4 January 2019
A PAYE Modernisation Hot Topics section has been added to the Revenue website. Revenue are updating this page in real time, based on the most common issues being reported or experienced by employers. Revenue are encouraging employers and agents to regularly visit the webpage (https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-2172018.aspx).
Revenue has published a new Manual which lists the Tax and Duty Manuals that have been updated or created to reflect PAYE Modernisation changes.
Universal Social Charge
Revenue’s Manual on the operation of the Universal Social Charge (USC) has been updated for Finance Act 2018, including:
- 2019 USC rates and bands.
- Provisions regarding ‘week 53’.
- New monthly USC reporting requirement for employers.
- References to sections 128F and 194AA in the list of USC exempt income and removing old references to Social Welfare type payments no longer in place.
- Rewording the 5% USC property relief surcharge examples in order to provide greater clarity.
Employers’ Guide to PAYE
Revenue’s Employers’ Guide to PAYE has been updated to reflect the following changes which are effective from 1 January 2019:
- 2018 USC rates.
- Removing reference to Top Slicing Relief which is no longer relevant.
- Confirming that Department of Employment Affairs and Social Protection (DEASP) child dependent payments are exempt from tax.
- Including an arrangement to cater for a payroll operator being absent from work.
- Providing clarification for the term “persistent technology failure”.
Revenue has published a new Manual regarding the making of an assessment by Revenue under section 990 TCA 1997 where:
- an employer has not submitted a PAYE return under section 985G for a month, or,
- a return was made but does not include the total amount of tax due.
The Manual applies to emoluments paid on or after 1 January 2019. Prior to that date, sections 989 and 990 provided for the making of estimates, rather than assessments.
Read the Manual - https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-2212018.aspx
Tax treatment of certain benefits payable under Social Welfare Acts
Revenue has published a new Manual regarding Section 126 TCA 1997. Section 126 provides for a charge to tax under Schedule E for certain Department of Employment Affairs and Social Protection (DEASP) payments. The section was amended by Finance Act 2018 in order to clarify that certain DEASP payments are exempt from the charge to tax. The Appendix in the new Manual lists all such payments.
Capital Acquisitions Tax - Dwelling House Exemption
In TaxFax on 26 October 2018, we referred to a recent High Court case involving a successful claim for Dwelling House Exemption under section 86 CATCA 2003, where the Appellant inherited the family home, together with an interest in four other properties, as part of the residue of the deceased’s estate.
Revenue did not appeal the High Court judgement and Part 24 of Revenue’s CAT Manual has now been updated to reflect Revenue’s revised approach in distinguishing between dwelling houses inherited as a specific legacy and those inherited in the residue of an estate. The revised Manual states that a dwelling house forming part of the residue of an estate will not to be taken into account in determining whether a successor has an interest in another dwelling house at the date of an inheritance. The relevant factor for the purposes of the Dwelling House Exemption is whether a successor already had an interest in another dwelling before the date of the inheritance or whether the successor received more than one dwelling as a specific legacy in the same inheritance.
The Manual confirms that taxpayers who paid a CAT liability relating to an inheritance of a dwelling house which, based on Revenue’s revised approach following the High Court judgement, would have qualified for the exemption may apply for a refund. However, the Manual states that a refund will not be made where the relevant CAT return was not filed within the allowable four-year period for claiming refunds.
The CAT Manual has also been amended to reflect the anti-avoidance provision introduced by Finance Act 2018, which deems successors who have placed previously owned dwelling houses into discretionary trusts, of which they are a beneficiary, to have a beneficial interest in such houses at the date of the inheritance of a subsequent dwelling house.
Stamp Duty Manual updated for farm consolidation and farm leasing reliefs
Revenue has updated their Stamp Duty Manual to include separate Manuals on farm consolidation and farm leasing reliefs, which are more comprehensive and include changes made by Finance Acts 2017 and 2018. These new Manuals are published in the new 'replacement' Stamp Duty folder on the Revenue website.
Notes for Guidance and Statutory Instruments
Revenue has published updated Notes for Guidance on the TCA 1997 and VAT to include Finance Act 2018 amendments.
High Income Individuals' Restriction
Revenue’s Manual on High Income Individuals Restriction - Carry forward of excess relief for married couples and civil partners has been revised to include illustrative versions of how the joint assessment provisions should be considered in the context of section 485FA TCA 1997.
Tax treatment of operating leases accounted for under IFRS 16
Revenue’s Manual on tax treatment of operating leases accounted for under IFRS 16 has been updated to outline the tax treatment of lessors, who apply international accounting standards when accounting for operating leases changes from 1 January 2019 under IFRS 16. The Manual also incorporates guidance previously published under Further guidance on IFRS issues.
Commencement of VAT Compensation Scheme for Charities
Minister for Finance and Public Expenditure and Reform, Paschal Donohoe T.D. signed the Value-Added Tax (Refund of Tax) (Charities Compensation Scheme) Order 2018 on 18 December 2018. The Order gives effect to the Budget 2018 announcement of a VAT Compensation Scheme for Charities, which allows charities to reclaim a proportion of their VAT costs based on the level of non-public funding they receive. A capped fund of €5 million will be available in 2019, to finance payments under the scheme in respect of claims of VAT paid in 2018.
The terms of the VAT Compensation Scheme (https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part12-refunds-and-repayments-of-tax/vat-compensation-scheme/vat-compensation-scheme-guidelines.pdf) include:
- Charities must be registered with the Charities Regulator, have tax clearance, and be in possession of up to date audited accounts.
- A claim must be based on the level of privately-sourced income raised by a charity.
- Where the total amount of claims in a year exceeds the capped amount, charities will be paid on a pro-rata basis (i.e. where the total value of claims is double the capped pool amount, each charity will receive 50% of their claim).
Revenue has published new VAT Compensation Scheme Guidelines which provide an overview of the scheme, such as eligibility criteria, eligible tax and the application process.
New VAT Regulations Published
S.I. No. 581 of 2018 transposes Article 1 of Council Directive (EU) 2017/2455 (Modernisation of VAT on e-Commerce) into Irish VAT law. The Regulations introduce a threshold of €10,000 for telecommunications, broadcasting and electronically supplied services made to non-taxable persons below which threshold suppliers may regard the place of supply of such services to be the supplier’s Member State of establishment. They also provide that taxable persons not established in the EU, but having a VAT registration number in a Member State, can use the special scheme for taxable persons not established within the EU. Transposition is effected by way of amendment to VATCA 2010. These amendments came into force from 1 January 2019.
Read the Statutory Instrument - https://www.finance.gov.ie/wp-content/uploads/2018/12/SI-581-of-2018-EU-VAT-Regulations-ecommerce.pdf
S.I. No. 582 of 2018 transposes provisions of Council Directive (EU) 2016/1065 into Irish VAT law, which introduces new rules on certain vouchers issued on or after 1 January 2019.
Read the Statutory Instrument - https://www.finance.gov.ie/wp-content/uploads/2018/12/SI-582-of-2018-EU-VAT-Regulations-vouchers.pdf
Update to VAT Tax and Duty Manual
The VAT Tax and Duty Manual has been updated to include new guidance on:
- VAT treatment of rollators from 1 March 2019.
- VAT treatment of food supplements that applies from 1 March 2019.
- VAT treatment of Single-Purpose Vouchers and Multi-Purpose Vouchers - the guidance sets out the new rules and definitions that apply to certain types of vouchers that are issued on or after 1 January 2019.
The Manual has also been updated to reflect the reintroduction of guidance on:
- The pharmacists scheme for VAT: This guidance has been reincorporated within the Manual and clarifies that the scheme applies to pharmacies with annual vatable turnover less than €1.5 million.
- The VAT treatment of staff canteen services: This guidance has been reincorporated to clarify the VAT treatment of the different arrangements that may be in place for staff canteens.
- The VAT treatment of opticians: This guidance has been reincorporated to clarify the VAT treatment of supplies of goods and services made by opticians and how VAT can be reclaimed.
In addition, the following guidance has been updated:
- VAT treatment of Personal Contract Plans (PCPs)
- VAT on food and drink.
The VAT Tax and Duty Manual Index has also been updated to take account of these changes.
Tax Policies in the European Union Survey 2018
The European Commission has published its annual report on the performance of the tax systems of the EU Member States. The Tax Policies in the EU Survey examines how Member States' tax systems help to promote investment and employment, how they are working to reduce tax fraud, evasion and avoidance, and how tax systems help to address income inequalities and ensure social fairness. The report outlines the most recent reforms in Member States and the main indicators used by the Commission to analyse tax policies in the context of the European Semester. It also presents reform options to improve efficiency and fairness in tax systems.
Malta and Singapore deposit ratification instruments for the MLI
Malta and Singapore have deposited their instruments of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) with the OECD. The Competent Authority Agreement between Ireland and Malta will have effect for taxable periods beginning on or after the expiration of a period of six months from the later of the dates on which the MLI enters into force for Ireland and Malta. It is expected that Ireland will deposit its instrument of ratification with the OECD in early January 2019. On 1 January 2019, the MLI entered into force in respect of Australia, France, Israel, Japan, Lithuania and the Slovak Republic.
View the full list of signatories - http://www.oecd.org/tax/treaties/beps-mli-signatories-and-parties.pdf