Matthew Britton, Sonya Manzor

The Finance Bill 2011 is expected to be enacted in the coming week. For information relating to the Finance Bill, as initiated, please click here. The most significant amendments to the Bill introduced at committee and report stages are set out below.

• Pay and File Deadlines: The existing pay and file deadlines for income tax and CGT (i.e. 31 October in the following year of assessment) have been retained. Interestingly, the proposed amendment to bring forward the CAT (gift & inheritance tax) pay and file deadline to 30 September remains and applies to returns delivered and tax paid on or after 21 January 2011.
• Universal Social Charge (“USC”): Higher USC rates were introduced for self-employed individuals who have relevant income exceeding €100,000. The rates have increased by 3% to 10% for individuals under 70 and to 7% for those who are 70 and over. The amendments also provide that all medical card holders, irrespective of age, will be subject to a USC rate of 4% on income above €16,016.
• Property Based Reliefs: The Bill confirmed that the proposed abolition of certain property-based reliefs and allowances has been postponed to come into effect by Ministerial Order and after the impact assessment is published.  The effective date of the legislation shall not be earlier than 60 days after the publication of the impact assessment.
• Corporation Tax Interest Relief: The Bill introduced certain restrictions on relief claimed by companies relating to interest incurred on intra-group loans where the loans were used to purchase assets from another group company.  The amendments have relaxed these restrictions specifically for certain leasing and securitisation transactions.
• Excess Bank Remuneration Charge (“EBRC”): A new taxation charge is being introduced on certain bank bonuses.  Where the bonuses are determined by reference to the individual’s or to the institution’s performance, the EBRC will replace the USC specifically in relation to that income.  Such income will be subject to the EBRC at a rate of 45% and will bring the effective rate of tax for such income up to 90% (including income tax of 41% and PRSI of 4%).  The EBRC will not apply where the bonus does not exceed €20,000 in a tax year.  The provisions are effective on the passing of the Finance Act, however if payments are made between 1 January 2011 and the date on which the act is passed, such payments have to be reported to Revenue by the employer before 30 June 2011. The provisions apply to employees of those institutions that receive financial support under Section 6.1 of the Credit Institutions (Financial Support) Act 2008 or the National Pensions Reserve Act 2000.
• Film Investment: The deadline for claiming tax relief for investment in films has been extended from 31 December 2012 to 31 December 2015.
• Preferential Loans: The definition of a preferential loan for benefit in kind (“BIK”) purposes has been amended.  Such a loan is now defined specifically with reference to interest paid as opposed to interest payable.  This means that the amount to be taken into account in calculating the BIK will only be reduced to take account of interest actually paid by the individual.
• Energy Efficient Expenditure: For a jointly assessed individual, relief for expenditure on energy efficient equipment will now only be available at the standard rate up to €15,000 (as opposed to the €20,000 initially published).
• Double Tax Agreements: The Finance Bill now gives effect to a number of double-taxation treaties which had been signed but had yet to come into effect.  Treaties with Albania, Hong Kong, Kuwait, Montenegro, Morocco, Singapore and United Arab Emirates will be in force following the passing of the Finance Bill.