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Construction of the Legislation

Brian Keegan 7&8 Jan 2011. CHARTERED TAX CONSULTANT STAGE 2 MODULE 1. Construction of the Legislation. Introduction. History of Irish Tax Policy Main sources for change Legislative Process International Dimension Revenue Structure. Irish Tax Legislation. Double Tax Agreements.

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Construction of the Legislation

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  1. Brian Keegan 7&8 Jan 2011 CHARTERED TAX CONSULTANT STAGE 2 MODULE 1 Construction of the Legislation

  2. Introduction History of Irish Tax Policy Main sources for change Legislative Process International Dimension Revenue Structure Irish Tax Legislation Double Tax Agreements Case Law EU Law

  3. Tax Policy Political History 1920s – 1950s Economic Policy 1958 Policy Paper Free Trade Challenge

  4. Tax Policy Corporate Tax Income Tax Value Added Tax Capital Taxes

  5. Corporate Tax Policy Inward Investment low tax regime since 1950s 1980 EU pressure Financial Services 2003 to date 0% for internationally traded goods 10% CT for manufacturing IFCS established 12.5% for all trading Minimum complex anti avoidance

  6. Income Tax Policy Top Tax Rates >50% until 1992 1990s to recently – lower taxes on labour and capital Tax Shelters gradually eliminated Effective Tax Rates >50% including PRSI and Levies Current policies – National Recovery Plan

  7. Value Added Tax Policy Introduced 1972 replacing retail and wholesale taxes EU Directives apply Minimum impact for policy objectives Rates 0%; 13.5% and 21% Increases to standard rate under NRP 22% 2013 and 23% 2014

  8. Capital Taxes Policy CGTA 1975 CATCA 2003 SDCA 1999 RIPs Wealth Tax 1975-1978 RPT 1983 – 1997 Probate Tax to 2000 Capital Taxes Capital Acquisitions Tax Capital Gains Tax Stamp Duties

  9. Capital Taxes CGT Rate halved in Dec 1997 to 20% Property Boom – CGT and SD significant SD seen as tool to implement policy Recent policy to remove property-based tax schemes

  10. Origins of Tax Code Is history of tax legislation vital for CTC? YES Understanding current form Access to older material Was a provision amended? When? Back Duty Investigations

  11. Origins of the Tax Code The beginning in UK Reached Ireland Irish State 1922 Irish tax law William Pitt 1799 Gladstone’s Income Tax Act 1853 Income Tax Act 1918 Shares same DNA as UK

  12. First Consolidation Major consolidation Effective 6th April 1967 Income Tax Act 1967 Income Tax Act 1967 Income Tax Act 1918 Irish Finance Acts 1923 – 1966

  13. Taxes Consolidation Act 1997 TCA 1997 replaced ITA 1967 Prior to 1997 unofficial consolidations published Helpful in identifying origins of pre 1997 law Note references to surtax – pre 1974

  14. TCA 1997 Consolidation of : Corporation Tax Act 1976 Income Tax Act 1967 Capital Gains Tax Act 1975 Finance Acts Enacted 30th November 1997 Effective 6th April 1997

  15. Legislative Timeline

  16. Legislative Timeline

  17. Legislative Timeline

  18. Know the Code - Why? Irish Finance Acts “borrow” UK language Anti avoidance measures Wide range of interpretative sources opened UK Case Law and HM Interpretation useful for Irish tax law

  19. Why is History Important? Rational behind provision revealed Access to Non – statutory material Insight into purpose of provision Dáil Debates

  20. Understanding History Anti avoidance perspective “..an abuse of the provisions having regard to the purpose for which it was provided” Need to access commentary under pre consolidated form References still made to Sec 23 properties, Sec 84 Loans etc

  21. Understanding History Places legislative provision in context eg Development Land provisions Part 22 TCA 1997 are pre CGT Electronic Search tools hugely helpful Back Duty Investigations Tax geared penalties for certain taxes eg PAYE

  22. The Irish Constitution 1937 Article 15.4.1 “The Oireachtas shall not enact any law which is in any respect repugnant to this Constitution ..” Presumption of constitutionality difficult to displace

  23. Constitution – Case Law Madigan v AG Unsuccessful challenge to RPT Property rights attacked Article 40.3 Contrast with Brennan v AG Irish and US constitutional guarantees similar Tax Laws in category of their own Latitude to be allowed to legislature Land Rating found unconstitutional

  24. Constitution – Case Law Murphy v AG Taxation of married couples unconstitutional Michael Daly v Revenue Change to current year basis of assessment Presumption of constitutionality rebutted PSWT Case No credit for PSWT for one year Provision found unconstitutional

  25. Constitution – Case Law Paul Browne and others v Revenue Kennedy v Hearne James G Orange V Revenue BIK on private use of cars held not to breach Articles 40.3, 40.3.2 or 40.1 PAYE estimates not in breach of Constitution Serving of notice of attachment case lost

  26. Constitution and Tax Law Tax legislation has rarely been found to be in breach of the Irish Constitution

  27. The Tax Code 2009 Revenue Commissioners Report

  28. 2009 Revenue Annual Report

  29. 2009 Revenue Annual Report

  30. Direct Taxes Sec 1(2)TCA 1997 “the Capital Gains Tax Acts” “ the Corporation Tax Acts” “the Income Tax Acts” “the Tax Acts” (ITAs & CTAs) TCA 1997 Income Tax Corporation Tax Capital Gains Tax

  31. Withholding Taxes TCA 1997 RCT Relevant Contracts Tax PSWT Professional Services Withholding Tax DWT Dividend Withholding Tax PAYE Pay As You Earn CGT Capital Gains Tax DIRT Deposit Interest Retention Tax

  32. Capital Taxes Stamp Duty SDCA 1999 Capital Acquisitions Tax CATCA 2003

  33. Value Added Tax Indirect Taxes VATA 1972 Value-Added Tax Consolidation Act 2010 EU Directives and Regulations ECJ

  34. Finance Acts Each Finance Act amends tax legislation Finance Acts introduce new taxes Income Levy: FA (No2) 2008 VRT: FA 1992

  35. Consolidated Texts Published texts are unofficial Can contain printing errors Definitive statement is the TCA 1997 plus Finance Acts published by Government Publications Refer to official source when in doubt

  36. Other Charges PRSI Health Contribution Plastic Bag Tax Department of the Environment NPPR (charge of €200 on “second” homes) Social Welfare Acts Health Acts Regulations under Waste Management Acts 1996-2007 Local Government Charges Act 2009

  37. Important non FA Provisions Health Insurance (MP) Act 2009 National Pension reserve Fund Act 2009 National Asset Management Agency Act 2009 Stamp duty on medical insurance policies Amended tax code Impact on FA 2010

  38. Tax Legislation – other legislation Urban Renewal 1998 Town Renewal Act 2000 Criminal Justice Acts Property Incentive Schemes Powers granted to Revenue

  39. Structure of TCA 1997

  40. Structure of CATCA 2003

  41. Structure of SDCA 1999

  42. Statements of Practice Interpretations of Law Difficult to sustain a legal challenge SP IT3/07 Payroll deductions for non-Irish employments SP IT1/07 International aspects of Share Options SP- Gen/1/94 Revenue Powers exercised outside Revenue offices

  43. Customer Service Charter Replaced Taxpayer Charter of Rights Charter of Rights withdrawn after Supreme Court case of Terence Keogh v CAB and Others (2004) IESC 32 Taxpayer availed of this rights to extend period to make appeal Argued Revenue had not provided full information under Charter

  44. Non Statutory Statements Supreme Court Judgment in Keogh Case “contain no more than praiseworthy statements of an aspirational nature..to give the latter ..assurance that complaints.. will be seriously entertained” Customer Service Charter not likely to be enforceable in a court of law

  45. Finance Act Process You must know the FA process - WHY? FA is the key legislative development each year FA implements Government policy in Budget Usually one FA but 2 in 2008

  46. Finance Act Process You must know the FA process – WHY? Accounting Standards – legislation at balance sheet date Effective date(s) for legislation Timetable important for submissions Advising clients on draft legislation- changes and discussions on provisions

  47. Finance Act Process Constitution Article 21- Money Bill initiated in Dáil Money Bill cannot be amended in Seanad Money Bill deemed passed if not returned by Seanad to Dáil within 21 days

  48. Finance Act Process Constitution Article 22 definition of a Money Bill “A Bill which contains only provisions dealing with…imposition, repeal, remission or regulation of taxation; …” Article 22 does not include local authority taxes

  49. Provisional Collection of Taxes Act 1927 Allows Financial Resolutions to become law FRs become law on Budget night until enactment of Finance Bill FRs have statutory effect under Sec 2 PCTA where Dáil resolves new taxes/changes to taxes/public interest

  50. Financial Resolutions Increase Excise Duties from Budget night Anti avoidance measures Restrict tax reliefs Can be put forward immediately prior to Committee Stage of Finance Bill

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