ANALYSIS:The Bill combines measures to raise revenues and clamp down on tax avoidance, writes Arthur Beesley
THE INTRODUCTION of a 3 per cent levy on annual income above €250,120 was the dominant item in the Finance Bill, but the legislation included several other measures to bolster the Government's fiscal position and clamp down on tax avoidance.
However, Minister for Finance Brian Lenihan made it clear that the totality of the measures set out in the Bill would not alter the fiscal projections set out in the Budget. The 3 per cent income levy would yield an additional €60 million for the exchequer, he said, offsetting the impact of exempting those earning up to €18,304 from the 1 per cent levy that would apply on income up to €100,000. Further exemptions will apply to the first €20,000 of income received by single people aged 65 and over and on the first €40,000 received by married people of that age.
In an effort to increase tax revenues from the "superwealthy", all visits to Ireland by non-tax residents will be counted against their permitted days in the State.
Revenue-raising measures in the Bill include an increase to 22 per cent from 20 per cent in capital acquisitions tax on inheritances and gifts, a change that will yield an additional €30 million.
Mr Lenihan is also bringing forward to January 31st from October 31st the payment date for capital gains tax on gains made in December "to facilitate a potential cash-flow benefit" to the exchequer next year.
In response to concern expressed by regional airports that they would not benefit from the lower air travel tax rate of €2 per journey, the rate will apply to departures from "any Irish airport where the destination is 300km or less from Dublin airport".
The Government said measures under which all second-hand vehicles, including used imports, would be subject to checks by the national car-testing service "as a condition of registration" would come into force in the first half of 2010. Foreign-registered vehicles kept within the State for more than 42 days will be recorded on a new temporary register.
Anti-avoidance measures include the imposition of stamp duty on transactions for the "exchange" of property as distinct from the "sale" of property.
Another loophole, under which the issuers of corporate bonds could generate "artificial losses" and use such losses to shelter "real" capital gains, will be closed.
The Bill imposes an income tax charge on employees or company directors who exchange rights to acquire shares or assets in a business and where the substituted right is never exercised.
In addition, new provisions will oblige advisers engaged in making offshore discretionary trusts to provide "information" on such trusts to the Revenue Commissioners. Such provisions will also empower authorised officers acting for the Revenue to request a party to a settlement of such a trust to provide details of the settlement.
The Department of Finance declined last night to identify the two employee share ownership schemes that will be subject to new provisions empowering the Revenue to withdraw "favourable tax treatment" if the company in question fails to make the necessary returns of information.
Separate measures will place on a statutory footing the Revenue's practice of recovering tax penalties from the estate of a deceased person only "where the person either agreed in writing to pay the penalties or a court has determined, before the person's death, that the person was liable to the penalties".
The Bill extends by three months the cut-off point for claims made under the Business Expansion Scheme and Seed Capital Scheme where the required statements are submitted within the prevailing time by firms that have raised funding under such schemes.
