Tax Credits & Reliefs >> Deeds of Covenant

Tags: tax saving tips, elderly parents, tax refunds

Who can Claim?
Tax Relief may be claimed on covenants made:
To permanently incapacitated individuals. There is No relief due on covenants from a parent to his/her permanently incapacitated minor child.
To elderly individuals i.e. aged 65 or over. Restricted to 5% of total income.
For research, teaching of natural sciences and to certain bodies for the promotion of Human Rights. Restricted to 5% of total income.

Method of Payment: The payer deducts income tax at the 20% rate when making the payment. The recipient receives a net of tax payment and is entitled to a refund and must reclaim same from the Revenue. The payer obtains further tax relief when finalising their tax position for the tax year involved amounting to €225 of the gross payment. 

TAX SAVING TIP
Deeds of Covenant are a very good way of providing financial assistance to elderly parents in a tax efficient manner. Depending on the income of the parents they might not be taxable and at the same time the children will receive tax relief at 41% on payments made.

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Age 65 and Over

PAYE Taxpayers

Tax Credits & Reliefs