Will the new Home Renovation Tax Credit make any difference to 'cash culture'?

Tombo2001

Just wondering what people's thoughts are on this......

I am not in the trade.

I'd be fairly strongly of the view that I would rather pay someone who is themselves paying their taxes.

On the other hand, nearly everything I hear from family, friends and even professionals such as Estate Agents, Accountants etc is telling me I would be a fool not to 'pay cash'......that I would be naive, not copped on, basically an idiot to do not to 'pay cash'.

Personally, I dont think the Home Renovation tax credit will have any impact, as the builders/ fitters/ tilers/ plumbers/ electricians/ pavers who dont pay VAT can also undercut by not paying income tax, and possibly claiming dole. On the other hand, I have no idea how widespread this practice is; but I dont believe its unusual.

What do other people think?

fclauson

I actually think the plan is quite clever

To get the refund it has to be done via the revenue - and they will want all the details and hence no one who pays cash will get it - so it will make trades register and give more transparency to their incomes

Tombo2001

fclauson wrote: »

I actually think the plan is quite clever

To get the refund it has to be done via the revenue - and they will want all the details and hence no one who pays cash will get it - so it will make trades register and give more transparency to their incomes

But is the cash builder not still in a position to undercut considerably.....

BryanF

could we keep this about the pros & cons of the new 'Home Renovation tax credit'

and not about the black economy

thanks

kkelliher

fclauson wrote: »

I actually think the plan is quite clever

To get the refund it has to be done via the revenue - and they will want all the details and hence no one who pays cash will get it - so it will make trades register and give more transparency to their incomes

The basis for the issue is to help with the utilization of registered builders and get a tax credit equal to the cost of the VAt on the work back over two years.

The simple con with this is the reality of the fact that if you don't pay VAT in the first place (ie black economy) what do you need to claim back?

BryanF

kkelliher wrote: »

The basis for the issue is to help with the utilization of registered builders and get a tax credit equal to the cost of the VAt on the work back over two years.

KK, please clarify for us (or have you a link to this piece of legislation)

any cert of payment issued for domestic works within the last two years is eligible for this tax rebate?

so on say 100k spent what can the client expect back?

cheers

martinn123

BryanF wrote: »

KK, please clarify for us (or have you a link to this piece of legislation)

any cert of payment issued for domestic works within the last two years is eligible for this tax rebate?

so on say 100k spent what can the client expect back?

cheers

Just had a chat with my own Accountant.
The detail will be published in the Finance Bill.
The 2 years refers to 2014/15
So between 5K and 30K spent during those years ( not backdated) will qualify for a rebate, if the Contractor is Tax Compliant.

kkelliher

martinn123 wrote: »

Just had a chat with my own Accountant.
The detail will be published in the Finance Bill.
The 2 years refers to 2014/15
So between 5K and 30K spent during those years ( not backdated) will qualify for a rebate, if the Contractor is Tax Compliant.

+1 the above, I based my statement on the information provided by the minister. IT will not I believe kick in until early 2014 and will apply to going forward costs so nothing in the past will be of benefit.

martinn123

Listening to the ministers on RTE this morning, it appears the rational for this is two-fold.

1. To release into the Economy savings.
Our savings rate, has become too heavy, compared to similar Economies, so this measure coupled with the Increase in DIRT Tax, is to encourage those who have savings to start spending

2. To counteract the Black Economy
We all know the issue.
The Hospitality trade got a tax break, reducing VAT from 13.5 to 9%. This has proved a great success and has been extended.
In reality our VAT rate has been reduced to NIL, with certain limits
We charge 13.5%, and the house-holder gets a refund.......it's a no brainer

Most of the regulars here, know the area in which i operate.
Most of my jobs would be in the 20-30K range, and all domestic, so this break is perfect for my business

Realistically if I could get 5 more jobs next year say 100K in turnover, it would make a huge difference to my bottom line.

So in answer to the OP, I hope it does make a difference, after 5 years of scraping along the bottom, this could signal the end of the recession for myself.

Tombo2001

BryanF wrote: »

could we keep this about the pros & cons of the new 'Home Renovation tax credit'

and not about the black economy

thanks

Bryan,

Regarding your post.

The two appear to be intrinsically linked.

The Home Renovation Tax Credit is aimed at reducing or diminishing the black economy.

Therefore, a 'pro' or 'con' of the initiative is.......will it succeed in doing that or not....and the reasons why.

Thats what I want to discuss and the reason I started the thread. If we cant discuss it then there if no point to the thread.

kkelliher

martinn123 wrote: »

Listening to the ministers on RTE this morning, it appears the rational for this is two-fold.

1. To release into the Economy savings.
Our savings rate, has become too heavy, compared to similar Economies, so this measure coupled with the Increase in DIRT Tax, is to encourage those who have savings to start spending

2. To counteract the Black Economy
We all know the issue.
The Hospitality trade got a tax break, reducing VAT from 13.5 to 9%. This has proved a great success and has been extended.
In reality our VAT rate has been reduced to NIL, with certain limits
We charge 13.5%, and the house-holder gets a refund.......it's a no brainer

Most of the regulars here, know the area in which i operate.
Most of my jobs would be in the 20-30K range, and all domestic, so this break is perfect for my business

Realistically if I could get 5 more jobs next year say 100K in turnover, it would make a huge difference to my bottom line.

So in answer to the OP, I hope it does make a difference, after 5 years of scraping along the bottom, this could signal the end of the recession for myself.

Martin

Where I find this issue to fall flat for the want of a better word is in the detail. The bottom line is weather people invest in the black economy or invest in the real economy then both of your points above are still realized. I am effected on a daily basis by the black economy through Quantity Surveyors who are on the dole etc doing nixer's against my full time practice. I acknowledge that this initiative is not aimed at my sector directly but I still fail to see how this initiative will stop the black economy when those who are going to go down that route will do so in any event and will be no worse off by not using this initiative. In fact they will be worse off in that they will have to wait for 2 years to get the money. I do hope it does have an impact but I don't think it was well taught out.

BryanF

Tombo2001 wrote: »

Bryan,
Regarding your post.
The two appear to be intrinsically linked.
The Home Renovation Tax Credit is aimed at reducing or diminishing the black economy.
Therefore, a 'pro' or 'con' of the initiative is.......will it succeed in doing that or not....and the reasons why.
Thats what I want to discuss and the reason I started the thread. If we cant discuss it then there if no point to the thread.

In the past there have been plenty posts/threads on the 'cash-in-hand economy' and how cheap the cost of services can be if you don't pay tax etc

This is against the law, which is against the C&P forum charter, not to mention consequences of not paying tax to the future sale of the home/ defects / guarantees etc.

the C&P forum is not the place for discussing the black economy - BUT the new tax legislation and how it effects the construction industry, CAN be discussed at length without it being 'about the black economy' even if thats the purpose of the legislation

'Even' Martin has managed to do so above

Tombo2001, you should no better than to post in response to a mod direction on thread - thats what the PM button is for.

martinn123

kkelliher wrote: »

Martin

Where I find this issue to fall flat for the want of a better word is in the detail. The bottom line is weather people invest in the black economy or invest in the real economy then both of your points above are still realized. I am effected on a daily basis by the black economy through Quantity Surveyors who are on the dole etc doing nixer's against my full time practice. I acknowledge that this initiative is not aimed at my sector directly but I still fail to see how this initiative will stop the black economy when those who are going to go down that route will do so in any event and will be no worse off by not using this initiative. In fact they will be worse off in that they will have to wait for 2 years to get the money. I do hope it does have an impact but I don't think it was well taught out.

I agree that the devil will be in the detail, and we await the Finance Bill for that detail.
I'm not sure however why you think it will take 2 years to get the refund.
The only time line mentioned was that the refund would be available during 2014/15


I suppose. The attraction may be that householders may wish to participate in the regular economy, get the refund, and the associated benefits of dealing with a Registered Business.
So for example do your "Compeditors" in the Black economy carry any Insurance P.I etc, surely not?
I will be marketing my business as Tax Compliant, and hope that will increase my turnover, and perhaps giving customers a little more comfort that I will be around should a problem arise, rather than White Van Man, who will have changed his disposable Mobile Number.

martinn123

BryanF wrote:

Even' Martin has managed to do so above.

Didn't want to take any liberties, on your first week.......give it time....

Tombo2001

BryanF wrote: »

Tombo2001, you should no better than to post in response to a mod direction on thread - thats what the PM button is for.

ok Bryan, fair comment and thanks for the response.

martinn123

Details from the Revenue Web-site

http://www.revenue.ie/en/tax/it/reliefs/home-renovation-incentive.html

Highlights.

The Scheme provides for tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure on repair, renovation or improvement work carried out on a principal private residence. Qualifying expenditure is expenditure subject to the 13.5% VAT rate. The work must cost a minimum of €5,000 (exclusive of VAT) which would attract a credit of €675. Where the cost of the work exceeds €30,000 (exclusive of VAT), a maximum credit of €4,050 will apply. The credit is payable over the two years following the year in which the work is carried out.

Homeowners must be LPT compliant in order to qualify under the Scheme while building contractors must be tax compliant in order to carry out works.

Owner occupiers of a principal private residence who are tax compliant are eligible. Specifically, the homeowner’s LPT and Household Charge must be up to date
Building Contractors who are tax compliant are eligible to carry out work under the scheme.

Building Contractor - You should ensure that you are fully tax compliant Homeowner - You should ensure that your tax and specifically your LPT and Household Charge are up to date.

Qualifying work must cost a minimum of €5,000 excluding VAT (or €5,675 including VAT). While there is no upper limit on the cost of work, the maximum tax credit (see below) is linked to qualifying expenditure on work costing €30,000 excluding VAT

martinn123

kkelliher wrote: »

Martin

Where I find this issue to fall flat for the want of a better word is in the detail. The bottom line is weather people invest in the black economy or invest in the real economy then both of your points above are still realized. I am effected on a daily basis by the black economy through Quantity Surveyors who are on the dole etc doing nixer's against my full time practice. I acknowledge that this initiative is not aimed at my sector directly but I still fail to see how this initiative will stop the black economy when those who are going to go down that route will do so in any event and will be no worse off by not using this initiative. In fact they will be worse off in that they will have to wait for 2 years to get the money. I do hope it does have an impact but I don't think it was well taught out.

This practise is also being targeted via the Budget.

Revenue.ie wrote:

Start Your Own Business (SYOB)
An incentive for individuals who have been long-term
unemployed for at least 15 months prior to starting their
own business will provide a two-year exemption from the
charge to income tax up to a maximum of €40,000 income
per annum.

Additional information will be provided in the Finance
(No.2) Bill 2013.

So an incentive for those offering, ''off the books'' QS Services to start up legally and be Tax Free for 2 years.