Finance Act 2014

PART 1 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. Amendment of Part 18D of Principal Act (universal social charge)

2. Part 18D of the Principal Act is amended—

(a) in section 531AL by substituting the following for the definition of “similar type payments”:

“‘similar type payments’ means payments which are of a similar character to social welfare payments but which are made by—

(a) the Department of Education and Skills,

(b) the Department of Agriculture, Food and the Marine,

(c) the Health Service Executive,

(d) an education and training board in relation to attendance at a non-craft training course funded by An tSeirbhís Oideachais Leanúnaigh agus Scileanna,

(e) a sponsor in respect of participation in programmes known as the Community Employment Scheme and the Jobs Initiative Scheme, or

(f) any other state or territory;”,

(b) in section 531AM(2) by substituting “€12,012” for “€10,036”,

(c) in section 531AN—

(i) in subsection (1)(a) by substituting “column (2) of Part 1 of the Table to this section corresponding to the part of aggregate income specified in column (1) of Part 1 of that Table” for “column (2) of the Table to this section corresponding to the part of aggregate income specified in column (1) of that Table”,

(ii) in subsection (1)(b) by substituting “column (2) of Part 2 of the Table to this section corresponding to the part of aggregate income specified in column (1) of Part 2 of that Table” for “column (3) of the Table to this section corresponding to the part of aggregate income specified in column (1) of that Table”,

(iii) in subsection (2) by substituting “column (2) of Part 1 of that Table, be charged on the amount of that excess at the rate of 11 per cent” for “column (2) of that Table, be charged on the amount of that excess at the rate of 10 per cent”,

(iv) in subsection (3) by substituting “exceeds €17,576 at the rate provided for in column (2) of Part 1 of that Table, be charged on the amount of the excess at the rate of 3.5 per cent” for “exceeds €16,016 at the rate provided for in column (2) of that Table, be charged on the amount of the excess at the rate of 4 per cent”,

(v) in subsection (3A)(a) by substituting “3.5 per cent” for “4 per cent”,

(vi) by substituting the following subsection for subsection (4):

“(4) Subsection (3) shall cease to have effect for the tax year 2018 and subsequent tax years.”,

and

(vii) by substituting the following Table for the Table to that section:

“TABLE

PART 1

PART 2

”,

and

(d) in section 531AS(1A)—

(i) in paragraph (b) by substituting “column (2) of Part 1 or column (2) of Part 2” for “column (2) or (3) ”, and

(ii) in paragraph (c) by substituting “column (2) of Part 1 or column (2) of Part 2” for “column (2) or (3) ”.

Chapter 3 Income Tax

3. Amendment of section 15 of Principal Act (rate of charge)

3. As respects the year of assessment 2015 and subsequent years of assessment section 15 of the Principal Act is amended—

(a) in subsection (3)(i) by substituting “€24,800” for “€23,800”, and

(b) by substituting the following Table for the Table to that section:

“TABLE

PART 1

PART 2

PART 3

”,

4. Amendment of section 128 of Principal Act (treatment of directors of companies and employees granted rights to acquire shares or other assets)

4. Section 128 of the Principal Act is amended in subsection (11) by substituting “to the Revenue Commissioners, in an electronic format approved by them,” for “in writing to the inspector”.

5. Amendment of section 195 of Principal Act (exemption of certain earnings of writers, composers and artists)

5. Section 195 of the Principal Act is amended—

(a) by substituting the following for subsection (1):

“(1) In this section—

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

‘EEA state’ means a state which is a contracting party to the EEA Agreement;

‘work’ means an original and creative work which is within one of the following categories:

(a) a book or other writing;

(b) a play;

(c) a musical composition;

(d) a painting or other like picture;

(e) a sculpture.”,

(b) in subsection (2)(a) by substituting the following for subparagraph (i):

“(i) who is—

(I) resident in one or more Member States, or in another EEA state, and not resident elsewhere, or

(II) ordinarily resident and domiciled in one or more Member States, or in another EEA state, and not resident elsewhere, and”,

and

(c) in subsection (3)(aa) by substituting “shall not exceed €50,000 for the year of assessment 2015” for “shall not exceed €40,000 for the year of assessment 2011”.

6. Exemption in respect of compensation for certain living donors

6. The Principal Act is amended by inserting the following section after section 204A:

“Exemption in respect of compensation for certain living donors

204B. The compensation for donation of a kidney for transplantation payable to a living donor under conditions defined by the Minister for Health pursuant to Regulation 21(2) of the European Union (Quality and Safety of Human Organs Intended for Transplantation) Regulations 2012 (S.I. No. 325 of 2012) shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.”.

7. Amendment of section 244 of Principal Act (relief for interest paid on certain home loans)

7. Section 244 of the Principal Act is amended in subsection (1) —

(a) in the definition of “qualifying residence” by substituting “situated in an EEA state” for “situated in the State, Northern Ireland or Great Britain,”, and

(b) by inserting the following definitions:

“‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

‘EEA state’ means a state (including the State) which is a contracting party to the EEA Agreement;”.

8. Amendment of Schedule 13 to Principal Act (accountable persons for purposes of Chapter 1 of Part 18)

8. (1) Schedule 13 to the Principal Act is amended—

(a) by deleting paragraphs 20, 36, 64 and 98, and

(b) by inserting the following after paragraph 192:

“193. Child and Family Agency.

(2) This section applies as and from the date of the passing of this Act.

9. Amendment of section 216A of Principal Act (rent-a-room relief)

9. As respects the year of assessment 2015 and subsequent years of assessment, section 216A of the Principal Act is amended, in subsection (5), by substituting “€12,000” for “€10,000”.

10. Amendment of section 189A of Principal Act (special trusts for permanently incapacitated individuals)

10. Section 189A(1) of the Principal Act is amended in the definition of “qualifying trust” by substituting the following for subparagraph (b)(ii):

“(ii) the undistributed part of the trust funds—

(I) where the individual or the last surviving individual, as the case may be, is survived by a child, spouse or civil partner, be appointed in favour of the estate of the deceased individual, or

(II) otherwise, be applied for charitable purposes or be appointed in favour of the trustees of charitable bodies,”.

11. Amendment of Chapter 1 of Part 12 of Principal Act (loss relief)

11. (1) Chapter 1 of Part 12 of the Principal Act is amended—

(a) in section 381(1) by substituting “this section and sections 381A, 381B and 381C” for “this section and section 381A”,

(b) by inserting the following section after section 381A:

“Restriction of loss relief — passive trades

381B. (1) (a) In this section ‘relevant loss’ means a loss in a trade or profession (including any amount in respect of allowances which, pursuant to section 392, is to be treated as a loss for the purposes of section 381) but does not include a loss which arises from—

(i) farming, within the meaning of Part 23,

(ii) market gardening,

(iii) a trade which consists of the underwriting business of a member of Lloyd’s,

(iv) any amount in respect of qualifying expenditure which by virtue of section 482(2) is to be treated as a loss, or

(v) any amount in respect of specified capital allowances, within the meaning of section 531AAE, which pursuant to section 392 is to be treated as a loss.

(b) For the purposes of this section—

(i) an individual carries on a trade in a non-active capacity during a period if the individual does not work for the greater part of his or her time on the day to day management or conduct of the trade or profession during that period, and

(ii) an individual does not work for the greater part of his or her time on the day to day management or conduct of the trade or profession during a period unless, over the course of that period, he or she spends an average of at least 10 hours a week personally engaged in the activities of the trade or profession and those activities are carried on on a commercial basis and in such a way that profits of the trade or profession could reasonably be expected to be made in that period or within a reasonable time afterwards.

(2) (a) Subject to paragraphs (b) and (c), where a person carries on a trade or profession in a non-active capacity during a year of assessment then for the purposes of section 381, the amount of any relevant loss sustained by that person in that trade or profession in that year of assessment shall be the actual amount of the loss so sustained, or €31,750, whichever is the lower.

(b) Where the basis period for a year of assessment is shorter than 12 months, then the reference to €31,750 in paragraph (a) shall be construed as €31,750 reduced in the proportion that the length of the basis period bears to 12 months.

(c) Where a person carries on 2 or more trades or professions to which this subsection applies, then for the purposes of section 381, the aggregate of the amount of the losses sustained by that person in those trades or professions in any year of assessment shall be the aggregate of the actual amount of the losses so sustained, or €31,750, whichever is the lower.”,

and

(c) by inserting the following section after section 381B (inserted by paragraph (b)):

“Restriction of loss relief — anti-avoidance

381C. (1) (a) In this section—

‘arrangements’ includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

‘relevant loss’ means a loss in a trade or profession (including any amount in respect of allowances which, pursuant to section 392, is to be treated as a loss for the purposes of section 381) but does not include a loss which arises from—

(i) any amount in respect of qualifying expenditure which by virtue of section 482(2) is to be treated as a loss, or

(ii) any amount in respect of specified capital allowances, within the meaning of section 531AAE, which by virtue of section 392 is to be treated as a loss;

‘relevant period for a year of assessment’ means the basis period for the year of assessment, or where that basis period is shorter than 6 months—

(i) where the basis period is determined in accordance with section 67(1)(a), a period of 6 months ending on the last day of that basis period, or

(ii) in all other cases, a period of 6 months starting on the first day of the basis period;

‘relevant tax avoidance arrangements’ means arrangements the main purpose, or one of the main purposes of which, is to give rise to a claim under section 381.

(b) For the purposes of this section—

(i) an individual carries on a trade in a non-active capacity during the relevant period for a year of assessment if the individual does not work for the greater part of his or her time on the day to day management or conduct of the trade or profession during that period, and

(ii) an individual does not work for the greater part of his or her time on the day to day management or conduct of the trade or profession during the relevant period for a year of assessment unless, over the course of that period, he or she spends an average of at least 10 hours a week personally engaged in the activities of the trade or profession and those activities are carried on on a commercial basis and in such a way that profits of the trade or profession could reasonably be expected to be made in that relevant period for a year of assessment or within a reasonable time afterwards.

(2) Where a person carries on a trade or profession in a non-active capacity in the relevant period for a year of assessment and sustains a relevant loss in that trade or profession for that year of assessment and that loss arises in whole or in part, directly or indirectly, in consequence of or otherwise in connection with relevant tax avoidance arrangements, then for the purposes of section 381 that person shall be deemed not to have sustained a loss in that trade or profession for that year of assessment.”.

(2) Paragraphs (a) and (c) of subsection (1) shall apply as respects a basis period for a year of assessment which commences after 23 October 2014.

(3) Paragraph (b) of subsection (1) shall apply as respects the year of assessment 2015 and subsequent years of assessment.

12. Amendment of section 467 of Principal Act (employed person taking care of incapacitated individual)

12. Section 467 of the Principal Act is amended in subsections (2) and (3) by substituting “€75,000” for “€50,000” in each place.

13. Amendment of section 477B of Principal Act (home renovation incentive)

13. Section 477B of the Principal Act is amended—

(a) in subsection (1) —

(i) by substituting the following for the definition of “qualifying residence”:

“‘qualifying residence’, in relation to an individual, means a residential premises situate in the State—

(a) which is owned by the individual and which is occupied by the individual as his or her only or main residence,

(b) which has previously been occupied as a residence and has been acquired by the individual for the purposes of occupation by the individual as his or her only or main residence on completion of the qualifying work and which is so occupied upon completion,

(c) which is owned by an individual and occupied by a tenant under a tenancy for which registration is required under Part 7 of the Residential Tenancies Act 2004, and where such registration requirements have been complied with by the individual, or

(d) which is owned by an individual and which is intended by the individual to be occupied by a tenant under a tenancy for which registration is required under Part 7 of the Residential Tenancies Act 2004, and where such registration requirements have been complied with by the individual and which is occupied by a tenant within 6 months of completion of the qualifying work;”,

and

(ii) by inserting the following definitions:

“‘rental unit’ means—

(a) part of a building used, or suitable for use, as a dwelling which is occupied by a tenant under a tenancy for which registration is required under Part 7 of the Residential Tenancies Act 2004, and where such registration requirements have been complied with, or

(b) part of a building used, or suitable for use, as a dwelling which is owned by an individual and which is intended by the individual to be occupied by a tenant under a tenancy for which registration is required under Part 7 of the Residential Tenancies Act 2004, and where such registration requirements have been complied with by the individual and which is occupied by a tenant within 6 months of completion of the qualifying work;

‘tenancy’ has the same meaning as it has in the Residential Tenancies Act 2004;

‘tenant’ has the same meaning as it has in the Residential Tenancies Act 2004;”,

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

“(1A) Where, as a result of the carrying out of qualifying work, a residential premises referred to in paragraph (c) or (d) of the definition of ‘qualifying residence’ in subsection (1) is converted into more than one rental unit, each such rental unit shall be a qualifying residence.”,

(c) by substituting the following subsection for subsection (2):

“(2) (a) This section applies to qualifying expenditure incurred on qualifying work carried out—

(i) during the period from 25 October 2013 to 31 December 2015 in the case of a qualifying residence to which paragraph (a) or (b) of the definition of ‘qualifying residence’ in subsection (1) refers, and

(ii) during the period from 15 October 2014 to 31 December 2015 in the case of a qualifying residence to which paragraph (c) or (d) of the definition of ‘qualifying residence’ in subsection (1) refers.

(b) Where, during the period from 25 October 2013 to 31 December 2013, qualifying work is carried out on a qualifying residence to which paragraph (a) or (b) of the definition of ‘qualifying residence’ in subsection (1) refers, and where payments in respect of such work are made during that period, any such payments shall be deemed to have been made in the year of assessment 2014.

(c) Where, during the period from 15 October 2014 to 31 December 2014, qualifying work is carried out on a qualifying residence to which paragraph (c) or (d) of the definition of ‘qualifying residence’ in subsection (1) refers, and where payments in respect of such work are made during that period, any such payments shall be deemed to have been made in the year of assessment 2015.

(d) Notwithstanding paragraph (a), where qualifying work, for which permission is required under the Planning and Development Act 2000, is carried out during the period from 1 January 2016 to 31 March 2016, then provided such permission is granted on or before 31 December 2015, that work shall be deemed to be carried out in the year of assessment 2015.”,