New special savings schemes and changes in the taxation of profits on share options are still under consideration at the Department of Finance. The measures, expected in the Finance Bill 2001, were not included in the Department's Preliminary List of Measures published yesterday.
Discussing the List, Department second secretary general Mr Donal McNally pointed out that this year's Finance Bill will include a number of measures which were not in the advance list such as certain tax anti-avoidance measures and "other measures still under detailed consideration but not yet decided upon". Discussions have been held with banks, building societies and life assurers on possible new savings schemes and measures to fund long-term care costs, he said. In his November Budget Finance Minister Mr McCreevy said he would consider suggestions for "further savings innovations" before the Finance Bill was enacted. The Finance Bill, tentatively scheduled for February 15th, will contain the detailed measures required to enact the Budget 2001 measures and other technical tax measures. The Preliminary List contained no real surprises.
It included confirmation of the income tax, capital gains tax, stamp duty and indirect tax changes announced in the Budget. Among these measures were the reductions in income tax rates, increases in allowances and the widening of the standard rate band. The List included a number of technical measures to implement the move to tax credits, the alignment of the income and capital gains tax years with the calendar year and the conversion of Irish pound amounts to euros. Budget-related measures include the taxation arrangements agreed with the Credit Union movement for members' interest and dividends income. On the List, the Credit Union taxation measures heading was extended to include the tax treatment of deposits in other financial institutions. Banks and building societies had threatened to complain to the European Commission over the Budget measures announced for credit unions.
Other measures include tax relief on trade union subscriptions, taxation of foreign life assurance investment and reduced corporation tax rates for firms with trading income of up to £200,000.
Non-Budget measures included the imposition of VAT at a rate of 20 per cent on toll road charges and an increase in the stamp duty exemption threshold for mortgages from £20,000 to £200,000. Some changes in the urban renewal tax reliefs were set out, such as a restricted definition of qualifying commercial premises under the Park and Ride scheme and the reintroduction of the "Living over the Shop" scheme. The Revenue limit for the release of a joint deposit account when one account holder dies to the survivor will be increased from the current £5,000 level to £25,000. Some loopholes which lead to abuses of tax reliefs will be closed in the Finance Bill including one in the tax relief arrangements on foreign earnings for people who spend part of the year working abroad. Mr McNally said the relief was being used to shelter income from tax by defining a day as any period up to 12 midnight whereas the intention was that that a day would be a working day. To qualify for relief, Irish residents must work abroad for 90 days in any continuous 12month period and each day counted must be one of at least 11 continuous days.
