Supplementary Budget 2009

2. Supplementary Budget 2009 Tax Planning in the Current Environment

3. What a difference 6 months can make…

4. Leadership & Vision …

5. The Rumours… • Income levy increase • Income tax rates increase X • New high tax rate X • Reduce tax credits X • Pension changes X • Increase in the rate of CGT / CAT • Residential property tax X • Reduce VAT rates X • Employee PRSI cap increased • Employers PRSI rate reduced X • Excise duty increase

6. Dublin Chamber of Commerce Budget Submission • Retain Corporate rate at 12.5% • No increase in Employers PRSI • Reduce 13.5% VAT rate to 10% X • Reduce excise on alcohol X • Introduce residential property tax X • Introduce wealth tax X

7. Objectives 6 Steps to Economic Revival • Stabilise public finances • Restore damaged banking system • Regain lost competitiveness • Protect jobs and retrain unemployed • Stimulate economic confidence • Restore reputation internationally

8. Fairness is Cornerstone Principle: Everyone must give according to means

9. Personal Tax

10. Rates No change

11. Income Levy • Rates doubled • Entry points reduced

12. Income Levy Yesterdays Budget €0 - €75,036 2% €75,037 - €174,980 4% €174,980 + 6% Effective 1 May 2009? Current Position €0 to €100,100 1% €100,100 - €250,120 2% €250,120 + 3% Effective 1 Jan 2009 Husband and wife separately assessed

13. Income Levy • Not due if: • Income < €15,028 pa • Entitled to medical card • If over 65 and income < €20k pa • On gross income before capital allowances, losses, pension contributions • On “exempt” income such as patent, forestry, artists exemption • Trading and rental income net of expenses • Deposit interest exempt

14. Income Levy Example John, single € Self employed net profit 90,000 Less: Pension AVC (15,000) Less: Capital allowances (18,000) Taxable Income 57,000 Annual impact of levy: €75,036 @ 2% = €1,501 €14,964 @ 4% = €599 €90,000 €2,100 Pre Budget €900

15. Preliminary Tax Impact Preliminary Tax 2009 due on lower of : 90% of tax for 2009 Or 100% of 2008 tax plus income levy on 2008 income € John’s 2008 tax liability 13,896 Plus income levy 2,100 Revised 2008 liability for PT purposes 15,996

16. Employee PRSI & Health Levy Employees PRSI - Employees PRSI Ceiling (4%) from €52,000 to €75,036 Health Levy Current Position €0 to €100,100 2% €100,100 + 2.5% Yesterdays Budget €0 - €75,036 4% €75,036 + 5% Effective 1 May 2009

17. New Marginal Tax Rate On income over €175,000 Top rate of income tax 41% Income levy 6% Health levy 5% 52%

18. What does this mean for Employees?

19. Mortgage Interest Relief • Ceases for loans over 7 years

20. Residential Rental Property • Tax deduction for interest reduced to 75% • Potential effect - 13% additional tax

21. DIRT • Increase to 25% on ordinary deposit accounts • Increase to 28% on other savings products (life assurance / investment funds • Effective 8 April 2009

22. Pensions • Clear signal – changes to tax free lump sum in 2010 Budget • Public service early retirement scheme • No standard rating of pension contributions

23. Childcare Benefits • Early childcare supplement • 50% from 1 May 2009 • Abolished from 31/12/2009 • Free pre-school year • Child benefit allowance will be reviewed in 2010 Budget

24. Capital Allowances • Termination of allowances on private hospitals and nursing homes • Transitional arrangements • Child care and palliative care facilities – relief still available

25. Business Taxation Ireland Inc

26. Business Taxation • 12.5% corporation tax rate unchanged Reminder: • “Manufacturing” tax rate of 10% ceases on 31 December 2010 • Employer PRSI unchanged at: • 8.5% on salary ≤ €18,512 pa • 10.75% on higher salaries

27. Incentive to Protect Employment • Enterprise stabilisation fund • €100 m fund = €50m 2009: €50m 2010 • Assist indigenous companies in difficult business environment • Particular focus SME and exports • Not in financial difficulty at 1 July ’08 • Remain financially viable

28. “Smart Economy” • Measures to support “Smart Economy” through investment and incentives • R & D target of 2.5% of GNP by 2013 • Tax relief on acquiring intangible assets including intellectual property

29. Capital Gains Tax

30. Capital Gains Tax (CGT) Current Position • 22% since 15 October ‘08 Yesterdays Budget • Increase to 25% • Effective 8 April ‘09

31. Capital Acquisitions Tax • Rate increased from 22% to 25% • Effective from midnight 7 April • Thresholds Pre 8 April 8 April • (Parent to Child) €542,544 €434,000 • (Relations) €54,254 €43,400 • (Strangers) €27,127 €21,700

32. Property

33. Dealing in Residential Development Land • Special 20% rate abolished • Taxable at marginal rate for individual - 2009 • Taxable at 25% for company - accounting periods from 1 January 2009 • Trading losses set off restricted – maximum value 20% • If not claimed by 7 April ‘09

34. Stamp Duty • “Trade-In” Scheme • No stamp duty payable on “traded in” property • As payment / part payment • In exchange for new house / apartment • Stamp duty due when “swapped” house sold

35. Property - Commercial Current Position • Stamp Duty rate still 6% • Stamp duty deferral for “resting on contract” still available

36. VAT & Other

37. VAT Rates No changes

38. Car Dealers • VAT Margin Scheme • Second Hand Cars Acquired from 1st July • VAT on Margin • Second Hand Cars Acquired before 1st July • Taxed on resale price • Spread Payments if resold before 31st December

39. Excise • 25 cent increase on cigarettes • 5 cent increase on diesel

40. Future Tax Cuts to be Reviewed • Taxation of child benefit • Introduce carbon tax • Introduce property tax • Review tax exempt income / reliefs

41. Other Possibilities • Tax mobile phone texts! • Rock concerts! • Electronic tag high worth tax exiles!

42. Supplementary Budget 2009

43. Tax Planning in the Current Environment

44. Current Environment • Tax certainty rates / reliefs • Next budget – due Dec ’09 • Commission on Taxation Report • Fundamental changes to tax regime • Maximise available remaining tax reliefs • Secure tax savings • Improve cashflow

45. Losses • Losses arising in your company? • Land write downs / restricted • Capital allowances claims – obsolete assets • Stock provisions • Bad debt provisions • Inter group loans – write off / down • General trading losses • Can be carried back to prior year • Obtain a refund of tax paid • Prepare accounts and return early to get refund

46. Cashflow Saving Tax Tips • Preliminary tax • If profits decreasing – base on current year • VAT refund on bad debts • Move to a cash receipts basis for VAT • Review direct debits for PAYE / VAT • Less frequent filing of VAT / PAYE • Directors current account

47. Tax Opportunities for Companies • Research & Development tax credits • Qualifying R & D • 25% cash refund • What costs qualify? • What is R & D? • Sectors benefiting: • Software, pharma, food, plastics, medical devices, electronics, biotech, manufacturing etc

48. Tax Based Funding • Seed Capital Relief • Start ups • Tax relief on investments up to €600k • Set against Income Tax bill in prior 6 years • Refund of income tax • Business Expansion Scheme • Tax relief of €150,000pa for individuals • Qualifying company can secure €2m • Lack of other tax incentives for individuals

49. Redundancy Planning • Some elements taxable, others not • Maximise after tax payments to staff

50. Tax Savings for New Start Ups • Taxation exemption for new companies • Commence new trades in ’09 • Profits of €960k over 3 years • Existing companies?