Analysis of Budget 2020

Minister Donohue delivered his “no surprises” Budget 2020 in the shadow of Brexit. Despite our economy being in a strong position and with a general election on the horizon, this was no give-away Budget. Both Minister Donohue and the Taoiseach had managed expectations in advance with talk of “safe choices in relation to taxation” and “modest, targeted welfare increases”.  Prudence seemed to be the order of the day.

There will be no deposit to our rainy day fund this year as the Government expects to have to borrow in 2020 to deal with a potential hard Brexit. A package of over €1.2 billion, excluding EU funding, was announced in the Budget to respond to Brexit.

Climate change was the other main influencer of Budget 2020. Increased carbon tax and other changes to vehicle-related taxes were all designed to support our transition to a low carbon economy. The balancing act for the Government was to ensure that the cost of these changes was distributed fairly. An increase to the weekly fuel allowance and allocations of €3 million to pilot new Agri-environmental schemes and €2.7 billion to the Department of Transport, Tourism and Sport in 2020 were some of the responses to this.

This Budget must have been a difficult one for the Government and partners to agree upon. It makes no moves towards the Taoiseach’s pledge to raise the 40% tax rate threshold to €50,000 and contains minimal social welfare increases. It looks like the possibility of a no-deal Brexit will haunt Irish politicians on the doorsteps long after Halloween and the current proposed Brexit date has passed!

For more information, please contact Eddie Murphy, Partner and Head of Tax Services.

Highlights from Budget 2020

Budget 2020 was delivered by Finance Minister Paschal Donohoe today. Below we highlight the main changes that could affect you.

Climate Measures and Carbon Tax

  • Benefit-in-kind on commercial vehicles to be linked to emissions from 2023.
  • Emissions thresholds in respect of capital allowances and VAT reclaim on commercial vehicles to be reduced.
  • 0% benefit-in-kind on electric vehicles will be extended until the end of 2020.
  • A Carbon tax increase of €6 per tonne likely to result in an increase of about 2c per litre of petrol and diesel immediately and about €15 per tank of home heating oil from May 2020.
  • Relief to be provided to hauliers through the Diesel Rebate Scheme for the increased cost of fuel.
  • A new nitrogen oxide (NOx) surcharge will replace the 1% diesel surcharge and will apply to all passenger cars registered from 1 January 2020.
  • VRT relief for hybrid vehicles will be extended until the end of 2020.
  • The weekly fuel allowance will increase by €2.

Personal Tax

  • The reduced rate of Universal Social Charge for medical card holders to be continued until the end of 2020.
  • Income tax bands and rates remain unchanged.
  • The Home Carer Credit will increase from €1,500 to €1,600.
  • The Earned Income Credit will increase from €1,350 to €1,500.
  • Help to Buy Scheme will be extended until the end of 2021.
  • Living City Initiative will be extended until the end of 2022.

Corporation Tax

  • Confirmation of the 12.5% rate of tax.
  • Special Assignee Relief Programme (SARP) and Foreign Earnings Deduction will be extended until the end of 2022.
  • Enhancements to the Key Employee Engagement Programme (KEEP) and Employment and Investment (EII) programme announced.
  • For micro and small companies:
    • R&D Tax Credit to increase from 25% to 30%.
    • R&D Tax Credit will now be available for certain pre-trading expenditure.
  • The qualifying spend limit for R&D outsourced to third level institutions to be increased from 5% to 15% for R&D Tax Credit purposes.
  • New Anti-Hybrid Rules will be introduced, in line with the Anti-Tax Avoidance Directive (ATAD).
  • Transfer Pricing rules to be brought in line with OECD standards with effect from 1 January 2020.
  • Anti-avoidance measures to be introduced to the IREF and REIT regimes with immediate effect.

Agri Measures

  • Farm Restructuring Relief will be extended until the end of 2022.

Capital Gains Tax and Capital Acquisitions Tax

  • Capital Acquisitions Tax and Capital Gains Tax remain at 33%.
  • The threshold for capital acquisitions tax that applies to children receiving gifts or inheritances from their parents will increase by €15,000 to €335,000.

Other Measures

  • The rate of stamp duty on non-residential property will increase from 6% to 7.5%.
  • A new stamp duty charge of 1% will apply where a scheme of arrangement, in accordance with Part 9 of the Companies Act 2014, is used for the acquisition of a company.
  • The rate of Dividend Withholding Tax to be increased from 20% to 25% from 1 January 2020 with further changes to the DWT regime to follow from 2021.
  • The excise duty on a packet of 20 cigarettes is being increased by 50 cents with a pro-rata increase on other tobacco products.
  • A new relief from betting duty and betting intermediary duty up to a limit of €50,000 per calendar year to be introduced.
  • A package of over €1.2 billion announced, excluding EU funding, to respond to Brexit.

Social Welfare

  • The 100% Christmas bonus will be paid out in 2019.
  • The Living Alone Allowance to be increased by €5 in 2020. Increases announced in the Qualified Child Payment of €3 for over 12s and €2 for under 12s.
  • Free GP care will be extended to under-eights and free dental care to under-sixes.
  • Prescription charges for the over 70s are to be reduced from €1.50 to €1 per item.
  • There will be a reduction in the monthly threshold for the Drugs Payment Scheme from €124 to €114.
  • Medical card income threshold for the over 70s to be increased by €50 to €550 for a single individual and by €150 to €1,050 for a couple per week.

For more information, please contact Eddie Murphy, Partner and Head of Tax Services.

The Companies Act 2014 (the “Act”) places requirements on companies and their officers to display information on company stationery and websites. The requirements set out in the Act are summarised below.

Letterhead

The following particulars must be shown on all business letters:

  • the full name of the company
  • the forename (or initials) and surnames and any former forenames and surnames of the directors and their nationality, if not Irish.

In addition to business letter and company order forms, all limited liability companies must disclose the following, in paper or any other form:

  • the legal form of the company
  • the number under which it is registered with the Registrar of Companies
  • address of the registered office
  • if the share capital of a company is mentioned on letterheads or order forms of a company, the reference must be to the issued share capital

Websites

Companies are required to disclose the following information on their homepage or on an accessible webpage:

  • the legal form of the company
  • address of the registered office
  • if the share capital of a company is mentioned on letterheads or order forms of a company, the reference must be to the issued share capital

This publication is intended only as general guidance and should not be used as a substitute for professional advice.

For further information, please contact David Morris, Senior Consultant in our Corporate Compliance Department.

Crowleys DFK hosted a Virtual Race Night Fundraiser in aid of Charity Partner, Cork ARC Cancer Support House last week. The night was a huge success and raised over €6,600 for Cork ARC.

One of the highlights of the night was a bidding war between Managing Partner, James O’Connor and Partner, Tony Cooney, in an effort to win a two night stay with dinner in The Europe Hotel. James was the lucky winner with a massive €750 raised from this alone.

Speaking about the event, Managing Partner, James O’Connor commented,

“On behalf of everyone at Crowleys DFK I would like to express our sincere gratitude for the very generous sponsorship by friends, clients and local businesses for our Virtual Race Night. We couldn’t have done it without your support. We are proud to support Cork ARC and play a part in supporting the great work that they do.”

Marketing & Communications Manager of Cork ARC, Joanne McCarthy said,

“We are so thankful to Crowleys DFK for hosting another successful fundraising event in support of Cork ARC – their continued support as Charity Partner gives us so much encouragement in our work and helps us to continue to reach out to the community to offer support and information to those affected by a cancer diagnosis in our community. Crowleys DFK have truly made room for Cork ARC and the people of Cork.”

Since the beginning of 2019, we have been participating in events to raise funds and awareness for Cork ARC, including the Cork City Marathon, a Sponsored Skydive and the Mini Marathon. We hope to continue to raise as much as possible for Cork ARC throughout the rest of the year.

Do you trade with the United Kingdom, or transport goods to/from Europe via the UK? Then you will need to consider the impact of Brexit on your organisation and put in place an action plan to ensure you are best prepared for whatever outcome on the 31st October 2019.

Supply Chain
Review your supply chain. Map the movement of goods into and out of the UK and goods going to and from Europe via the UK, to understand the potential for disruption caused by Brexit (possible delays, clearance requirements, additional checks on goods etc.) Consider actions you can take to prevent this disruption.

Customs Clearance
If you intend to import/export goods to and from the UK, you will need to be registered with Customs. Customs declarations will be required in order to move the goods through the border.

  • Ensure you have an Irish Customs registration number- ‘EORI number’ beginning with IE
  • You will also need a UK EORI number beginning with GB
  • Engage with a customs clearance agent/broker to lodge Customs declarations on your behalf.

Customs Duty
Customs Duty will apply to the import of many goods from the UK into Ireland and vice versa. It is non recoverable and is an additional cost to the business.

  • Ensure you correctly assign the correct commodity codes to the goods imported/exported. The codes will be needed in customs declarations and will determine the amount of duty to be paid.
  • Consult with your agent/broker to see if any reliefs are available.
  • Establish whether you need to obtain a ‘Deferred Payment Account’, this will allow you to import goods into Ireland from the UK and defer the payment of Customs Duties and Import VAT to the month following import.

Vat on Importation
The Irish Revenue passed a bill allowing for the “Postponed Accounting” for VAT on importation where businesses would no longer pay VAT at importation. You can instead account for VAT through the normal monthly VAT return resulting in a significant cash flow saving.  However, they will introduce qualifying criteria for this provision over time. If you do not qualify, VAT (currently 23% for ROI) will apply to the import of many goods from the UK into Ireland and will be payable at the time of import of the goods into Ireland.

Product Certification
The area of product certification will change post-Brexit. UK notified bodies will lose their status as EU notified bodies and will not have any legal status in the EU. This means they cannot provide EU certification. If you rely on UK notified body, you must source an alternative notified body in the EU.

  • More detailed information is available at www.nsai.ie/brexit

Exchange Rates
Currency/exchange rate exposures are a risk for businesses trading in foreign currency. You can take steps to help reduce your exposure.

  • Consider Dual Invoicing
  • Currency Hedging/Forward contracts

ERP Systems
Companies should assess the changes required to be made to their ERP/Finance systems and the time/cost that it will take to implement these changes.

For further assistance, please contact Edward Murphy | Partner | Head of Tax services.

For further information you can visit the below websites or call your local enterprise office.

www.gov.ie/brexit

www.revenue.ie/brexit

www.localenterprise.ie/brexit

www.prepareforbrexit.com

Voluntary Strike-Off is one way in which you may formally wind up a company.

An Irish company that ceases to trade or never traded and has no outstanding creditors can request the Registrar of Companies to strike-off a company from the Register of Companies. Section 733 of the Companies Act 2014 gives the Registrar power to strike companies off the register.

A summary of the requirements is outlined below:

To proceed with a Voluntary Strike-Off application, the director(s) of a company need to ensure that the assets of the company are not greater than €150. Liabilities must also not be greater than €150. Also, all tax filings must be up to date with Revenue.

There are two statutory forms that must be completed and submitted to the Companies Registration Office, the G1-H15 and the H15. The form H15 must be signed by all the directors confirming that the company has ceased to carry on business and that there are no assets or liabilities more than the above-mentioned thresholds remaining. The Form G1-H15 must be signed by a director or secretary of the company.

A Letter of No Objection from Revenue and an advertisement from a daily newspaper must accompany the statutory forms when being submitted to the Companies Registration Office. Once the application is registered by the Companies Registration Office, the company will become ‘Strike-Off Listed’. Approximately 3 months thereafter becoming Strike-Off Listed the company will be dissolved.

For further assistance with the Voluntary Strike-Off process, please contact David Morris, Senior Consultant in our Corporate Compliance Department.

Crowleys DFK Selfie with Simon Coveney

An Tánaiste and Minister for Foreign Affairs, Simon Coveney joined James O’Connor, Managing Partner of accountancy firm Crowleys DFK today at the firm’s recently refurbished Cork office in Lapps Quay to announce the creation of 40 new jobs in Cork and Dublin over the coming two years.

 

Crowleys DFK is one of Ireland’s leading indigenous accounting, tax and advisory firms. Founded 44 years ago in Cork, the firm has experienced three consecutive years of over 20% growth and currently employs 90 staff across both cities.

Recruitment is underway as the firm looks to fill roles across a range of specialties including Internal Audit, IT Audit, Risk Management, Advisory, Cloud Accounting and Public Sector Services as well as roles in its core Assurance and Tax Departments. Of the 40 new hires, 26 will be filled by experienced candidates with college graduates filing the remaining 14 roles.

James O'Connor Crowleys DFK with Simon Coveney

James O’Connor, Managing Partner of Crowleys DFK, said at today’s announcement: “We are delighted to announce these 40 new jobs across our Cork and Dublin offices. Our business has changed dramatically in recent years. The demand for access to trusted and experienced business advisors has resulted in an increased need for more innovative client solutions. Therefore, in conjunction with these 40 new roles we will also be investing in new technologies and introducing new service lines including Data Analytics, Business Process Improvement and HR and Marketing Consultancy.”

Crowleys DFK’s client base includes indigenous owner-managed businesses, and subsidiaries and European headquarters of overseas SME and multi-national companies. The firm’s national presence in Ireland is supported by their international reach through DFK International. Crowleys DFK has been a member of this global network of independent accounting and business advisory firms since 1993.

An Tánaiste Simon Coveney said: “I’m delighted to be here today for this significant announcement of 40 new jobs. Crowleys DFK is a great example of a local business achieving national and global success through ambition, innovation and a commitment to investing in talent. I’m particularly pleased to see Crowleys DFK provide career opportunities not only for homegrown and overseas professionals but also for our next generation of talent through their graduate programme.”

Crowleys DFK Recruits with Simon Coveney

An Tánaiste and James O’Connor were joined by Gloria Ramasia and Robert Graham, two new staff members of Crowleys DFK. Gloria Ramasia said: “I am thrilled to be starting my career with Crowleys DFK – it is a company that is really thinking about the future of our industry and I look forward to being part of it”.

 

“We believe this announcement is an important building block in our future growth. It also highlights our commitment to providing innovative service offerings to help our clients navigate the complex and sometimes challenging issues of today’s modern economy. The continued success and growth of the firm is a testament to the dedication and hard work of all our staff. I am excited with these new developments and what the future holds for Crowleys DFK”, James O’Connor concluded.

Budget 2019 increased the Home Carer Tax Credit from €1,200 to €1,500 per annum. This tax credit is available to married couples or registered civil partners, where one spouse stays at home to care for a “dependant”.

A dependant can be:
  • a child for whom child benefit is payable;
  • a person aged 65 years or over; or
  • an incapacitated individual.

It does not include a spouse or partner. Often there may be one or more dependants being cared for by the carer spouse. This does not increase the tax credit available.

The Home Carer Tax Credit is often unclaimed as there is a misconception that you must be caring for a sick relative. This is not the case.

Conditions to qualify:
  • You must be jointly assessed for income tax.
  • The dependant person must normally reside with the carer for the tax year. However, if the dependant person is a relative, they can live next door, on the same property or within 2kms of the carer. A relative includes a relative by marriage or a person for whom the claimant is a legal guardian, but not a spouse or civil partner. However, there must be a direct communication link between the two residences such as a telephone or alarm system.
  • The carer spouse must have income of €7,200 per annum or less (excluding any carers benefit or payments received from the Department of Social Protection). If you earn more than €7,200 but less than €10,200 per annum, you may claim a reduced credit:

For example, if the carer spouse earns €8,200 per annum, the maximum tax credit that can be claimed is reduced by the additional earnings as follows €8,200-€7,200=€1,000/2 = €500. The tax credit is reduced by €500 giving a maximum credit of €1,000 available.

If the carer spouse earns €10,200 or above, no Home Carer Tax Credit is available.

This tax credit cannot be claimed alongside the increased standard rate bands for married couples/civil partners. Revenue will grant you the more beneficial option.

Remember; if you qualified for the Home Carer Tax Credit in any of the past 4 tax years (2018, 2017, 2016, and 2015), you can still make a claim to Revenue for it.

If you require any assistance with the home carer tax credit, please contact Michelle Mangan, Manager of Tax Services.

27 August 2019 – Crowleys DFK, one of Ireland’s leading accounting, tax and advisory firms, is delighted to announce the appointment of David Coombes as a Partner in its Public Sector Services Department.

New Partner Promtion: David Coombes, Partner, Public Sector Services

Pictured: (l-r) James O’Connor, Managing Partner and David Coombes, Partner, Public Sector Services

David joins the partner group having previously held the position of Director within the Public Sector Services team. David joined the firm in 2006 and is highly experienced leading public sector financial and business advisory assignments in areas such as financial reporting framework implementation, management information system design, strategic finance support, risk management and governance compliance.

Commenting on the appointment, Managing Partner, James O’Connor said, “David’s appointment, along with our other senior promotions announcement last month, reflects the firm’s continued strong growth and our commitment to the long-term career development of our staff. I am delighted to see so many of our people moving ahead in their careers.

I would like to congratulate David on this important career milestone. His appointment is a thoroughly deserved recognition of the outstanding contribution he has made to the growth of the practice over the years and for his hard work and commitment to the firm and to our clients.”

New Partner Promotion: David Coombes and Vincent Teo

Pictured: (l-r) Vincent Teo, Partner and Head of Public Sector Services and David Coombes, Partner, Public Sector Services

According to Vincent Teo, Partner and Head of the Public Sector Services Department, “Crowleys DFK remains one of only a handful of accountancy firms in Ireland with a dedicated Public Sector Department. As the Department reports rapid year on year growth, it is important for us to have strong leadership to carry on this momentum, and to ensure that we deliver a seamless and consistent service to our public sector clients as they navigate the substantial financial reporting, governance and internal control compliance that is placed upon them.

David’s appointment will provide a great boost to the leadership team. He is consistently well regarded by clients and is a great addition to our partner group.”

Commenting on his promotion to Partner, David Coombes said: “I’m delighted to have been given this opportunity and feel very fortunate to be part of a firm which offers the best career development opportunities possible for its staff. I see an exciting future ahead for both the firm and the Public Sector Services Department. I look forward to working closely with the Partners and our talented team to continue to grow the firm and broaden our services to our clients.”

The Companies Act 2014 for the first time has set out the principal fiduciary duties of a company director. Fiduciary duties are in addition to other statutory duties under the Companies Act 2014 and other legislation. The principal fiduciary duties of a company director are owed to the company, and the company alone.

The principal fiduciary duties of a company director are to:

  • Act in good faith in what the director considers to be the interest of the company.
  • Act honestly and responsibly in relation to the conduct of the affairs of the company.
  • Act in accordance with the company’s constitution and exercise his or her powers only for the purposes allowed by law.
  • Not benefit from or use the company’s property, information or opportunities for his or her own or anyone else’s benefit unless the company’s constitution permits it or a resolution is passed in a general meeting.
  • Not agree to restrict the director’s power to exercise an independent judgment unless this is expressly permitted by the company’s constitution.
  • Avoid any conflict between the director’s duties to the company and the director’s other interests unless the director is released from his or her duty to the company in relation to the matter concerned.
  • Exercise the care, skill and diligence which would be reasonably expected of a person in the same position with similar knowledge and experience as a director. A director may be held liable for any loss resulting from their negligent behaviour.

For further information on the impact of fiduciary duties on your company’s board of directors please contact David Morris, Senior Consultant in our Corporate Compliance Department.