Finance Act 2012

PART 1 Income Levy, Universal Social Charge, Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1 Interpretation

1. Interpretation (Part 1).

1.— In this Part “Principal Act” means the Taxes Consolidation Act 1997.

Chapter 2 Universal Social Charge

2. Universal social charge: miscellaneous amendments.

2.— (1) The Principal Act is amended in the Table to subsection (1) of section 531AM—

(a) in paragraph (a)(ii) by inserting “except where such shares were held by an employee share ownership trust, approved in accordance with Schedule 12, before 1 January 2011,” after “Chapter 1 of Part 17,”,

(b) in paragraph (a)(iii) by deleting “and”,

(c) by substituting the following for paragraph (a)(iv):

“(iv) any gain exempted from income tax by virtue of section 519A(3) or 519D(3) after such a gain is reduced by the market value of the right referred to in subparagraph (iii), and”,

(d) by inserting the following after paragraph (a)(iv):

“(v) the ‘specified amount’ as defined in section 825C,”,

(e) in paragraph (a)(III) by substituting “PAYE Regulations, and” for “PAYE Regulations”,

(f) in paragraph (a)(IV) by substituting “Schedule 3.” for “Schedule 3, and”,

(g) by deleting paragraph (a)(V),

(h) in paragraph (b)(ii)—

(i) by substituting “(IV)” for “(V)”, and

(ii) by deleting “(iv)”,

(i) in paragraph (b)(vi) by substituting “section 531AU(1),” for “section 531AU(1), and”,

(j) in paragraph (b)(vii) by substituting “section 531AU(2), and” for “section 531AU(2),”, and

(k) by inserting the following after paragraph (b)(vii):

“(viii) where section 372AP applies in respect of an individual, the amount that the individual is deemed to have received as rent in accordance with subsection (7) of that section where the individual received, or was entitled to receive, the deduction referred to in subsection (2) of that section on or after 1 January 2012,”.

(2) The Principal Act is amended in section 531AM(2) by substituting “€10,036” for “€4,004”.

(3) The Principal Act is amended in section 531AN—

(a) by inserting the following after subsection (2):

“(2A) For the purposes of subsection (2), relevant income shall not include any amount in respect of which an individual is chargeable to tax under Schedule E in accordance with section 128(2).”,

(b) in subsection (3) by substituting “Council Regulation (EC) No. 883/2004 of 29 April 2004 [^1]” for “Council Regulation (EEC) No. 1408/71 of 14 June 1971”,

(c) by inserting the following after subsection (3):

“(3A) Where an individual is chargeable to income tax under Case IV of Schedule D in respect of an encashment amount, or a deemed encashment amount, as the case may be, under section 787TA, then—

(a) notwithstanding subsection (1) and the Table to this section, the individual shall be charged to universal social charge for the tax year in which the income tax is charged on the full amount so charged to income tax at the rate of 4 per cent, and

(b) the amount so chargeable to income tax shall not be regarded as relevant income for the purposes of subsection (2).”,

and

(d) in subsection (4) by substituting “subsections (2), (2A), (3) and (3A)(b)” for “subsections (2) and (3)”.

(4) The Principal Act is amended in section 531AO—

(a) by deleting subsections (2) to (12), and

(b) by inserting the following after subsection (1):

“(1A) Where—

(a) an employer pays relevant emoluments to an employee in the form of shares (including stock), or

(b) an employee realises a gain by the exercise of a right in accordance with the provisions of a scheme approved under Schedule 12A,

and where, by reason of an insufficiency of payments actually made to or on behalf of the employee, the employer is unable to deduct the amount (or full amount) of the universal social charge required to be deducted under this Part and regulations made under this Part in respect of those shares or that gain, as the case may be, that employer shall be entitled to withhold and to realise sufficient shares to meet that universal social charge liability.

(1B) Where subsection (1A) applies—

(a) the employee shall allow such withholding as is referred to in that subsection, and

(b) the employer shall be acquitted and discharged of so much of the universal social charge liability as is represented by the shares withheld as if the value of those shares had been paid to the employee.

(1C) Subsection (1A) shall not apply where the employee has otherwise made good to the employer the amount of the universal social charge required to be deducted under this Part and regulations made under this Part in respect of those shares or that gain, as the case may be, as is referred to in that subsection.”.

(5) The Principal Act is amended by deleting sections 531AP and 531AQ.

(6) The Principal Act is amended in section 531AS by inserting the following after subsection (1):

“(1A) For the purposes of subsection (1) and, as respects a gain realised by an individual by the exercise of a right to acquire shares in a company, section 128B shall, with any necessary modifications, apply to universal social charge as it applies to income tax and for this purpose—

(a) ‘relevant tax’ as referred to in section 128B shall include universal social charge,

(b) ‘B’ in the formula in section 128B(2) shall be the percentage which is equal to the highest rate set out in column (2) or (3), as the case may be, of the Table to section 531AN that is in force for the tax year in which the individual realises a gain by the exercise of a right to acquire shares in a company, and

(c) where the Revenue Commissioners are satisfied that the individual is likely to be chargeable to universal social charge for a tax year at a rate other than whichever of the rates set out in column (2) or (3), as the case may be, of the Table to section 531AN is the highest such rate, section 128B(14) shall apply as if the reference to the standard rate was a reference to that other rate.”.

(7) The Principal Act is amended in section 531AT by substituting the following for subsection (2):

“(2) Subsections (3) and (4) of section 531AS, as they relate to the aggregation of universal social charge and income tax, shall apply for the purposes of this section, with any necessary modifications, as they apply to universal social charge due and payable by a chargeable person and as if ‘For the purposes of subsection (2)’ were deleted in subsection (4).”.

(8) The Principal Act is amended by inserting the following after section 531AU:

“Universal social charge and approved profit sharing schemes.

531AUA.— Where universal social charge is charged on the initial market value of shares in accordance with subparagraph (a)(ii) of the Table to section 531AM(1), it shall not be charged—

(a) where there is a disposal of shares, or a deemed disposal of shares, as referred to in subsections (2) and (7), respectively, of section 512, on the appropriate percentage of the locked-in value of those shares as construed in accordance with subsection (1) of that section, or

(b) where there is a capital receipt within the meaning of section 513(1), on the appropriate percentage of the amount or value, as the case may be, of that capital receipt.”.

(9) The Principal Act is amended in section 531AAA—

(a) by substituting the following for paragraph (a):

“(a) Chapter 1 of Part 38, in relation to the making of returns of income, and Chapter 4 of that Part, in relation to the making of enquiries and the exercise of the powers, duties and responsibilities provided for by that Chapter,”,

and

(b) in paragraphs (b) and (c) by substituting “Chapters” for “Chapter”.

(10) The Principal Act is amended in section 531AAB—

(a) in paragraph (q) by deleting “and” where it last occurs,

(b) in paragraph (r) by substituting “appeal;” for “appeal.”, and

(c) by inserting the following after paragraph (r):

“(s) with respect to the deduction, collection and recovery of amounts to be accounted for in respect of notional payments, and

(t) for the making available by the Revenue Commissioners of an electronic system or systems to allow employers and employees to fulfil their obligations under this Chapter and regulations made under this Chapter and to allow for electronic communications between the Revenue Commissioners, officers of the Revenue Commissioners, employers, employees and other persons pursuant to obligations under those provisions and for the provision of enhancements or other changes to that system or those systems, as the case may be, and for any replacement for such system or systems.”.

(11) The Principal Act is amended by inserting the following after section 531AAE (inserted by section 3):

“Delegation of functions and discharge of functions by electronic means.

531AAF.— Any act to be performed or function to be discharged by the Revenue Commissioners that is authorised or required by this Part or by regulations made under this Part may be performed or discharged by any one or more of their officers acting under their authority or may, if appropriate, be performed or discharged through such electronic systems as the Revenue Commissioners may put in place for the time being for any such purpose.”.

(12) Paragraphs (a), (c) and (h)(ii) of subsection (1), (a), (b) and (d) of subsection (3) and subsections (7), (8) and (9) shall be deemed to have had effect as on and from 1 January 2011.

(13) Subsection (2)has effect as respects the liability of an individual to universal social charge for the year of assessment 2012 and each subsequent year.

3. Universal social charge: surcharge on use of property incentives.

3.— (1) Part 18D of the Principal Act is amended by inserting the following after section 531AAD:

“Property relief surcharge.

531AAE.— (1) In this section—

‘aggregate of the specified property reliefs’, in relation to a tax year and an individual, means the aggregate of the amounts of specified property reliefs used by the individual in respect of the tax year;

‘amount of specified property relief’, in relation to a specified relief used by an individual in respect of a tax year, means the amount of the specified property relief used by the individual in respect of the tax year, determined by reference to the entry in column (3) of Schedule 25B opposite the reference to the specified relief concerned in column (2) of that Schedule;

‘area-based capital allowance’, in relation to a tax year and an individual, means any allowance, or part of such allowance, made under Chapter 1 of Part 9 as that Chapter is applied—

(a) by section 323, 331, 332, 341, 342, 343, 344, 352, 353, 372C, 372D, 372M, 372N, 372V, 372W, 372AC or 372AD, or

(b) by virtue of paragraph 11 of Schedule 32,

for the tax year, including any such allowance, or part of any such allowance, made for a previous tax year and carried forward from that previous tax year in accordance with Part 9;

‘balancing allowance’ means any allowance made under section 274;

‘specified capital allowance’, in relation to a tax year and an individual, means any specified relief that is—

(a) a writing down allowance or a balancing allowance made for the tax year, or

(b) an allowance, or part of such allowance, made under Chapter 1 of Part 9 as that Chapter is applied by section 372AX, 372AY, 843 or 843A for the tax year,

including any such allowance or part of such allowance made for a previous tax year and carried forward from that tax year in accordance with Part 9;

‘specified individual’, in relation to a tax year, means an individual whose aggregate income for the tax year is €100,000 or more;

‘specified property relief’, in relation to a tax year and an individual, means—

(a) any allowance, or part of any allowance, specified in the definition of ‘area-based capital allowance’ or ‘specified capital allowance’, as the case may be, or

(b) any eligible expenditure within the meaning of Chapter 11 of Part 10, to which section 372AP applies, which is to be taken into account in computing under section 97(1) a deficiency in respect of any rent from a qualifying premises or a special qualifying premises, within the meaning of section 372AK;

‘specified relief’, in relation to a tax year and an individual, means any relief arising under, or by virtue of, any of the provisions set out in column (2) of Schedule 25B;

‘writing down allowance’ means any allowance made under section 272 and includes any such allowance as increased under section 273.

(2) Any reference in this section to any specified property relief being used in respect of any tax year shall be a reference to that part of that specified property relief to which full effect has been given for that tax year.

(3) The amount of universal social charge which is to be charged on the aggregate income for the tax year concerned of a specified individual under this Part shall be increased by an amount equal to 5 per cent of that part of that aggregate income in relation to which an amount of specified property relief or, as the case may be, the aggregate of the specified property reliefs, has been used by the specified individual in that tax year.

(4) For the purposes of this section—

(a) section 485C(3) and Schedule 25C (as if the references to the tax years 2006 and 2007 in that Schedule were references to the tax years 2011 and 2012, respectively) shall apply in determining the amount of any specified property relief to be carried forward from any tax year to each subsequent tax year, and

(b) any specified relief, which is a specified property relief, shall be treated as used in any tax year in priority to a specified relief which is not a specified property relief.

(5) Where universal social charge is payable for the tax year 2012 in respect of a specified individual’s aggregate income for a tax year, being an individual who is a chargeable person (within the meaning of Part 41), section 958 shall apply and have effect as if, in accordance with this section, universal social charge had been payable for the tax year 2011.”.

(2) Subsection (1) applies for the year of assessment 2012 and each subsequent year of assessment.

Chapter 3 Income Levy and Income Tax

4. Share-based remuneration.

4.— (1) The Principal Act is amended—

(a) in section 128A(4A)(d)(i)(II) by substituting “half of the aggregate” for “the aggregate”,

(b) in section 128E(6)(a) by substituting “for the purposes of income tax, income levy and universal social charge” for “income tax purposes”, and

(c) in section 985A by inserting the following after subsection (4A):

“(4B) Where—

(a) an employer pays emoluments to an employee in the form of shares (including stock),

(b) subsection (4) applies, and

(c) the employee has not made good to the employer the amount of the income tax required to be deducted under this Part and regulations made under this Part in respect of those shares,

then—

(i) the employer shall be entitled to withhold and to realise sufficient shares to meet that income tax liability,

(ii) the employee shall allow such withholding as is referred to in paragraph (i), and

(iii) the employer shall be acquitted and discharged of such withholding as if the amount of income tax required to be deducted had been paid to the employee.”.

(2) Paragraph (b) of subsection (1) shall be deemed to have effect as on and from—

(a) 1 January 2009 in the case of income levy,

(b) 1 January 2011 in the case of universal social charge, and

(c) 1 January 2012 in the case of income tax.

5. Amendment of Schedule 23A (specified occupations and professions) to Principal Act.

5.— (1) Schedule 23A to the Principal Act is amended by inserting “Cricketer” after “Boxer”.

(2) This section applies for the year of assessment 2012 and subsequent years of assessment.

6. Amendment of section 470B (age-related relief for health insurance premiums) of Principal Act, etc.

6.— (1) Section 470B of the Principal Act is amended in subsection (4)—

(a) in subparagraph (i) by substituting “1 January 2013” for “1 January 2012”,

(b) in clause (II) by inserting “but before 1 January 2011” after “2010”,

(c) in clause (III) by inserting “but before 1 January 2012” after “2011”,

(d) in clause (III) by substituting “such total annual premium,” for “such total annual premium, and”,

(e) by inserting the following after clause (III):

“(IIIa) as respects a relevant contract renewed or entered into on or after 1 January 2012, the amount specified in column (5) of the Table to this subsection corresponding to the class of insured person mentioned in column (1) of that Table or, where the payment made to the authorised insurer is a monthly or other instalment towards the payment of the total annual premium due under the relevant contract, an amount equal to the amount so specified divided by the total number of instalments to be made to pay such total annual premium, and”,

and

(f) by substituting the following for the Table to that subsection:

“TABLE