Ministers Alan Shatter and Michael Noonan recently announced plans to introduce new methods of dealing with personal insolvency via non-judicial methods, in addition to the proposed reduction of the current bankruptcy period from 12 to 3 years via the continuing reform of the Bankruptcy Act. The Personal Insolvency Bill, it is hoped,  will be signed into law by the end of April.

For more detailed information, please click here.

Following Budget 2012, the government issue guidance on how the new mortgage interest relief is to work. The document clarifies through tables the effect of the changes on single people and married couples who took out their mortgages between 2004-2008. It also outlines the relief available to those who take out mortgages in 2012.

The document is available for download here.

Revenue has issued a document detailing the various job creation measures available and the benefits of these to both employees and employers.

The measures include:

• The Revenue Job Assist scheme
• Tax relief for new start-up companies
• The Seed Capital Scheme
• Employment and Investment Incentive
• Retraining relief.

The document is available for download here: Supporting job creation

The new online system for relevant contracts tax came online as of 1 January 2012. The system is now mandatory and paper returns will no longer be accepted. For more detail on what constitutes a relevant contract, please click here.

In order to use the new service, principals are advised to register for the Revenue Online Service which will allow individuals to liaise with Revenue on all matters related to RCT or any other taxes relating to their business.

The principal new requirements of the online system are the “contract notification” and “payment notification” obligations, outlined below.

Contract notification

When a principal enters into a relevant contract with a subcontractor, he/she will be obliged to provide Revenue with details of the contract online, including a declaration that the contract being entered into is not a contract of employment. Revenue have issued a guidance note for people entering into relevant contracts from 2012 onwards. It is available here.

Payment Notification:

Under the new system, principals must notify the Revenue before they make payments to subcontractors. Once Revenue has received the notification, they will issue a Deduction Authorisation which advises the principal what level of tax should be withheld and paid over to Revenue. The amount to be deducted will be one of the following percentages:

0% – for subcontractors who are registered and up to date with their taxes.

20% – for subcontractors who are registered and substantially compliant.

35% – for subcontractors who are not registered and/or not compliant with their tax obligations.

Revenue has produced a video illustrating online payment notifications below:

eRCT – payment notifications

Subcontractors

The system is also available for subcontractors to use. Among the services available, registering will allow them to check online to see  contracts that have been registered with Revenue and that tax withheld from payments has been paid by the principal over to Revenue. The system will facilitate more speedy reclaims and allow the subcontractor to have immediate oversight of his or her RCT position.

Revenue has also produced a video guide as to how subcontractors can avail of the service.

eRCT – guidance for subcontractors

Revenue have issued a list of frequently asked questions relating to civil partnerships. Click here to download.

For more general information on civil partnerships, click here.

The new capital acquisitions tax pay and file deadline is rapidly approaching.

Finance Act 2011 brought forward the payment date from 31 October, meaning that all gifts and inheritances received in the 12 month period to 31 August should be included in the return now due at the end of September. It is the valuation date that applies.

For 2011, tax payable on all gifts or inheritances received will have to be paid by 30 September. The pay and file deadline for gifts and inheritances received with valuation dates after 31 August 2011 will form part of the return for the year to 31 August 2012.

Revenue have issued eBrief 43/11.  As part of Revenue’s change management plan for the introduction of the new RCT system, a mail shot is being issued to principal contractors to inform them of the main RCT changes, the potential implications for their business and what they should do to prepare for these changes. Principal contractors can expect to receive their letter and an information leaflet from Revenue from 19th July onwards.

A copy of the eBrief is available here and a full list of links detailing the changes in the entirety can be found here.

Revenue has issued guidance on the treatment of locums in the medical sector and when they are to be considered employees. The Tax Briefing represents the Revenue’s final position on the matter following two years of consultations.

In summary, a locum will be considered a full-time employee, a temporary employee, a part-time employee or a casual employee in the majority of cases. The guidance does not preclude the fact that the locum may be self-employed. However, it seems unlikely they will be considered as such following Revenue’s victory at the Appeal Commissioners in the MIDOC case.

The Revenue have made particular reference to locums who do not consider themselves employees and make the point that it does not necessarily matter. As far as Revenue are concerned, the employer will be obliged to operate PAYE/PRSI as with any other employee.

The Tax Briefing in full can be accessed here.

New legislation has been published  to allow people entering into civil partnerships to avail of the same tax treatment as other married couples. The Civil Partnership bill was published on 13 June 2011 and is to give legal effect to the objectives announced by the previous government.

Included in the legislation are certain changes to allow for long-term cohabiting couples, though it stops far short of granting such couples the same tax rights as those in civil partnerships or marriage. The changes mainly involve protection in the case of the death of a partner and in the case of a financially dependent co-habiting partner when a long-term relationship breaks down.

Below is a summary of the main effects from a tax perspective:

Income tax:

• Civil partners will now be able to allocate tax credits and bands to the same degree as other married couples
• There will be no change for co-habiting couples – both will continue to be assessed singly.

Transfers of assets:

• As with married couples, civil partners will be able to transfer assets to each other without triggering charges to capital taxes, including on the death of either spouse.
• Co-habiting couples will continue to be subject to normal rules, except on death where the surviving member of the relationship was financially dependent on the deceased.

Separation and divorce

• Civil partners will be able to avail of the same tax treatment as that afforded to married couples
• Financially dependent partners in a co-habiting relationship will be able to claim a form of compensation in the event the relationship breaks down.

Revenue has published detailed FAQs on the two main topics (click to download):

• Taxation-civil-partnerships FAQs
• Cohabitants FAQs

Revenue have issued eBrief 34/11 and Information Note No.3, providing further detail on the new RCT regime. The main points can be summarised as follows:

• The new scheme is expected to be introduced on 1 January 2012;
• All contact will between principal contractors and Revenue will be online;
• Mandatory online filing will apply, though Revenue indicate they will make an exception for 2011 RCT35s;
• A new rate of 20% will be introduced.

For further information, click on eBrief 34/11 and Information Note No.3.