficial Owner” is defined as an individual who ultimately holds more than 25% ownership or control of a company.The 2016 Regulations therefore create greater transparency in respect of corporate ownership and limit the benefit of having shares held in trust by another individual/entity.The 2016 Regulations have a commencement date of 15 November 2016 and Irish companies are required to create and maintain an internal beneficial ownership register from this date. Companies will also be required to submit details of beneficial ownership to a central register, which is required to be established by 26 June 2017 under the 2016 Regulations. Company Directors and Secretaries should therefore ensure that a beneficial ownership register is prepared on behalf of the company, as soon as possible.

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Last chance to make a Qualifying Disclosure of Offshore Income and Assets – Act Now!

Background In the wake of the “Panama Papers”, Finance Bill 2016 introduces a proposed new measure in relation to foreign income, gains and assets, which aims to counteract offshore tax evasion. If the proposed measure is enacted as published, it will mean that from 1 May 2017, individuals holding offshore accounts or trusts will no longer be able to avail of the benefits of a qualifying disclosure.The proposed changes are part of the recent developments in the area of mandatory automatic financial information exchange between countries, known as the Common Reporting Standard (“CRS”). Over 100 jurisdictions have committed to exchange information held by financial institutions regarding their non-resident customers under the CRS, with the first data exchanges due to take place in September 2017.Other recent initiatives as part of the OECD common reporting standard include the establishment of compulsory registration of beneficial ownership of corporates and trusts, referred to separately in this newsletter. Disclosures affected by proposed changes The new provisions will apply where a disclosure relates directly or indirectly to any of the following:an account held or situated in a country or territory outside Ireland; income or gains arising from a source, or accruing, in a country or territory outside Ireland; property situated in a country or territory outside Ireland.“Offshore” therefore includes all countries outside of Ireland and is not limited to tax havens such as the Isle of Man or the Cayman Islands.Furthermore, where tax liabilities arise within Ireland as well as liabilities relating to offshore matters, a qualifying disclosure will be unavailable in respect of all of those liabilities (except in limited circumstances). Implications The new provisions will mean that with effect from 1 May 2017, persons with liabilities involving offshore matters would be liable to higher penalty rates, the settlement would be liable for publication in the quarterly Defaulters’ List, and the person concerned could also be the subject of a criminal prosecution.In this regard, the Minister announced the introduction of a new strict liability criminal offence for failure to return details of offshore accounts in the Budget earlier this year, similar to that introduced in the UK. This strict liability criminal offence has not been included in the Finance Bill. However, Revenue have the power to refer certain tax offences to the DPP for criminal prosecution with Judges having the power to impose custodial sentences of up to 5 years and fines of up to €127,000 where a taxpayer is convicted on indictment for serious tax evasion.In 2015, Revenue secured 28 criminal convictions for tax and duty evasion and were pursuing criminal prosecutions in 48 other cases at year end, with a further 122 under investigation with a view to prosecution. Action required before 1 May 2017 Taxpayers are being afforded an opportunity to make a qualifying disclosure in relation to offshore matters before 1 May 2017, subject to the general rules and requirements for making such a disclosure as set out in the Code of Practice for Revenue Audit and other Compliance Interventions. In making such a qualifying disclosure before the deadline of 1 May 2017, taxpayers can avail of reduced penalties, non-publication and reassurance that the matter will not be referred to the DPP for criminal prosecution.At Cahill Taxation Services, we have experience and expertise in assisting individuals with offshore taxation issues. Therefore, anybody affected by these new provisions should contact us in confidence on 065 684 0630 or email us. Opportunities While every case will differ, the benefits and certainty of making a qualifying disclosure should not be underestimated and therefore the 1 May 2017 deadline should be seen as an opportunity for taxpayers to review their offshore tax filing affairs and address any issues as required. Case Study To illustrate the benefit of making a disclosure, Revenue has provided the following example in their relevant FAQ document:"John is a consultant and operates as a sole trader. In 2009, after a better than expected year, he put €200,000 into a bank account in Northern Ireland. The €200,000 had not been included in his accounts and consequently had not been declared for tax purposes. A marginal rate of tax, PRSI and levies of 51% was chargeable at the time. John withdrew the full amount and closed the account in 2015 when the balance was €221,500. If John takes the opportunity to make a qualifying disclosure now, his tax liability and statutory interest would be as follows: Treatment under Current Disclosure Regime Tax, PRSI, Levies & USC: € 114,800Interest [from 2009 to 1 November 2016]: € 61,549Penalty 10% € 11,480Total due € 187,829 John’s settlement will not be published on the list of tax defaulters and Revenue will not take steps to initiate a prosecution. Should John not avail of a qualifying disclosure on or before 30 April 2017 and is subsequently identified by Revenue as being a non-compliant taxpayer the liabilities due to Revenue would be as follows: Treatment post Budget Initiative Tax, PRSI, Levies & USC: € 114,800Interest [from 2009 to 1 November 2016]: € 61,549Penalty 100%: € 114,800Total due € 291,149  John’s settlement will be published in the list of tax defaulters and Revenue may take steps to initiate a prosecution. Therefore, in cases similar to the above example, a significant advantage in voluntarily disclosing the tax default to Revenue is indisputable. If you would like to discuss the proposed changes please feel free to contact us.

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Companies (Accounting) Bill 2016

The Companies (Accounting) Bill 2016 (the "Bill"), which transposes Directive 2013/34/EU ("the Directive") into Irish law, was published earlier this year and is currently in the final stages of being enacted. The Bill makes considerable changes to unlimited companies’ filing requirements and we would therefore recommend that directors of unlimited companies review their corporate structures and consider whether they will be required to publish accounts under the new legislation. We have set out below a summary of the proposed changes under the Bill.  The Directive was due to be transposed by 20 July 2015 and therefore the Bill is expected to be enacted in January 2017. Unlimited Companies – End of Non-Filing Structures The Bill, as drafted, will abolish “non-filing structures” in their current form for unlimited companies (“ULCs”) and the scope for unlimited companies to avoid filing accounts will be reduced significantly. The Bill achieves this by expanding the definition of a “designated ULC” in Section 1274 of the Companies Act 2014 to include additional corporate structures, which cannot avail of the accounts exemption. The new definition is very broad and provides (amongst others) that a ULC will be required to file financial statements if, at any time during the relevant financial year, it “has been a holding company of an undertaking which was at that time limited”. It was expected that the Bill would require certain “non-filing structures” with non-EEA companies in the group to be required to file accounts. However, the Bill as drafted is much wider than originally envisaged and also appears to require simpler structures, such as an Irish ULC holding shares in an Irish limited company, to file accounts. Therefore, if the Bill in its current form is enacted, most unlimited companies will be required to file accounts. Effective date for new filing requirements It is not clear when the new filing requirements will first apply and it may apply to financial years beginning on or after 1 January 2016. However, it is hoped that the changes will apply to financial years beginning on or after 1 January 2017 due to the delay in the publication of the Bill. Confirmation of the financial year to which the changes will first apply will only be available once the Bill is enacted and the relevant section commenced by Ministerial Order. Increase in Thresholds & Introduction of “Micro Company” A summary of the existing and new thresholds proposed under the Bill are available here (a company must not exceed 2 of the 3 thresholds). Accounting Compliance Requirements The Bill also brings about some positive changes. The compliance requirements have been expanded, to increase the existing thresholds for “small” and “medium” companies and a new “micro company” has been introduced, with simplified compliance requirements. Micro companies will also be exempt from disclosing directors’ remuneration and from preparing a directors’ report.   

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Changes to Section 86 – Dwelling House Exemption

The Dwelling House Exemption, in its current form, provides an exemption from Capital Acquisition Tax (“CAT”) for beneficiaries who have occupied a house as their main residence for three years or more, subject to certain conditions. Significant changes to the Dwelling House Exemption, provided for under Section 86 of the CAT Consolidation Act 2003, have been included in Finance Bill 2016 at Committee Stage.  In summary, it is proposed that the Dwelling House Exemption will only apply in the following limited set of circumstances: Gifts to a relative aged 65 or over; Gifts to an incapacitated relative; or An inheritance (where the disponer occupied the house as his/her main residence at his/her date of death). There was concern by Revenue, that the Dwelling House Exemption was being used contrary to the original intentions of the legislation when it was introduced hence the introduction of these changes.However, while it was expected that some changes would be made to the Dwelling House Exemption (such as capping the relief), the extent of the proposed changes has much wider application and will therefore impact upon a lot of individuals. For example, where a proposed beneficiary is under 65 and in the midst of the three year period of occupation, it appears that the Dwelling House Exemption will not be available on a gift of the house after Finance Bill 2016 has been enacted. On a more positive note, the exemption has been expanded to provide that any periods of absence from the house for employment purposes will not be disregarded when determining whether the beneficiary has occupied the house for the requisite 6 year clawback period after the gift/inheritance. It is envisaged that the changes will be introduced with effect from the date of enactment of the Finance Bill, which is expected to take place in late December 2016. If you would like to discuss the proposed changes please contact us as soon as possible, to determine your position before the enactment of the Finance Bill.

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Income Tax Returns 2015 – Useful Tips

Accountants and Tax Practitioners around the country are busy in the run up to the Income Tax filing deadline on 10 November 2016.We have found that the two most topical issues when preparing 2015 Income Tax returns are the application of the "Guillotine" Provisions and the Order of Set-Off of Losses and Capital Allowances."Guillotine" ProvisionsIn the 2015 tax returns, it is important that individuals assess whether the capital allowance "guillotine" provisions apply to tax incentives on their books.The "guillotine" provisions kicked in at the end of 2014 where the tax life of an accelerated property had already expired. However, certain allowances are permitted to be carried forward to 2015 where the tax life had not yet expired.When self-assessing whether the "guillotine" provisions apply when preparing the 2015 tax return, we recommend that a review is carried out to determine the nature and content of capital allowances and losses forward to 2015. Reliefs such as Section 23-type-relief and Section 50 (Student Accommodation) are not affected by the "guillotine" provisions so it is vital that the content of losses forward is reviewed in this respect. We have found that the review can be a fruitful exercise for clients as it quite often results in the preservation of allowances and losses that were thought to have been lost by the provisions.We should also point out that allowances that were previously "restricted" as a result of the application of the High Earners Restriction (known as Section 485F allowances) are not affected by the "guillotine" provisions. These allowances are attractive in that they are available against total income. It is therefore crucial that the allowances are separately identified in the Form 11 for 2015. Order of Set-Off of Losses & Capital AllowancesAnother important matter for practitioners to be mindful of when preparing the Income Tax returns is the order of set-off of losses and capital allowances. Revenue eBrief No. 24/16 provides some useful guidance in this regard.You will find a brief summary of the order of set-off as follows:Case V capital allowance forward (Non-Specified) Case V capital allowances forward (Specified) Current year Case V capital allowances (Non-Specified) Current year Case V capital allowances (Specified) Case V losses forward (Non-Specified) Case V losses forward (Specified) (e.g. Section 23 relief)If you require any assistance or have any queries in relation to the above please get in contact.

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Finance Bill 2016

The Finance Bill 2016 was published on 20 October 2016 and is currently at Committee Stage. There were very few additional items included in the Finance Bill that were not already announced in the Budget. Details of the provisions announced in the Budget are covered in detail in our newsletter.Once the Bill has been enacted, we will provide our comments and in-depth analysis. 

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Our Services at A Glance – Succession Planning

Fergal Cahill of CTS, recently made a presentation to members of the farming community on succession planning. The presentation was hosted by the Clare IFA and AIB as part of their nationwide Agri Information Evening sessions and a large audience attended on the night.The message in Fergal's presentation was that farms and lands enjoy a unique status in Ireland with farms being passed from one generation to the next for hundreds of years.When considering a farm transfer it is important to formulate a plan.  We would encourage all landowners to ask themselves the following key questions when considering succession planning:Who is the successor? What assets are transferring? What is the reason for the transfer? What are the alternatives?At CTS, we guide and advise business and landowners throughout the succession planning process. In doing so, we put our clients’ personal preferences and financial securities at the forefront of the thought process while also ensuring tax liabilities are minimised at the same time. If the process is correctly managed, we find that reliefs from Capital Gains Tax and Capital Acquisition Tax ensure that liabilities arising are confined to stamp duty.We also find that a similar strategy can be applied in other business sectors. The tax reliefs are available so it is a case of ensuring that the conditions are satisfied.Having advised and implemented hundreds of asset exchanges in recent years, CTS is your one-stop shop for all your succession planning needs. We have successfully implemented succession plans in a variety of sectors including retail, construction, agribusiness, nursing homes, property development, pharmacies, accommodation and many more.At CTS, we manage all aspects of the succession process. We liaise closely with our clients’ accountants and solicitors to ensure compliance with accounting and legal requirements. The focus is on ensuring the availability of reliefs and minimising tax leakage on the asset transfer.If you’d like to discuss any of your succession planning needs please contact us by email or call our offices on 065 6840630.  

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Budget 2017 Breakfast Briefing

Budget 2017 was announced last month and like every year our tax experts in Cahill Taxation Services worked late into the little hours of the morning to bring our valued clients a summary of the key areas covered in the Budget. In association with the Ennis Chamber of Commerce, we hosted what was another successful Budget Breakfast Briefing. We enjoyed a great turnout and fantastic hospitality provided by the staff of the Temple Gate Hotel in Ennis. If you haven’t already read it, we’d like to invite you to share our perspective of the Budget 2017 by reviewing our newsletter.  To stay connected with all things tax and to keep informed about any other upcoming events make sure to follow us on Twitter and Facebook. [gallery columns="4" ids="705,703,702,701,700,699,698,695,694,693,691,686,685,684,687,682,680,681,679,678" orderby="rand"]

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Income Tax Return Deadline Fast Approaching

Please note that the Income Tax deadline for tax returns relating to the year 2015 is approaching fast. The pay and file deadline for self-assessed income tax payers is 31 October 2016. If you opt to file and pay your tax online, using the Revenue Online Systems (“ROS”), the deadline is extended until 10 November 2016.

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Current Job Opening: SENIOR TAX MANAGER/DIRECTOR

Cahill Taxation Services offers exciting career opportunities in a dynamic and fast-paced work environment.Drawn from a variety of backgrounds, our people are as unique as our clients. Combined with fantastic personalities our team have years of experience and professional qualifications, making CTS a great place in which to pursue a career in tax.We are currently seeking to recruit a SENIOR TAX MANAGER / DIRECTOR to join our progressive tax boutique. If you are interested or know somebody who might be a good fit, please get in contact with us today.

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Budget 2017 Presentation

To view our presentation from yesterday's Budget 2017 Breakfast Briefing please click here.Below are a few impressions from the briefing which we hope you found informative.We hope to see you again next year.         [gallery columns="2" ids="706,687,702,685,678,679,683,680,681,682,684,686,688,690,691,692,693,695,694,701,696,697,698,699,700,703,705,704"]

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Budget 2017

Budget 2017 was announced by the Minister for Finance, Mr Michael Noonan, earlier today. Cahill Taxation’s tax experts have analysed the details in Budget 2017 and we invite you to share our perspective on the Budget by reviewing our newsletter. While there is no doubt that, in recent years, Ireland is operating in significantly improved times economically, 2016 has been a somewhat tumultuous year on the economic front.  The Budget is therefore cautious and conservative in content which is what was expected in the first Budget of the minority government operating within a limited fiscal space. The uncertainties presented by Brexit and the publication of the negative EU State Aid ruling on Apple's  tax structure in Ireland were no doubt to the forefront of the Minister’s thoughts when drafting the Budget. The Budget in particular focussed on a number of key areas including:The Budget presented a number of measures aimed at supporting the housing market including the “Help-to-Buy” scheme for first time buyers and the partial removal of interest relief restrictions for residential landlords. The Government introduced measures aimed at encouraging entrepreneurship in Ireland through the enhancement of the Capital Gains Tax Relief for entrepreneurs and an increase of €400 to the tax credit for the self-employed.  However, there is a significant amount to be done in this area before Ireland can be considered a "go-to" place for budding entrepreneurs. The Budget introduced measures aimed at supporting the rural economy with reliefs for the agricultural sector in particular.  However, the measures are likely to have limited impact  and will do little to encourage businesses to set up in rural Ireland.As is the norm on Budget Day, the Minister used his speech to reiterate the long-term intention to maintain the 12.5% corporation tax rate.  However, the Government has importantly signalled a review of our corporate tax system with an assessment of its impact on investment. Such a review is to be welcomed, particularly in times when our corporate tax regime is under much scrutiny internationally. Apart from minor changes to USC and tax credits, no material changes were made to our personal tax rates.  The entry level to the top rate of income tax in Ireland remains at a comparatively low €33,800 when compared with other OECD countries. There is much work to be done in the area of personal taxes and this area should become a key priority of the Government in the years ahead to ensure that Ireland remains an attractive country to work and live in. If you have any questions on what Budget 2017 means for you or your business, please feel free to contact a member of the Cahill Taxation team. To view the slides from our Budget 2017 Breakfast Briefing please click here.

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Budget 2017 Breakfast Briefing

 Cahill Taxation Services' annual Budget Breakfast Briefing is back! The Budget for 2017 will be announced on Tuesday, 11th of October 2016. CTS would like to invite you to our annual CTS Budget 2017 Breakfast Briefing the following morning, 12th of October  2016, in the Temple Gate Hotel, Ennis. Breakfast will commence at 7.30am with the presentation to follow at 8.00am. Speakers:Fergal Cahill Sinéad Dooley Caroline Kennedy This is a free event so booking is essential.To secure your place today please contact Diane at info@cahilltaxation.ie or on 065 684 0630.We hope to see you there!

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Companies Act 2014 – Deadline: 30 November 2016

The deadline for conversion of existing Private Limited Companies to Private Companies Limited by Shares (“LTD”) and Designated Activity Companies (“DAC”) in accordance with the Companies Act 2014 is 30 November 2016 (31 August 2016 by ordinary resolution for DAC).We strongly recommend that all existing Private Limited Companies convert to a LTD or DAC in advance of that deadline. As most existing Private Limited Companies have not yet converted, there is likely to be a rush in advance of the 30 November 2016 deadline. We therefore recommend that the conversion documentation is submitted to the CRO by 31 August 2016 to ensure that the conversion is processed well in advance of the 30 November 2016 deadline.We have set out a comparison of both company types. We understand from the Companies Registration Office (“CRO”) that the most popular conversion type to date has been to an LTD.If you would like to discuss the most suitable type for your company, please feel free to contact us at info@cahilltaxation.ie.

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Income Tax Reform Plan

The Programme for a Partnership Government (“PPG”) published an Income Tax Reform Plan ("The Plan") on 21 July 2016. The purpose of the Income Tax Reform Plan is to review the current personal taxation system and to consider possible options for a future reform within the existing system. Some of the key proposals in the Plan are as follows: 1. Mortgage Interest ReliefMortgage Interest Relief is due to expire on 31 December 2017. It is proposed that the relief may be extended under various options up to 2020. One of three options mentioned is to phase out the relief over a period of time by reducing the rate of the relief to 75% of the current level in 2018, to 50% in 2019, to 25% in 2010 and nil thereafter. Another option is to phase out the relief by reducing the ceiling on allowable interest. Currently the ceiling for an individual is €3,000 (€6,000 for a couple). The final option considered is to continue the relief on a tapered basis for first time buyers who purchased property between 2004 and 2008 only and to reduce the relief to 75% of its current level in 2018, to 50% in 2019, to 25% in 2020 and Nil thereafter. 2. Universal Social ChargeThe PPG has committed to phase out the USC and proposed three options in the Plan. The first option involves a gradual reduction in USC rates within the existing USC bands (generally by 0.5%). Existing Rate Band Ceilings Suggested Rate1% On first €12,012 0.5%3% €12,013 to €18,668 1.5%5.5% €18,669 to €70,044 2.25%8% Over €70,044 6.5%3% surcharge On self-employed income over €100,000 1.5% surcharge The second option proposes a gradual increase in the USC band ceilings and the phased abolition of the 3% surcharge for the self-employed.For example, by 2019, the 1% band would apply to incomes between €0 and €35,000, 3% band for incomes between €35,001 and €65,000 and the 5.5% band would apply to incomes between €65,001 and €100,100. Existing BandUSC Tax Rates Suggested Ceiling0 - €12,012 1% 0 - €35,000€12,013 to €18,668 3% €35,001 – €65,000€18,669 to €70,044 5.5% €65,001 - €100,100Over €70,044 8% Over €100,000On self-employed income over €100,000 3% surcharge To be abolished The final option sets out an increase in the exemption threshold from €13,000 to €36,000, in which case USC would only be charged on income above €36,000. 3. Home Carer CreditThe home carer credit increased to €1,000 in Budget 2016. The Plan proposes to further increase the credit by amounts of between €100 and €250 in 2017. 4. Earned Income CreditAn Earned Income Tax Credit of €550 was introduced from 1 January 2016 for self-employed individuals and business owners who are not eligible for the PAYE tax credit. This is being introduced in order to address the current disparity in the take home pay of employees and self-employed individuals.The maximum relief for 2016 is €550 and the plan proposes to increase this credit to €1,650 by 2018. 5. PAYE Tax Credit and Earned Income CreditThe Plan proposes tapering out both of these credits for “high earners” from 2018 at a rate of 5% per €1,000 of income. It is proposed that a “high earner” for this purpose would be an individual earning either €80,000 (with the credit fully tapering out at income of €100,000) or €100,000 (with the credit fully tapering out at an income of €120,000). Summary The proposals in the Plan should result in tax savings for most taxpayers which is to be welcomed and a good starting point.However, it is most likely that, the marginal tax rate will exceed 50%. Our marginal rate of income tax and the entry point at which individuals pay tax at that rate, do not compare favourably on an international level. Therefore, further changes are required to the Irish personal tax system to make Ireland more competitive with other jurisdictions and encourage further foreign direct investment. 

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New Tax Appeal System

With effect from 21 March 2016, the Finance (Tax Appeals) Act, 2015 has changed the tax appeals process by replacing the old Appeals Commissioners process with a new tax appeals process. Since 21 March 2016 a taxpayer who disagrees with a Revenue assessment will no longer go to the Revenue Commissioners in the first instance but instead lodges an appeal directly to the Tax Appeal Commissioners (TAC).A brief summary of other key changes introduced include the following:A 30 day appeals deadline applies across all tax heads. The TAC decides whether to accept or refuse appeals. The right to appeal proceedings in front of the Circuit Court is no longer available to the Taxpayer. The only form of appeal for the Taxpayers is to the High Court on a point of law. In this instance, the TAC will now prepare the case for the High Court hearing. The TAC are now required to publish anonymised versions of their determinations within 90 days of notifying the parties of the decision. Determinations can be found on the new Tax Appeals website . There is no time limit for the Appeals Commissioners on making the determination only that it is made as soon as practicable. The default position is that hearings are held in public unless a request for a private hearing is made. Evidence may now be taken in oral or written testimony. The TAC may determine on a matter under appeal without an oral hearing. There is no longer a requirement for the taxpayer to express dissatisfaction if aggrieved with the determination in order to protect their right of appeal to the High Court on a point of law. The Rules and Procedures of the TAC are available at here.For cases that were in dispute with Revenue before 21 March 2016 but which had not been referred to the Appeal Commissioners, Revenue have written to the taxpayer to provide the appellant with the opportunity to enter settlement negotiations or to have their appeal referred to the TAC. The taxpayer is provided with 30 days to respond to these “Settlement” letters failing which the matter will be referred to the TAC. Where any such cases remain unsettled by 1 September 2016, they will be transmitted to the TAC.We in CTS believe that the new Tax Appeals System brings a lot of positives and the procedural changes should improve the efficiency of the appeals system. The increased transparency due to the publication of determinations is also to be welcomed. However as the right of appeal to the Circuit Court is no longer available, it is very important that the drafting of the Notice of Appeal and the appeal hearing are prepared and conducted as favourably as possible for the taxpayer.Should you have any queries in relation to the TAC or require our assistance in the appeals process, we would be delighted to assist. 

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Revenue Audits – The Year Ahead

In this article, Fergal Cahill and Sinéad Dooley of CTS offer practical advice to assist practitioners in preparing for Revenue Audits. They discuss the type and range of Revenue interventions, current trends, sectors under scrutiny and what’s in store. They conclude with a series of recommendations.Click here to view article, Revenue Audits - The Year Ahead,(From the June 2016 edition of Accountancy Plus, the official journal of the Institute of Certified Public Accountants in Ireland).

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Our People – Caroline Kennedy

Congratulations to our colleague Caroline who has achieved Chartered Tax Adviser status earlier on in the year, conferred by the Irish Tax Institute. Caroline has already excelled academically having previously obtained a Bachelor of Civil Law (NUIG) and LLM, Master of Law (UCC) qualifications.Caroline specialises in Corporate Restructurings, Personal Tax Planning, Income Tax and Succession Planning. She works closely with solicitors and accountants as well as directly with clients.CTS Founder, Fergal Cahill, congratulated Caroline, noting that her exam success shows the commitment of individual staff and the company as a whole to continuous professional development and to ensuring that CTS clients can expect the highest levels of qualification, experience and professionalism.

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