You can access the key dates list at any time from the Business Centre.

Revenue have been involved in an exchange of information exercise with the Department of Social Protection, which this week resulted in Revenue stating that 115,000 pensioners will pay extra tax in 2012. It is important to note that no change in tax law has occurred as a result of this initiative, rather due to technological advances the Revenue Commissioners are able to integrate information received from the Department of Social Protection into tax credit certificates from 2012.

It is important to distinguish between the self-assessed and the PAYE worker in this scenario.

Self-Assessed persons are obliged to complete an income tax return annually as they have significant non-PAYE income, e.g. trade or rental income. On an income tax return you are obliged to complete and have assessed all your income sources, not just your self-employed income. Therefore, you should be recording all your pension income on the form to ensure it is being taxed correctly.

PAYE Workers are not obliged to complete an income tax return each year as their income tax is deducted at source. For occupational pensions, the administrators of the fund are obliged to operate any pension payments through the payroll. However, in a lot of cases they would be issued with a tax deduction certificate for the recipient stating income up to €18,000 is tax exempt in 2011/2012 for a single individual, and up to €36,000 for a married couple.

Comparing this to the state pensions (Contributory Pension, Transitional Pension, Widows Pension, Invalidity Pension), these are liable to tax in the same way as occupational pensions, but due to the easing of the administrative burden, tax was never deducted at source on these pensions. An administrative burden would arise as the vast majority of such recipients would be under the threshold to be tax exempt, and therefore large refunds would be issued at the end of the tax year to repay the recipient for tax deducted at source. Such a position relies on the taxpayer being aware of whether their have any tax liability on their total income, and the need to inform the Revenue Commissioners of the amount of their state pension. The complexity of the tax system means that professional advice is often needed, not something which is often available to PAYE workers.

In order to ensure that the state pensions are appropriately taxed, the occupational pension administrators are advised of how much they must reduce the tax exempt limit of the recipient. Previously this was not done automatically by Revenue, which resulted in underpayments by certain tax payers. This is corrected for the tax year 2012 onwards, but arrears may be due for previous years in some cases.

Should you have any queries on this do not hesitate to contact us.

We wish to remind you of the VAT rate change which is to be applied from 1st January 2012.

Budget 2012 increased the standard rate of VAT to 23% from January 2012. This increase applies to all goods and services liable to the standard rate including alcohol and non-alcoholic minerals, transport fuels, vehicles, consumer goods, hiring/leasing, confectionery as well as many services.

All VAT registered businesses should ensure that from 1 January 2012 all sales at the standard rate are charged to VAT at 23%. If you have a computerised sales system you may need to contact your IT support if you do not know how to amend the system. If you do not amend the VAT charged on your sales from 1 January 2012, the Revenue Commissioners are entitled to hold you liable to account for the additional VAT which should have been collected.

For ongoing contracts, the date of the invoice is the determinant of the VAT rate to be charged, where all invoices from 1 January 2012 should be charged at 23%. For further information for specific invoicing arrangements please see the Revenue website.

Please feel free to contact us with any queries you may have on this.

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The offices of Royal Canal Financial Control Services and Ronan Duffy and Co. will be closed from 3pm on Friday 23rd December for the Christmas break and will re-open at 9am on Tuesday 3rd January.

During this period essential payroll services will be continued and urgent queries along with scheduled meetings will be attended to. If you wish to contact us during this time please ring the office on 044 9374 915 or text one of the directors.

Personal Taxation
• No changes in Income Tax rates, bands or credits.
• Universal social charge exemption increased from €4,004 to €10,036, and the move to a cumulative system will allow adjustments for under/over payments during the year.

Business Taxation
• Corporation tax exemption for new companies extended to 2014
• Employer’s relief from PRSI on pension contributions made by employees reduced to Nil from 1 January 2012 (currently 50% relief applies)
• No change in the Corporation Tax rate

Relevant Contracts Tax
• No changes to note

Indirect Taxes
• Standard VAT rate increased from 21% to 23% from 1 January 2012, in his speech Mr Noonan, said that this was the front loading of the increases in VAT from the EU/IMF deal and said that there will be no more increases in VAT in the life time of this government.
• Open farms can avail of tourism rate of 9% from 1 January 2012
• Increase in excise duty on cigarettes by 25c; no increase in alcohol excise duty, however legislation due on low cost selling

• Motor tax increases – average increase of 7.5% for cars taxed by engine capacity. But increases of over 50% for those taxed under the CO2 model (e.g. Class A increase of €56 to €160). This adjustment is required to reflect the increase in cars eligible for the lower CO2 model rates (17.69% of cars taxed in 2011 to date qualify, but they only account for 9.46% of the total motor tax income).

Stamp duty
• Abolition of multiple rates for non-residential stamp duty. For such instruments executed after 6 December 2011 a rate of 2% will apply.

Carbon Tax
• Increase of €5 to €20 per tonne on fossil fuels.

This equates to 1.4 cent per litre on petrol, and 1.6 cent per litre on diesel, this will take effect from midnight of the budget.

For a typical domestic oil fill of 1,000 litres of kerosene, the cost has increased by €14.40, and for natural gas €14.46 per kilowatt hour. Carbon tax increases on heating fuel will only take effect from 1st May 2012.

Capital Taxes from 6 December 2011 (midnight)
• Rate of capital acquisitions tax increased from 25% to 30%. Group A threshold to be reduced to €250,000.
• Rate of capital gains tax increased from 25% to 30%.
• New capital gains tax exemption for properties bought until the end of 2013, once property is held for at least seven years.

Miscellaneous Provisions & Announcements
• For items of public expenditure including health and social welfare, please see our Budget 2012 – Public Expenditure Measures page.
• Removal of the 36 day tax exemption for illness benefit.
• Mortgage interest relief to increase to 30% for first time buyers who bought at the height of the boom in the the period 2004 – 2008. A 25% rate applies for first time buyers in 2012, with a 15% rate for non-first-time buyers
• Household charge of €100 to be introduced in 2012, pending the development of a full property tax from 2014. Waiver for those on mortgage supplement and unfinished estates.
• DIRT rate increase by 3% for interest received on or after 1 January 2012

Summary Statistics

…

Whilst every care has been taken in the production of this budget summary, neither Royal Canal Financial Control Services nor Ronan Duffy and Co. can be held responsible for any action taken or deferred, resulting from any errors contained therein. For a more comprehensive summary please refer to the government press release.

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National Recovery Plan 2011 – 2014

Minister for Public Expenditure & Reform, Brendan Howlin addressed the Dail today in relation to the expenditure budget for 2012.

The main points are as follows:

• Target deficit of 8.6% of GDP in 2012
• Public service pay bill to fall by €400m in 2012, with a 12% staff reduction
• No reduction in weekly rates of social welfare payments
• Basic child allowance rate to be maintained. Over the next two years however, they will standardise the rate payable per child, by reducing the allowance for additional children.
• Fuel allowance period to be reduced from 32 to 26 weeks.
• Employer’s redundancy rebate to be decreased by 60% to 15%
• Increase in the monthly threshold under the Drugs Payment Scheme (DPS) from €120 to €132
• Increase in €250 of the student contribution to third level fees
• Job seeker benefit to be assessed on a 5 day week were recepient is a part-time worker (currently based on 6 day week)

Budget 2012 continues with Minister Michael Noonan’s speech tomorrow at 3pm.

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Finance Act (No. 3) 2011
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National Recovery Plan 2011 – 2014

Decision ECB/2010/14 requires retailers that fill ATMs to be responsible for the authenticity and fitness of the bank notes for circularisation. In order to comply with the legislation, retailers must operate a bank note handling machine which:

• Physically separates suspect bank notes from genuine ones without user intervention.
• Does not require any user intervention in order to determine when a bank note is suspect or not.

We have recently been informed that there are a few difficulties with some aspects of the new machine counting function such as notes with curled edged not being recognised.

For further details on this topic and for advice on which type of machine you should be using, we advise that you contact your local bank branch.

Background information on the EU decision is available on its website here.

If you are a Principal Contractor or a Sub Contractor please read the following very carefully.

We also encourage you to read all sections if you are a subcontractor only, so you can understand further how the changes affect you.

We will endeavour to update these notes as the new system comes live and if Revenue announces any changes, so please bookmark this page for future reference and check back and view the notes online to ensure you have our latest notes. You will note the change to the version by the date at the top of this document.

These notes are not intended to be comprehensive and are just provided as an overview of the main changes. The following notes are split into sections as follows (clink on section titles to jump to section)


Summary Highlights
Principal Contractor Notes
Subcontractor Notes
Useful Links

SUMMARY HIGHLIGHTS
As you are probably now aware Revenue is going online with all taxes as time goes on, RCT is the next on their list.

Revenue has published a video on youtube which they have on their website via the following link. It is broken down into different parts.

Revenue RCT Changes – Online Information Link

New eRCT System main highlights are as follows,

• No Paper forms at all
• No longer a C2 card
• Must be done online via ROS, no other option at all
• 3 rates of RCT 0%, 20% and 35%
• System will be live in part from 5th December 2011 to notify contracts only
• Full System will go live from 1st January 2012
• With new system you cannot make a payment to a subcontractor without notifying Revenue.
• ROS online and/or ROS offline to be used
• The following notifications must be supplied to Revenue via online
o Contract notification
o Payment Notification
o How much tax to deduct from sub-contractors payment instantly given
o Deduction Return Summary

Sectors affected:
• Construction
• Forestry
• Meat Processing

Why is Revenue making the change to online?

• Too much paper being used under current system, about 1 million pages per year at the moment
• Standard Rate too high at 35%
• Easier to complete monthly or quarterly returns compared to the old RCT30’s as Revenue will issue summary page with details already supplied.
• RCT35 form (annual return) will be gone as Revenue will now have all details of contracts
• Current Payment Cards gone
• Sub-Contractors will no longer receive the RCTDC page to claim the deducted tax back.

Subcontractors are not currently obliged to register for ROS, but if registered the advantage is that they can see what contracts are registered under their name.

For Agents there will be more work if clients are looking for their agent to act on their behalf for the principal.

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PRINCIPAL CONTRACTOR NOTES

On ROS online the area will be on the bottom left of the screen

You can upload 10 contracts for each batch and an unlimited number of batches.

You can upload 100 payment notifications per batch and again you can upload unlimited number of batches.

You can also view previous payments and old contracts notified to Revenue via this screen.

Since there is no longer a C2 card it is the Principal Contractors’ responsibility to ensure that some official form of photo ID is kept, for example, drivers licence, passport etc.

Notify Revenue of the contract as soon as it is agreed as you will need to do this before you can request a payment authorisation from Revenue.

You will need the Subcontractor’s Tax Reference number; if you do not have this you tick a box on screen and it will require you to enter more contact details on the subcontractor. This will also happen if the number supplied by the subcontractor is incorrect. If this happens the rate that will be deducted is 35%

If this happens the principal must write to the subcontractor that there was an issue with the tax number supplied within 7 days from the start of the contract.

Revenue will also make contact with the subcontractor.

If a labour only contract further questions will be asked for example, materials, insurance etc., but the details required are the same as for the current RCT1 form.

On submission there will be instant acknowledgment of the contract.

No payment can be made unless contract notified to Revenue online.

You can amend details as follows after notification of contract to Revenue;- location, value and end date, all other changes must be notified to Revenue directly in writing.

If you have multiple invoices to pay you may only make one payment notification if you wish, while the new system is being introduced; it is proposed that this will change in the future.

You enter your gross payment amount – Gross ex VAT if construction or VAT exclusive for other industries.

There will be penalties if Revenue is not notified of payments before payment is made.

However, if ROS is down or there is a technical reason why you cannot notify Revenue in advance you must notify Revenue online of the payment as soon as possible afterwards, there will be a box to tick that it is a post payment. Revenue has said that they will monitor this button closely and penalties could be applied if no real reason for it to be used.

If you are making a payment and cannot notify Revenue per above online, you must use the rate given by Revenue at the time the contract is notified to Revenue, if not sure or not available you must use 35%.

Payment Authorisation Notification Number will be returned to your ROS inbox, it will tell you how much tax to deduct and what the net payment will be.

A copy of this authorisation must be given to subcontractor, or alternatively in email or writing but must be agreed in advance.

The tax you deduct will go over to the subcontractor’s tax record straight away and the subcontractor will see these online too (see below for more information on subcontractors)

If there is an error you can cancel the payment within the return period (i.e. within the RCT30 return period), however you can only change gross but anything else you must cancel the payment and start again.

The new Deduction Summary replaces the RCT30 forms.

This form will be prepopulated with the list of payments made within the return period line by line. The Principal must check these before payment to Revenue can be made, you can amend the line item as mentioned earlier however this must be done before the due date of the return.

If after the due date of the return you have to add a payment you cannot do this but will have to notify the tax office and penalties and surcharges and interest will be charged.

In summary the following penalties apply to the the new system, some of which are new as a result of the new system:

Section 530F – Payment without notification to Revenue
Section 530M – €100 surcharge for late or amended return
Section 1078 – Failure to deduct tax
Section 1052 – Interest and penalties on overdue tax

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SUBCONTRATOR NOTES

As mentioned earlier there are 3 rates of RCT that can be deducted.

0% – Those who currently have a C2 or who are compliant for Tax
20% – Are for those who “Complied Substantially”
35% – Exceptional Circumstances, including where a contractor is “Unknown” per earlier, no tax number or tax number incorrect or where there are serious compliance issues i.e. taxes outstanding and or returns outstanding

For the first 3 months rates will be frozen until 1st April 2012.

Please note that there will be no more C2 cards.

Tax deducted will be on your RCT screen on ROS almost immediately after input by the principal; if the principal amends or cancels the payment/contract this will be updated on your record accordingly.

The tax deducted will only be available for offset against Corporation Tax or Income Tax if a sole trader and other tax liabilities during the year. Please remember that there will be no refunds during the year whatsoever.

Repayment will only occur after your own tax year, if you’re a company this will be our Corporation Tax year end or if a sole trader the calendar year end.

Your Corporation Tax return or Income Tax return will need to be filed before any refund can be processed. In addition you must have all of your current tax records up to date.

Finally – What do I need to do now?

1. Register for ROS, currently takes 10 days, if we act as your agent and have your ROS certificate; please speak to us to arrange for an additional certificate to be created or to send you the certificate.
2. Go online after 5th December 2011 to review what’s there.
3. Revenue will notify what rate you are on via ROS if registered or via post if not registered for ROS
4. View the online video when available from Revenue, link available at top of this page.
5. View the FAQ website, link below for more information
6. Ensure you register contracts leading up to 1st January 2012

If you have any questions or wish to discuss the new changes please feel free to contact Joe Bingham at 044 937 4915.

At Royal Canal Financial Control Service we can offer you onsite training and walk through when the system is live for you and your staff to better understand the new system, if you would like to enquire about this service offering please contact us for a quote.

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USEFUL LINKS
Revenue RCT Index
Revenue – RCT Changes 2011
Revenue – Principal Contractors Page
Revenue – Subcontractors Page
Revenue – RCT New System FAQs

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Whilst every care has been taken in the production of this summary, neither Royal Canal Financial Control Services nor Ronan Duffy and Co. can be held responsible for any action taken or deferred, resulting from any errors contained therein.

Retail Intelligence’s survey reports that the majority of respondents will have less money to spend this Christmas as a result of the economic downturn and the effect this is having on their personal debt situation. They will tend to look to the larger discount stores for their Christmas food needs.

Smaller retailers should carefully consider their need for Christmas stock in the run up to the festive season.

To read the full article by Retail Intelligence please click here.

This scam we like to call the cash dispersal scam. With this scam the employee neglects to scan all the items a customer purchases at the till, however the customer is charged the correct amount. At the end of the shift the employee pockets the amount that the till is over. Where the employee is not responsible for counting the till amount at the end of shift, the employee will be required to keep a record of money they have scammed in order to keep the till reconciled at the end of shift.

Common signs to look out for:
• Till is unreconciled by an even amount, e.g. bus tickets and lotto sales are easier to keep track of the amounts involved. This will only appear if the till operator makes a calculation error.
• Stock variances on items where it is easy to keep track of their monetary value.

Deterrents:
• Policy of receipts given to all customers and till display is clearly visible to the customer.
• Unannounced till shift changes
• CCTV over till area.