The ceiling for tax relief on local authority waste charges will be removed in the Finance Bill 2002, which also contains measures to penalise more severely institutions failing to collect Deposit Income Retention Tax (DIRT) and to give the Revenue greater powers to tackle tobacco and drug smugglers.
Tentatively scheduled for February 7th, the Bill will also include measures restricting the availability of capital allowances for investment in hospitals and sports clinics; allow bookmakers to absorb the new 2 per cent betting tax (reduced from 5 per cent) rather than pass it on to the customers; and exempt Tote bets placed with bookmakers from betting duty. In addition, bets made on the Tote with off-course bookmakers will be exempt from Value Added Tax bringing the tax treatment into line with on-course betting.
But measures to change the taxation of gains under Employee Share Option Plans, which had been expected, were not included in the Preliminary List of Measures for Finance Bill 2002 announced by the Department of Finance yesterday.
Householders who pay their waste charges to their local authorities on time will be able to claim tax relief at the standard rate on the full amount paid when the Finance Bill measures are enacted. The increase will mean an annual saving of €31 (£24.40) for a household paying annual charges of €350.
Outlining the list of measures, Department of Finance Assistant Secretary Ms Brigid McManus rejected any suggestion that the removal of the €195 ceiling for tax relief would clear the way for local authorities to increase their waste charges. She said a number of councils had informed the Department their charges were above the €195 ceiling.
Measures to increase the penalties on institutions failing to deduct a tax on behalf of the Exchequer, such as DIRT, follow the criticisms of the system by the Dail Committee of Public Accounts (PAC) which investigated the DIRT scandal. PAC said significantly more than the £3 million collected could have been extracted from the financial institutions if these penalties were "tax geared" rather than fixed sum amounts.
Tax-geared penalties, imposed on individuals, for example where incorrect income tax returns are filed or in fraud cases, could be 100 to 200 per cent of the amount of unpaid tax.
The Finance Bill will bring failure to deduct DIRT or Dividend Withholding Tax within the scope of the tax-geared penalties, which will mean higher penalties for institutions and will also remove the six-year time limit for imposing DIRT penalties for institutions.
The £3 million collected could have been as high as £50-£70 million if these penalties were in place at the time the banks were making their DIRT Scandal settlements, Ms McManus said. The banks also paid £70 million in tax and interest of £100 million to settle their DIRT tax liabilities.
The Bill will contain the detailed measures required to enact the Budget 2002 measures.
Other measures in preliminary list
Farmers selling land for road building or widening under Compulsory Purchase Orders, where the land has been let for five years or less, will be able to get Capital Gains Tax rollover relief and retirement relief under certain conditions and they will not have to pay CGT until they have received their compensation payments. The issues were raised by the Irish Farmers' Association during the sale negotiations but the agreement was not conditional on the Minister introducing the measures, the Department said.
Credit Unions: an amendment will ensure that members will not be able to get double tax exemptions through either having an exempt share account and an exempt deposit account in a credit union or an exempt share acount in a credit union and an exempt deposit account in a bank or building society.
Capital Gains Tax retirement relief will be extended to personally held assets (held outside the family company) as long as these assets are sold with the family company to the same person/persons.
Capital allowances for investment in independent hospitals and sports clinics will be restricted. Corporate investors, property developers and individual investors involved in the management or running of the hospital will not qualify. The changes are required under EU State aid rules, the Department said.