Changeover to cumulative system of deduction for USC

Since 1 January 2012, the way in which the Universal Social Charge (USC) is deducted by employers has been brought into line with the way in which the PAYE system operates in respect of Income Tax. The version of the Tax Credit Certificate (known as a P2C) that Revenue issues to employers/pension providers for Income Tax purposes also contains information on rates and thresholds for USC purposes.

However, the rates/thresholds for USC purposes are not relevant in relation to certain types of payment that are not chargeable to USC, i.e. social welfare-type payments (see next section). The purpose of this eBrief is to advise employers how they should treat such payments for USC purposes.

Exempt social welfare-type payments

Payments made by the Department of Social Protection (DSP) are not chargeable to USC. This exempt treatment also applies to certain other payments that are similar to social welfare payments. These are paid by other Government Departments and agencies such as FAS (now part of DSP) and the Department of Education and Skills, etc.

Those making such payments (employers, Departments, agencies, etc.) should not deduct USC when they are making these payments. Nor should these payments be recorded for USC purposes on forms P45, P60 and P35. Where Income Tax applies they should be recorded as normal.

Any non-exempt payments should be treated as normal and recorded on the forms mentioned above.

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** The above article was published by the Revenue Commissioners - eBrief No. 05/12

Importance of Recording the Correct PPS Number for Employees

When filing the P35 Return for 2011, employers and agents are reminded of the importance of recording the correct PPS number for each employee on the return. This will ensure that an employees details are updated correctly to the Revenue and Department of Social Protection (DSP) computer systems with the minimum of delay. The PPS number should match the PPS number on the most recent Tax Credit Certificate issued by Revenue to the employer.

If, as an employer, you have an employee in respect of whom you have a PPS number but have not received a Tax Credits Certificate from Revenue, this indicates that the person concerned has not been registered with Revenue for this particular employment. Before this persons pay, tax and PRSI details are filed with Revenue on the P35, you should immediately advise the appropriate Revenue District of the persons name, address and PPS Number so that and nbsp;Revenue can register the employee as employed with you and issue a Tax Credits Certificate.

When you have a Tax Credits Certificate for that employee, you can then include that persons pay, tax and PRSI details on the P35 return. If you have filed the P35 return already (without that persons details), then please file a supplementary P35 for that employee.

If you have enquiries on any aspect of the P35 Return filing, please contact the P35 Helpline on 1890 254565.

** The above article was published by the Revenue Commissioners - eBrief No. 03/12

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Terms and conditions apply. and nbsp; Click here for further details.

As announced in the and nbsp;Budget last week, the employer rebate of statutory redundancy payments is reduced from 60% to 15% with effect from 1 January 2012.

The Redundancy Payments Acts 1967-2007 provide a minimum entitlement to a redundancy payment for employees who have a set period of service with the employer. Not all employees are entitled to the statutory redundancy payment, even where a redundancy situation exists. There are specific redundancy procedures which employers and employees must follow in order to comply with the legislation.

If you have any queries in relation to the above, and nbsp; please contact Brenda Flynn, HR Manager at bflynn@rbk.ie.

Budget 2012 Analysis from Mairead OGrady, Tax Partner, Russell Brennan Keane.

Budget 2012 is unique in that the proposed expenditure cuts were announced a day ahead of the tax changes and also many of its provisions were well flagged ahead of Budget Day. The financial adjustment was set at and euro;3.8bn with and euro;2.2bn coming from expenditure cuts and and euro;1.6bn coming from increased taxation. Despite all the advance leaks and speculation the Minister managed to keep a number of the changes secret until the Budget Speech especially in the area of incentives to business and measures to kick start the property market.

Commenting on the tax changes in Budget 2012 Mairead OGrady, Taxation Partner of Russell Brennan Keane said that and quot;the Minister has repeated his stated policy of not increasing the rates of income tax but instead he focused on indirect taxes and on broadening the tax base. He was very reassuring in terms of maintaining the 12.5% corporation tax rate. He surprised many with the changes designed to help companies to export; the special assignee relief and the measures to try to assist the property market. and nbsp;The expected increases in Vat (but no further increases during the term of the Government) and the increased rate of 30% on capital taxes were confirmed. and quot;

A summary of the major changes introduced by the Minister are as follows;

• The first and euro;100,000 of R andD expenditure of all companies will be allowed on a volume basis for the purpose of the R andD Tax Credit;
• The outsourcing arrangements for R andD purposes to be improved;
• There will be an option to use some portion of the R andD credit to reward key employees who have been involved in the development of R andD;
• The corporate tax exemption for new start up companies is being extended for the next three years;
• The introduction of a Special Assignee Relief Programme;
• Smaller companies will also be able to avail of the planned foreign earnings deduction where they plan to expand their export markets into the BRICs countries (Brazil, Russia, India and China);
• No change in the 12.5% Corporate Tax Rate;
• No changes in the rates; credits or allowances for income tax;
• IFSC - new package of incentives to be introduced;
• First time buyers will get mortgage interest relief at a rate of 25% with non-first time buyers will benefit from relief at 15%;
• A surcharge of 5% (essentially a higher rate of USC) to apply from 1 January 2012 to income in excess of and euro;100,000. This will only apply to individuals and to income which has been sheltered by property reliefs;
• Investors in accelerated schemes will no longer be able to use any allowances beyond the tax life of the scheme where the tax life ends after 1 Jan 2015;
• Stamp duty on commercial property reduced to 2% with effect from 6^th Dec 2012;
• The household charge to be introduced for 2012 with some limited exemptions;
• Capital Acquisitions Tax increased to 30% and exempt threasholds reduced from and euro;332,084 to and euro;250,000 and proportionate reductions in other threshold exemptions;
• Capital Gains Tax rate to increase from 25% to 30% from 6^th Dec 2011;
• There will be a special new exemption from capital gains tax (CGT) on properties bought from the 6^th Dec 2011 to the end of 2013. Where such properties are held for seven years the gains accrued in that period will not attract CGT;
• Deposit Interest Retention Tax (DIRT) to increase to 30%;
• Vat to increase from 21% to 23% effect from the 1^st Jan 2012;
• New incentives to encourage the transfer of businesses and farms earlier;
• The Government have seemed to abandon the proposed legislation on the upward only rent reviews and instead NAMA will provide certain reliefs for the properties that it controls.

The Minister said that Budget changes the economic strategy to put a much greater focus on growth and employment. It balances the need to restore confidence in Irelands fiscal position with the key objective of supporting economic growth that delivers jobs.

Commenting further on these measures Mairead OGrady said and quot;the changes to the property reliefs signalled in last years Budget have effectively been abandoned by the Minister and the current position will remain unchanged until 2014. and nbsp; This is to be welcomed as those who are in negative equity will have time to assess the impact for them and plan accordingly. The incentives to export orientated companies; the changes to encourage earlier transfer of businesses and confirmation that there will be no further changes to Vat are also to be welcomed. However it will be some time before we can assess whether the efforts of the Minster are enough to bring about growth leading to increases in employment and quot;.

For more information please contact Mairead OGrady on 01) 6440100 or 090 6480600 or email mogrady@rbk.ie

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and nbsp; Please click here to download a copy of our Budget Highlights 2012.

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The current indications are that Tax reliefs, VAT and Capital taxes are among a myriad of changes about to be announced in Budget 2012. and nbsp;There is likely to be radical changes in taxes in order to generate additional revenue along with quantum adjustments to public expenditure.

and quot;Individuals need be fully aware of how these changes impact on their personal and business finances. and nbsp;There is a real concern that additional taxes combined with deep cuts to public expenditure will reduce retail spending further, hitting business confidence hard in an already struggling economy and quot; said Mairead OGrady, Taxation Partner, Russell Brennan Keane, chartered accountants and business advisers.

So what can businesses do about the upcoming budget? and nbsp;

and quot;Firstly they need to understand what it all means and then consider how these changes impact on their business and on their customers. They need to figure out what changes they can introduce to minimise the negative impact of what emerges in the Budgets next week. An example is the proposed increase in the VAT rate and businesses should do all they can to encourage sales or collect outstanding debts before this VAT increase is brought into effect and quot; continued Mairead.

Other areas of concern is the much debated reduction in Capital taxes reliefs and many businesses are currently, and have over the past year, brought about business transfers and succession planning to the next generation, to ensure this impact does not affect them dramatically.

and quot;It is vital that businesses look at the payment of taxes in a similar way to any other overhead and deal with them in a professional manner. Clearly they should minimise taxes but they should also look at the long term implications. They need to assess the impact of a transaction now resulting in a tax payment rather than deferring it which might bring increased taxes and unwelcome pressures and quot; concluded Mairead.

Russell Brennan Keane are hosting Budget Breakfast Briefings in Dublin and Athlone on Wednesday 7th December in order to address some of the key issues anticipated. Visit www.rbk.ie/OurEvents for further details.

Russell Brennan Keane are delighted to host a series of Budget Breakfast Briefings on Wednesday, 7th December 2011 from 7.30am - 9.00am and nbsp;covering the key issues arising from Budget 2012.

For further information and to register for the event, and nbsp; please click here.

County Enterprise Board

Local CEBs are actively seeking eligible businesses to apply for funding for expansion project, priming grant and feasibility study - www.westmeath-enterprise.ie

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Midlands Angel Groups

There are now two Midlands based Angel Investor Groups, seeking proposals for investment to be considered at December meetings. Early stage or start up companies in, or able to relocate to, the Midlands, have an opportunity to pitch to local and quot;dragons and quot;. http://www.lirinvestors.com/ / http://www.longfordbusinessangelnetwork.com/

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Athlone Institute of Technology Careers Fair, Thursday 10th November

Come visit our stand, doors open between 10:00am - 14:00pm

Please click here for further datails or contact Karen Duffy direct on kduffy@rbk.ie

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Extension to newly eligible VAT, PAYE/PRSI, and RCT customers

Reductions in the frequency of VAT, PAYE/PRSI, and RCT tax returns and payments for smaller businesses are being extended to eligible businesses from 1 January 2012.

• Businesses making total annual VAT payments of less than and euro;3,000 are eligible to file VAT returns and make their payments on a 6 monthly basis;
• Businesses making total annual VAT payments of between and euro;3,000 and and euro;14,400 are eligible to file VAT returns and make their payments on a 4 monthly basis;
• Businesses making total annual PAYE/PRSI payments of up to and euro;28,800 are eligible to make their payments on a 3 monthly basis
• Businesses making total annual RCT payments of up to and euro;28,800 are eligible to file RCT returns and make payments on a 3 monthly basis.

What are the benefits to businesses?

The benefits for qualifying businesses are two-fold:

• Improved cashflow by only having to make payments at the end of each 3, 4 or 6 monthly period, as appropriate.
• Reduced costs of administration through less frequent filing of tax returns.

How will these changes be implemented?

Revenue will shortly write to each eligible business confirming that reduced frequency of tax returns and tax payments will apply from 1 January 2012.

A copy of the letter will also be sent to the agent or tax practitioner on record for eligible customers (other than PAYE/PRSI customers).

There is no need for businesses to take any action to benefit from these changes as Revenue will extend this facility for reduced filing and payment to eligible businesses without any action required by the businesses concerned.

** The above article was published by the Revenue Commissioners - eBrief No. 66/11 and nbsp;

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Everyone knows that putting money aside now for the future is advisable and that the earlier you start the better.

and nbsp; and quot;Contributing to a pension now offers a tax efficient means of saving for your future. and nbsp; Not only do you benefit from tax relief on contributions paid but also from tax free growth on funds invested and quot;, says Yann Harrison, Financial Adviser with Russell Brennan Keane.

and quot;This October may well be the last for which tax relief at up to 41% is available on contributions paid. and nbsp; Maximising contributions while high rate tax relief is still available is advisable but individuals need to understand what exactly they are investing in and quot;.

Before making your pension contribution, Yann recommends that you:

1. and nbsp; and nbsp; and nbsp; and nbsp; Consider whether or not pension investment is right for you and nbsp; and nbsp;

Take independent advice on your pension options and make sure you understand how and when you will be able to access your funds in the future.

Invest only what you can afford to lock away until retirement.

2. and nbsp; and nbsp; and nbsp; and nbsp; Understand charges applied

There has been much coverage recently on the charges that are applied by some pension providers. Ensure you have all charges explained so you clearly understand how much of your money is actually being invested for your future benefit.

3. and nbsp; and nbsp; and nbsp; and nbsp; Know where your money is invested

Its your money, so invest wisely. Make sure you are aware of risks and ensure your investment is suitable to your individual risk tolerances. Spend time deciding where your funds are to be invested. and nbsp;

4. and nbsp; and nbsp; and nbsp; and nbsp; Avoid volatility if you are nearing retirement age

If you plan on accessing your pension benefits soon, avoid risky investment funds now. and nbsp; Choose low risk cash funds to preserve value.

Review your existing investments and de-risk where possible. and nbsp;

5. and nbsp; and nbsp; and nbsp; and nbsp; Monitor performance

Keep track of your investment and take action if you are not satisfied.

Above all, Yann urges pension investors to remember that and quot;actions taken today may just determine the actions that can be taken in the future. and nbsp; Investors owe it to themselves to get things right and quot;.

The Pay and File deadline for Domicile Levy for the year 2010 is 31 October 2011.

However, in order to facilitate individuals who are paying the balance of the income tax due for 2010 using the Revenue On-Line Service (ROS) and who wish to avail of the credit for income tax paid against Domicile Levy, the Pay and File deadline for Domicile Levy for 2010 is extended to 15 November 2011. This date coincides with the Pay and File deadline for payment of the balance of income tax due for 2010 using ROS.

The return should be made on Form DL1 and sent to:

Office of the Revenue Commissioners,
Large Cases Division,
1st Floor Setanta Centre,
Nassau Street,
Dublin 2.

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Form DL1 and the Information Leaflet relating to the Levy are available on the Revenue website at: Taxes and Duties - Domicile Levy.

Payment of the Levy should be made by Electronic Fund Transfer (EFT) using the Bank Account specified on the Domicile Levy Return Form DL1.

Sufficient time (at least 3 working days) should be allowed to ensure payment reaches the specified Bank Account by the due date.

The Collector-Generals Office should be notified by:

email - moneytrans@revenue.ie or
Fax - 00353-61-488674

at the time when payment of Domicile Levy is being made with details of the tax registration number, tax type, year and the amount of payment.

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** The above article was published by the Revenue Commissioners - eBrief No. 56/11 and nbsp;

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We wanted to share with you details of and nbsp;a free offer of life cover for parents from Irish Life.

Irish life are currently offering free parent life cover in the amount of and euro;10,000 for 12 months. and nbsp; This free offer is available for a limited time and there are currently just over 3,000 policies left.

Terms of Cover:

• and euro;10,000 free life insurance for each parent for 12 months
• No payment needed and and nbsp;cover is instant
• If you die within 12 months, it will pay you a lump sum of and euro;10,000 (We hope this wont apply!) and nbsp;

This and nbsp;offer will be fully subscribed very quickly, we would recommend that you consider it. and nbsp;If you or members of your family are interested in applying for cover, please contact and nbsp;Niamh Dunning ndunning@rbk.ie from our Pensions and Life Cover team who can process your application.

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The Irish Credit Union sector has changed further today given the Ministers for Finances announcement of phase 1 of the Interim report of the Commission examining Credit Unions

and quot;The Interim Report of the Commission on Credit Unions, acknowledging a strong future for the sector, has recommended strengthening of the regulatory framework they operate in. While the detail of the legislation is yet to come, it is expected that Credit Unions will have to learn to work more successfully with additional regulation in areas of compliance and risk management and governance. and nbsp;

Although not a surprise to the sector, the reality of the proposed changes will bring a significant burden of change and re-skilling to many credit unions relying on a volunteer ethos. The recommendations include extending the Central Banks administration sanction regime to Credit Unions, without doubt, this signals that full compliance with Central Bank regulations will be the only way forward and quot; said Colm OGrady, Credit Union Partner, Russell Brennan Keane.

The report includes the reassurance of the sectors future and retention of the States deposit guarantee. Other recommendations will see the beginning of financial contributions from the Credit Unions under the scheme, the establishment of a stabilisation fund and developing internal audit functions.

and nbsp; and quot;This much anticipated report sends a clear message that credit unions are entering a new world of compliance and regulation that will mirror the existing regulatory framework of the banks. and nbsp; It has been signalled that legislation will be published early therefore its vital that the Credit Union sector digests this proposed legislation quickly, has a voice in its formation and most importantly, its implementation. Credit Union Boards have been conditioned for change over the past year and the sector has even a more vital role than ever to play in the Irish financial services landscape as the economy stabilises and recovers. This new journey for them will lead to a more viable and robust sector to serve generations in the future. and quot; said Colm.

ENDS

For commentary or opinion, please contact Colm OGrady, Credit Union Partner, Russell Brennan Keane. Colm has worked with Credit Unions for over 20 years and is well experienced on the issues and complexities the sector is currently facing. and nbsp; Colm was also the author of the just released a Credit Union Benchmarking Report on the sector. and nbsp; The report is available at www.rbk.ie/cubenchmarking

Press contact: Mary Cloonan - 086 8227228 (commentary available over the weekend).

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From 1 January 2012 the basis by which the Universal Social Charge (USC) is deducted will change from the present week1 basis to a cumulative basis. The operation of cumulative USC will mirror that presently used in PAYE. USC thresholds will be managed in the same manner in which Cut-Off-Points are presently managed in PAYE.

As a result of this change, amendments will be made to a number of PAYE forms and outputs from 1 January 2012, they include:

• Employer(s) tax credit certificate (P2C)
• Employees Tax Credit Certificate (TCC)
• The Form P60
• The Form P45

The Revenue On-line System (ROS) will also be upgraded to accommodate this change.

Revenue is committed to providing continual updates on this change to assist in the smooth transition from the week1 basis of deduction to the cumulative basis.

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** The above article was published by the Revenue Commissioners - eBrief No. 54/11 and nbsp;

Graduate Recruitment Fair, Thursday 13th October

Please click here for further datails

Graduate Recruitment Fair, Monday 10th October at NUI Galway.

Please click here for further datails