Brendan Griffin (Kerry South, Fine Gael)
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Question 203: To ask the Minister for Finance if he will explain the seed capital scheme for starting small business; the take up rate of same; if he will give an example of the way the scheme works; and if he will make a statement on the matter. [24906/12]

Michael Noonan (Limerick City, Fine Gael)
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The Seed Capital Scheme allows an individual, who makes a qualifying investment in a company, to set off the amount of that investment against his or her taxable income in any of the previous 6 years. The activities of the company are required to constitute a qualifying new venture. The individual is required to take up full-time employment with the company and to hold at least 15% of the issued ordinary share capital for the required period, which is usually three years. The scheme has been considerably simplified for investments made on or after 25 November 2011.

The following table sets out recent scheme statistics:

The following is an example of the way the scheme works in the case of an individual who invests €20,000 in a qualifying company on 01/05/2012:

The individual may set off the amount of that investment against his or her taxable income in any of the previous 6 years. The individual nominates, say, 2009 as the refund year and makes a claim to Revenue's Incentives Branch on the relevant forms providing details of the company concerned and the investment. If the individual earned €20,000 in 2009 that was taxed at the higher rate of income tax (41%), where that tax has not been repaid by reference to any other scheme or relief, he or she will receive a refund of tax of €8,200 i.e. 41% of €20,000.

Brendan Griffin (Kerry South, Fine Gael)
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Question 204: To ask the Minister for Finance if he will explain the PRSI and tax breaks available to business for taking on new employees; the take up rate of same; if he will give an example of the way it works; and if he will make a statement on the matter. [24919/12]

Michael Noonan (Limerick City, Fine Gael)
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Sections 472A and 88A of the Taxes Consolidation Act 1997 provide tax incentives for both employers and employees, to help the long-term unemployed to return to employment. The relief under Section 472A, known as the Revenue Job Assist scheme, allows qualifying employees, in addition to their normal tax credits, to claim certain income deductions, including additional deductions for qualifying children, for the three year period after taking up employment.

Section 88A provides an associated tax incentive for employers. Employers may claim a double deduction in computing the profits of the trade or profession in respect of the first 3 years wages paid to qualifying employees. This double deduction may also be claimed in respect of the employers PRSI contribution on such wages.

For example, if an employer provided employment to an individual earning €20,000, the employers PRSI would amount to €2,150. When computing the profits for corporation tax purposes, the employer can deduct double the amount of salary and employers PRSI paid in respect of that individual i.e. an additional €22,150, which would result in a reduced liability to corporation tax saving the company €2,768.75 per annum.

Both incentives apply in respect of individuals who have been unemployed for at least 12 months and are in receipt of a specified social protection payment or who are in a category approved for the purposes of the scheme by the Minister for Social Protection with the consent of the Minister for Finance.

The latest year for which information is available on the take-up of the scheme is for 2009, when 200 employers and 390 employees participated, at a cost to the Exchequer of €0.3 million. Full details of the scheme for employees can be found in Revenue leaflet IT58 and for employers in Revenue leaflet IT59. These leaflets, along with a recently published guide entitled Supporting Job Creation – Tax reliefs, deductions and exemptions, are available on the Revenue Commissioners website at http://www.revenue.ie

In addition, the Department of Social Protection provides for the Employer Job (PRSI) Incentive Scheme. Under this scheme, if an employer takes on an additional member of staff in 2012 that has been unemployed for 6 months or more, an exemption from employers' PRSI for 18 months is available. Primary responsibility for this incentive rests with the Minister for Social Protection.