Kevin Humphreys (Dublin South East, Labour)
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To ask the Minister for Finance when the Report from the Office of the Revenue Commissioners showing the effect of the High Earners Restriction for 2011 will be published; the changes that have occurred, if any, to the restriction between 2010 and 2011; the changes, if any, that were introduced in the most recent Finance Bill; if he will provide this Deputy with a copy of the Report; and if he will make a statement on the matter. [38718/12]

Michael Noonan (Limerick City, Fine Gael)
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It is anticipated that the report for 2011 on the high income individuals’ restriction will be published around the middle of next year. Information relating to individuals who were subject to the restriction in 2011 will only start to be submitted to the Revenue Commissioners in November 2012 when taxpayers file their tax returns for 2011. Following receipt of the 2011 tax returns, it will be necessary for the Revenue Commissioners to extract and analyse information relating to individuals who were subject to the restriction before they will be in a position to commence work on the compilation of the 2011 report. I expect to receive the 2011 report around the middle of 2013. The most recent report by the Revenue Commissioners analysing the high income individuals’ restriction is in respect of the 2010 tax year. This report, which was published by my Department on 1 August 2012 and is available on the Department’s Tax Policy website , reflects the changes made to the restriction in Finance Act 2010. Those changes extended the restriction to a greater number of individuals by reducing the income threshold at which the restriction applies from €250,000 to €125,000 and by reducing the relief threshold from €250,000 to €80,000. The objective of these changes was to achieve an average effective rate of income tax of 30 per cent where the restriction applies in full. This effective rate does not include amounts payable in respect of PRSI and other levies and charges i.e. the Income Levy and Health Levy which applied in the tax year 2010 and the Universal Social Charge which applies from the tax year 2011.

The 2010 report indicates that the number of individuals who were subject to the restriction in that year increased to 1,544, up from 452 in 2009. The additional tax payable by these individuals because of the restriction was €80.18 million, up from €38.86 million in 2009. This additional tax represents almost a doubling of the tax that would otherwise have been payable if the restriction had not applied.

No significant changes have been made to the restriction since 2010. However, in Finance Act 2011, the successor to the Business Expansion Scheme i.e. the Employment and Investment Incentive, was added to the list of reliefs covered by the restriction. Likewise, in Finance Act 2012, the new relief introduced under section 12 of that Act, in relation to income earned in certain foreign states, was also added to the list of restricted reliefs. Additionally, a technical amendment relating to the calculation of balancing charges was made by section 16 of the Finance Act 2012 to ensure that unused allowances coming forward from previous years are not treated as specified reliefs for the purposes of the restriction where they are netted-off against the gross amount of a balancing charge.

Apart from these direct changes to the legislation dealing with the high income individuals’ restriction, changes to individual reliefs that are subject to the restriction have also been made. For example, under section 17 of the Finance Act 2011, the amount of exempt income that an artist can have disregarded for tax purposes was capped at a maximum of €40,000 with effect from the tax year 2011. Finally, under section 3 of the Finance Act 2012, a surcharge of 5 per cent on income sheltered by property reliefs was introduced for taxpayers with an aggregate income of €100,000 or more.