Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

Question 208: To ask the Minister for Finance if it might be proposed to review the provision whereby family members employed in a family business are taxed at a higher level than non-family members in view of the the need of the current economic situation and the desirability of encouraging the maximisation of employment opportunities by every possible means; and if he will make a statement on the matter. [24863/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The position is that family members employed in a family business are taxed at the same rate of tax as non-family members. Therefore, I am assuming that the Deputy is referring to the disallowance of the employee tax credit (more commonly known as the PAYE tax credit) to a spouse and some children in respect of the PAYE tax due on their income from employment in a family business.

I am informed by the Revenue Commissioners that Section 472 Taxes Consolidation Act 1997 provides for a tax credit known as the "employee tax credit" to an individual who has emoluments to which the PAYE system of tax deduction at source applies. However, the section prohibits the granting of this tax credit against the PAYE tax due on income from a family business payable to the spouse of a proprietary director (where the family business is conducted through a limited company) or payable to the spouse of a sole trader (where the family business is conducted as a sole trade).

While the same prohibition applies to income payable to the children of a proprietary director or of a sole trader, I am further informed by the Revenue Commissioners there are circumstances wherein such children (provided they themselves are not proprietary directors of the family business) may be entitled to the PAYE tax credit against the PAYE tax due on income from a family business. Such circumstances are -

(a) (i) the son or daughter is what is known as a specified employed PRSI contributor for the purposes of the Social Welfare Acts, or

(ii) the PAYE and Universal Social Charge systems has been applied in full to the wages paid to the son or daughter;

(b) the terms of the employment are such as to constitute a full-time employment and the individual actually engages in the employment on a full-time basis (i.e. the son or daughter must throughout the relevant tax year devote substantially the whole of his/her time to the employment (this rules out children engaged on a part-time or temporary basis); and

(c) the wages from the employment in the relevant tax year must not be less than €4,572.

I do not have any plans to review the provision of the PAYE tax credit to individuals engaged in a family business.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

Question 209: To ask the Minister for Finance the extent to which taxation and or incentive levels in respect of small enterprises wishing to retain existing staff numbers or take on new employees, have been progressed in the course of the past twelve months; and if he will make a statement on the matter. [24864/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The Government has brought forward a number of improvements to incentives designed to help businesses retain staff and take on new employees over the past year. These include the measures set out as follows.

The Employment and Investment Incentive (EII) and Seed Capital Scheme commenced on 25 November 2011 following the receipt of State aid approval from the European Commission. These schemes replace the previous Business Expansion Scheme and Seed Capital Scheme and provide tax relief for investments in small and medium-sized enterprises. Under the EII, an initial 30% tax relief is available to investors with the potential for a further 11% relief at the end of the three year holding period, where the company has increased employment or spent at least 30% of the funding raised on research and development. The new schemes provide relief for investments in companies operating in most sectors of the economy.

Tax relief is also available for start-up companies. This scheme was introduced in Budget 2009 and provides relief from corporation tax on the trading income and certain gains of new start-up companies in the first three years of trading, and was modified in 2011 so that the value of the relief will be linked to the amount of employers PRSI paid by a company. Finance Act 2012 extended this scheme for the next three years to include start-up companies which commence a new trade in 2012, 2013 or 2014.

The Revenue Job Assist scheme is available to all employers who employ qualifying individuals who have been unemployed for at least 12 months. This scheme provides a double deduction from Income Tax and PRSI for employers. A deduction from Income Tax is also available for the employee. This scheme was extended in Finance Act 2012 such that individuals who are signing for PRSI credits can also qualify.

All companies in receipt of the R&D tax credit now have the option to use a portion of the credit to reward key employees who have been directly involved in the development of R&D. This option was introduced in order to help companies to retain key employees. It is envisaged that there would be no additional cost to the Exchequer as the bonus comes from the R&D credit already received by the company and the employee still pays the full tax liability on their other income. This change will be monitored closely and if abused will be removed.

The Finance (No. 2) Act 2011 provided for a second reduced VAT rate of 9% on a temporary basis in respect of certain tourism-related services and goods for the period 1 July 2011 to 31 December 2013. This measure is aimed at contributing towards boosting tourism and the creation of additional jobs in that sector. Initial analysis of the effectiveness of the 9% VAT rate indicates that employment numbers in the tourism and restaurant sector have increased, prices have reduced and Tourism Ireland is targeting growth in overseas visitor numbers in 2012.

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.

Kevin Humphreys (Dublin South East, Labour)
Link to this: Individually | In context

Question 210: To ask the Minister for Finance the level of VAT that currently applies to any transaction related to a financial instrument carried out in Ireland; if VAT applies to any transaction involving bonds, shares, securities, derivatives or structured financial products carried out by a person, company or financial institution here; and if he will make a statement on the matter. [24881/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

In general, transactions related to financial instruments are exempt from VAT under the EU VAT Directive with which Irish VAT legislation must comply. The Value-Added Tax Consolidation Act 2010 provides that financial services supplied by a taxable person consisting of the issuing, transfer, or otherwise dealing, in bonds, shares, securities, derivatives or structured financial products are exempt from VAT.