Cork Airport Business Park Cork

1. Budget 2011 Kieran Coughlan Tax Manager 28 Merrion Square, Dublin 2 Cork Airport Business Park Cork

2. Budget 2011Expenditure Cuts Expenditure Cuts – Headline Issues Education • Higher Education – student contribution to be increased by €250 • Grants for post graduate courses to be withdrawn • Contribution for school bus to increase from €50 to €100 • Introduction of capital asset test for student grants from 2013 Health issues • Monthly personal contribution for drugs increased from €120 to €132 • Contribution by private health insurers to increase, health insurance costs likely to increase as a result CXC the Professionals for Contractor Services

3. Budget 2011Expenditure Cuts Company Issues • Rebate for redundancy be reduced 60% to 15% Social Welfare • Child benefit amounts to be standardised for all children over next two years, in 2012 payments to third and fourth children to be reduced by €19 & €17 per month • Jobseekers benefit will be based on 5 day week rather than 6 day week – negative effect for those taking up part time employment • Fuel allowance reduced from 32 weeks to 26 weeks • Personal contributions towards rent supplement to be increased • Back to school clothing and foot-ware allowance to be reduced CXC the Professionals for Contractor Services

4. Budget 2011Expenditure Cuts Social Welfare • One parent family payments to be phased out where youngest child reaches the age of 7 (after 2014) • Reform of child benefit, statutory sick pay and consolidation of means tested schemes still on the agenda. • Reduction in rates of State Pension flagged from September 2012 where full social insurance record not in place. • Reduction in mortgage interest supplement • Withdrawal of disability benefit in cases where disability less than 15% • Reduction in disability benefit down to jobseekers benefit levels CXC the Professionals for Contractor Services

5. Effect of expenditure cuts on RECRUITMENT Mixed messages • Harder for those getting back to part time employment • Very minor changes for those who choose social welfare “as a lifestyle choice” • Changes to redundancy rebate likely to bring forward some redundancies • Employers more likely to want contract/contractor employees • Cost of Agencies keeping staff for more than 2 years increased by €540 per year! CXC the Professionals for Contractor Services

6. Tax Changes for employees Positives + • No change to income tax, PRSI • Low earners will be exempted from USC (below €10,036) • No change to tax deductibility of pensions • Increase in mortgage interest relief for first time buyers who bought in the period 2004 to 2008 • Incentive for those to buy between now and end of 2012 CXC the Professionals for Contractor Services

7. Tax Changes for employees Negatives - • Increase in VAT on “luxury goods” from 21% to 23% • Household charge of €100 to be paid by 31 March 2012 • Increase in motor tax • Increase in carbon tax (fuel and heating) • Increase in Cigarettes 25c • Withdrawal of exemption from tax for first 6 weeks of Illness benefit CXC the Professionals for Contractor Services

8. Tax Changes for companies Positives + • Reaffirming of Corporation Tax at 12.5% • “Assignee” relief to be introduced • Exemption from corporation tax for start up companies extended for another 3 years (only applies to trading companies) • Blanket R&D tax credit available where expenditure less than €100,000 • Micro finance loan guarantee for new startups Negatives – • Reduction in employers PRSI relief for employee pension contributions • Rebate for redundancy reduced from 60% to 15% CXC the Professionals for Contractor Services

9. Tax changes for property investors Positives + • No change to tax deductibility of mortgage interest • Section 23 type allowances to be phased out in 2014/2015, no changes for most investors in 2012 or 2013 • Capital Gains Tax exemption for investing between now and end of 2013 if asset held for 7 years • Stamp duty on purchase of commercial property now down to 2% from 6% Negatives - • Surcharge of 5% for those with rents over €100,000 using Section 23 type relief CXC the Professionals for Contractor Services

10. Tax changes on wealth Negatives - • Capital Gains Tax increased to 30% from 25% • Gift/Inheritance Tax increased to 30% from 25% • Lifetime tax free limit for transfers from parent to child reduced to €250,000 • Increase in DIRT from 27% to 30% • 30% tax on passing of remainder of pension on death to child (up from 20%) CXC the Professionals for Contractor Services

11. Effect of tax changes on RECRUITMENT • No significant changes to takehome pay for you or your clients • New “Special Assignee Relief Programme” to extend tax break to highly skilled persons relocating to Ireland • “Foreign Earnings Deduction” for persons sent on temporary assignment to BRIC countries • Benefits on contracting remain as good as they have always been CXC the Professionals for Contractor Services

12. About CXC • Offices throughout the World in over 15 countries • Market Leaders for Accounting Services to Contractors • Established in Ireland since 2001 • Over 2500 Contractors in Ireland and abroad • Managed by Professional Accountants • Staff of over 35 Professionals to assist you

13. “Alone we do so little, together we can do so much” ( Helen Keller ) CXC the Professionals for Contractor Services