Minister brings in tax break for sports people
The Minister for Finance has introduced a tax break for sportsmen and women similar to the one enjoyed for decades by artists. When they retire, professional players resident in the Republic will now be able to claim back tax paid on their earnings since 1990.
The relief - which was announced in the Finance Bill published yesterday - is restricted to income from wages and winnings, rather than earnings from sponsorship deals and promotional activities.
Mr McCreevy said the measure was a way of rewarding sportsmen for the "prestige they bring to Ireland". He added that it would also encourage more people to take up sports. He said the initiative was his own idea and he had not been sounded out on the issue since he was a backbench TD and had been lobbied by professional jockeys.
Mr McCreevy admitted that the most of the Republic's better-known sportsmen would not be able to avail of the relief because they were not resident in the State.
"That is true. They will lose out," he said.
The main beneficiaries would be rugby players based in the Republic and semi-professionals such as League of Ireland soccer players, he said.
Mr McCreevy predicted the relief would not have much impact on the debate on professionalism in the GAA. The cost of the scheme would be relatively small, because only a handful of big earners would meet the residency requirement, he said.
The scheme allows retiring sportsmen to choose up to 10 years out of the playing career. The period cannot commence before 1990 and they must have been resident in the State for tax purposes in those years. The first 40 per cent of their gross earnings (before expenses) will then be tax free. Because the individuals will have paid tax on these earnings, they will receive a rebate from the Revenue Commissioners.
The other surprise announced yesterday was some changes to the rules governing employee pensions, which Mr McCreevy said he plans to bring forward at the committee stage of the Finance Bill.
The proportion of employees' income that can be paid into company pension schemes has been brought in line with limits that apply to the self employed.
The limit has been increased from a flat 15 per cent of earnings to 20 per cent for people between 30 and 40 years of age; 25 per cent of earnings for people aged between 40 and 50 years of age; and 30 per cent of earnings for people over the age of 50.
The move has been welcomed by pension advisers who say it reflects the reality that people will change employers several times in their career.
"This allows them make up for lost pension rights," said Mr Michael Kelly, head of pensions with KPMG. The minister announced a number of other minor changes to the legislation governing pensions.
The income tax relief available for medical expenses of individuals and their dependent family members has been expanded to include a wider range of relatives, including non-dependents and, in some situations, individuals who are not relatives. One of the main consequences of this would be to simplify the system for claiming tax relief on nursing home fees for elderly relatives, said Mr McCreevy.
The Fine Gael spokesman for finance, Mr Jim Mitchell, said he was pleased that "unlike previous years, there were few unexpected significant provisions which were not announced on Budget Day. Thankfully this is Minister McCreevy's final Finance Bill. He leaves the public finances in disarray as is evident from his own projections for 2003 and 2004."