FINANCE BILL CHANGES PUBLISHED

THE Finance Bill, which deals with the precise details of the changes in tax law, has been published. It reflects the Budget speech of the Minister in October.

There are minor changes in the Universal Social Charge (USC) with the rate band of 4.75 per cent reduced to 4.5 per cent and the two per cent rate band increased by €502.

Up to €12,012 at 0.5% €12,013 to €19,874 at 2% €19,875 to €70,044 at 4.5% Over €70,044 at 8%

Single person

Up to €35,300 at 20% Over €35,300 at 40%

Married person (with one earner) Up to €43,550 at 20%

Over €43,550 at 40%

The changes are insignificant and there is no indication when USC will be abolished. It was created as a temporary measure in the crisis.

On the positive side, the Home Carer Credit rises to €1,500 and the Earned Income Credit increases to €1,350.

Interest paid as a deduction from rent on let residential properties is restored to 100 per cent. People letting rooms in their house via Airbnb and then claiming Rent-A-Room exemption are attacked with a provision that requires a Rent-A-Room claimant to let the room for a minimum of four weeks to each tenant.

The availability of averaging of farm profits over a five-year period is widened to include a situation where the farmer or the spouse has another business either held as a sole trader, in a partnership or through a company. This is a welcome development given the climate changes which can greatly distort farm results from one year to another.

The tourism sector was given a setback with the increase in the VAT rate from nine per cent to 13.5 per cent on its sales. Commentators said that it was understandable in the Dublin area and hard to justify outside of Dublin. However, with the distortion of competition rules it is not open to the Government to have different VAT rates in different parts of the State.

People who have the benefit of a company owned car got a boost as the Finance Bill provides for no Benefit-In-Kind (BIK) on the use of a car costing up to €50,000 solely powered by electricity for the next three years. It was to run out in December but so far the motor trade reports a poor pick-up on this major tax break due to the need for frequent recharging of the car. The value of the tax break can be understood when a conventionally powered car has an annual BIK equal to 30 per cent of it cost new.

There may be further changes in the Finance Bill as it goes through what are called the Committee Stage and the Report Stage. A practice has also grown up of Revenue slipping in changes near the end of the process.

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