The Local Property Tax (LPT)
The Local Property Tax (LPT) will come into effect from 1 July 2013 with a half year charge applying for 2013. The Revenue Commissioners will administer the LPT. Aside from some exceptions, owners of residential properties, including rental properties, will be liable to pay the LPT which will apply on a self-assessed basis.
Individuals can self-assess the value of their property or follow Revenue's guidance on this process. The initial valuation (which must be carried out on 1 May 2013) is valid up to 31 December 2016. For the first 18 months (up to 31 December 2014), the national central rate of LPT will be 0.18% of the first €1million of value with 0.25% applying to the excess. From 1 January 2015, local authoritoes will have the discretion to vary the rates by +/- 15%.
The market value of the property will be divided into bands with the initial band covering €0 - €100,000. Thereafter, bands of €50,000 width will apply up to €1million. The tax liability will be calculated by applying the tax rate to the mid-point of the band. No band will apply where houses are valued at over €1million (0.18% on the first €1million and 0.25% thereafter).
Newly constructed but unsold residential properties, mobile homes, vessels, houses in certain unfinished estates and unoccupied principal residences by reason of long term mental illness or infirmity will be exempt from the LPT.
There will also be an exemption until the end of 2016 for new and previously unused properties that are purchased between 1 January 2013 and 31 December 2016. The exemption will also apply for second hand property purchased by a first time buyer in 2013. The LPT is expected to yield €250 million in 2013 and €500 million for a full year charge.
The household charge will cease with effect from 1 January 2013. The NPPR charge will cease with effect from 1 January 2014. However, unpaid arrears along with interest and penalties on NPPR and the household charge that have accrued will remain a charge on related property.
The Personal Insolvency Act
The Personal Insolvency Act was passed into law in December 2012 with the aim of modernising the Irish personal insolvency laws and addressing the obligations of debtors and the rights of creditors in a proportionate and balanced way. There is also a need to distinguished between debtors who are genuinely unable to pay their debts and those who are unwilling to pay.
The Act provides for:-
Non-Judicial Debt Resolution Processes
a) Debt Relief Notices (DRNs) provide for the write-off of qualifying unsecured debts (credit cards, utility bills, overdrafts, rent etc) up to €20,000. This process is only available to debtors who have a net disposable income of €60 or less a month and assets worth no more than €400.
b) Debt Settlement Arrangements (DSAs) assist persons who do not meet the eligibility criteria for DRNs. DSAs are only available in respect of unsecured debts and cannot be used to affect the rights of secured creditors. A debtor seeking to avail of this process must engage a personal insolvency practitioner to put a debt settlement proposal to creditors for the repayment of an amount of the debt over a five-year period (or six years, where agreed). A DSA must be approved by at least 65 per cent (in value) of the creditors present and voting at a creditors' meeting.
c) Personal Insolvency Arrangements (PIAs) are the only option available to debtors with both secured and unsecured debts and may include terms altering the rights of secured creditors. PIAs are available in respect of any amount of unsecured debts and secured debts up to a cap of €3 million, which may be waived by written consent of all secured creditors.
Proposals for a PIA must be made through a Personal Insolvency Practitioner and provide for the compromise and settlement of both secured and unsecured debts over a six-year period (or seven years, where agreed).
A proposal for a PIA must be approved by at least 65 per cent in value of the total of the debtor's debts; and by creditors representing more than 50 per cent of the value of the secured debts; and by creditors representing more than 50 per cent of the value of unsecured debts. Where a PIA is rejected, the debtor does not have any right of appeal.
The Act does not provide guidance for banks or other secured creditors on how proposals for PIAs ought to be evaluated, leaving both debtors and creditors unsure as to how these will operate in practice. Without further clarification, there is a danger that confidence in the PIA process may be undermined.
Reforms to bankruptcy legislation
Amongst other reforms, the Act reduces the automatic bankruptcy discharge period from 12 to three years, subject to certain conditions. Whether this will go far enough to reduce the recent trend in bankruptcy tourism to Britain and the North remains to be seen.
Debtor /Creditor Balance
Concerns have been expressed that the PIA voting requirements effectively provide secured creditors with a right of veto. Against this, Minister Shatter has stated that the reduction to the automatic discharge period will strengthen a debtor's position in dealings with creditors, including banks.
Where a creditor refuses to approve a PIA, the debtor will retain the option to file for bankruptcy and, if successful, could potentially be relieved from indebtedness within three years.
Waste Water Tank Registration
The Water Services (Amendment) Act 2012 provides for the introduction of a registration and inspection system for domestic wastewater treatment systems. It has been introduced to address the European Court of Justice ruling against Ireland in October 2009 and more importantly, to protect ground and surface water quality (particularly drinking water sources) from the risks posed from malfunctioning systems.
All owners of domestic wastewater treatment systems are required to register their systems. The following must be registered:-
Property owners are obliged to register the system for houses rented or let out. Houses that are unused or unoccupied, but are connected to a septic tank must also be registered.
Inspections will commence in 2013. Formal notification will be issued by the local authority before any inspection will take place.
Registration is €50. Registration and payment can be completed online, alternatively registration and payment can be made in person at your local city or county council office. Registration and payment can also be submitted by post to Protect Our Water, P.O. Box 12204, Dublin 7.
Registration forms can be downloaded online or are available from libraries and city / county council offices.
Registration must be completed by Feb 1, 2013. Late registrations do not attract automatic penalties but it is an offence not to register and penalties can be court applied. It will be necessary to obtain a 'certificate of registration' when selling or transferring a property. The certificate of registration will only be issued to those who have registered their domestic waste water system.
Registration last five years and properties must be re-registered after this time but with no additional registration fee payable.
The registration site is www.protectourwater.ie
The Companies (Amendment) Act 2012
What is the Act about?
The purpose of the new Companies (Amendment) Act 2012 was to make two main changes to the current provisions of the Companies (Miscellaneous Provisions) Act 2009. At present the 2009 Act allows for the use of US Accounting Standards ('US GAAP') when preparing accounts of a particular category of companies. The 2009 Act also permits the use of other internationally recognised accounting standards in the preparation of such accounts.
Under the existing 2009 Act, the use of the US GAAP by a relevant parent undertaking was restricted to four years. The new Companies (Amendment) Act 2012 extends the use of the US GAAP by such undertakings until financial years ending not later than the 31st December 2020. Previously under the Companies ( Miscellaneous Provisions) Act 2009 the use of the US GAAP only extended to financial years ending on the 31st December 2015. The new Act also extends the provision of the prescription of other internationally recognised standards and in this case the timescale was also extended to financial years ending not later than the 31st December 2020.
Why is the Act necessary and who is affected by it?
The amendments outlined above are the result of a number of significantly large US Multi-National companies submitting requests and recommendations that changes be made to the 2009 Act and in particular to the provisions for the current use of the US GAAP.
If these amendments had not been made, this may have led to some serious consequences for those Multi-Nationals. The companies affected may have been required to prepare two different sets of accounts, one set under the IFRS requirements and another set using the US GAAP. The preparation of these would have resulted in them incurring huge cost and duplication.
What are the benefits of the Act?
It is hoped that these amendments will not only ease the cost and burden of the preparation of accounts for the multi-nationals currently in operation in Ireland and therefore encourage them to remain here for the foreseeable future but also that these amendments may go some way in attracting new foreign investment into the country. The new Companies ( Amendment ) Act 2012 should have some significance to the growth and development of Ireland's economy and employment opportunities in the coming years.
What do accountants need to do now?
The new Companies (Amendment) Act 2012 has taken effect from the 4th July and it should be noted that any references made to the Companies Acts from this date should now refer to 'Companies Acts 1963 to 2012'. This affects the Company Act References in financial statements, letters of engagement, audit planning letters, letters of representation and all other documentation, correspondence and working papers that refer to the Companies Acts.