FINANCE BILL OVERVIEW

The Finance Bill will likely be rushed through despite the far-reaching measures it contains, according to Kevin McLoughlin, head of tax services at Ernst & Young.

In an exhaustive article for the Your Money supplement in The Sunday Business Post, McLoughlin is scathing of the fact that political expediency means 223 pages of complex, revenue-raising measures will be rushed through without sufficient scrutiny of the likely effects.

“While the government is driven by political imperative to pass the bill before the upcoming general election, it is unacceptable that such complex, far-reaching legislation will not be given sufficient time to allow for proper consultation and meaningful debate,” he says, pointing out that in Britain such legislative proposals are often published years in advance. The wide-ranging measures include such notable changes as:

• Interaction with Revenue

The Revenue’s ability to recover unpaid taxes from people who still have jobs will be strengthened. The bill allows the Revenue to send a notice of attachment to an individual’s employer requiring them to deduct amounts specified from the employee’s salary.

• Self-assessment (more detail to follow below in a separate piece)

This year a taxpayer with income and capital gains tax liabilities could have as many as five different dates for filing returns, meeting of their tax liabilities and paying pension contributions. “None of this is likely to enhance the smooth operation of the self-assessment system, which has been tinkered with to such an extent in recent years that it now bears little resemblance to the ‘pay and file’ system initially intended,” McLoughlin notes.

• Personal Health Insurance

The Health Insurance (Miscellaneous Provisions) Act 2009 provided for an age-related tax credit for private health insurance premiums paid to authorised insurers between January 1, 2009 and December 31, 2011. It applied to those 50-plus when the contract started.

The Finance Bill amends this – abolishing the credit for those under 60 and increasing it for those over 60 who entered their healthcare contract from January 1, 2011.

Anyone aged between 60 and 69 will see their credit increase from €525 to €625. Anyone aged between 70 and 80 will see it increase from €975 to €1,275. Anyone over 80 will see it go up from €1,250 to €1,725.

The tax relief will be given at source by the insurer.

• Property  (more detail to follow below in a separate piece)

McLoughlin notes the capital allowances reforms proposed in the December Budget were effectively kicked to touch in the Finance Bill, following uproar over the measures whereby capital allowances were severely curtailed. They have now been deferred until 2012 at the earliest.

“There remains great uncertainty regarding what will happen in 2012,” McLoughlin writes.  “At least the opportunity is now available … to demonstrate the type of financial carnage that could be created through the implementation of the restriction. Should the minister … decide to proceed with the implementation of the restrictions in the manner proposed by the Finance Bill then, for passive investors, any capital allowances in respect of investment in a building or structure can only be offset against the rent arising from that particular building or structure and will not therefore be available to shelter rental income from other properties.”