In 2005 an exemption from tax was introduced for Officers of the State to compensate them while on foreign service for the extra costs of having to live and work abroad. For 2007 this exemption has been extended to include Enterprise Ireland, An Bord Bia, Tourism Ireland and the IDA.
There is a complete exemption from tax subject to certain limits for the long term leasing of farm land. From 2004 onwards the owner of the land must be 40 years of age or over. For earlier tax years the owner had to be at least 55. There is no age limit where the owner is permanently incapacitated. The lease must be in writing and for a definite term and the lessor and lessee must not be related.
There are three different levels of income exemption depending on the length of the lease term as follows: Income Exemption Limits depending on the term of the lease.
term of lease 5 – 7 Years €12,000
term of lease 7 – 10 Years €15,000
term of lease 10 Years + €20,000
Each spouse of a married couple is entitled to their own individual exemption threshold. For the year 2007 onwards a married couple who jointly lease farm land can qualify for income tax exemption on income up to €40,000 per annum.
TAX SAVING TIP
If the farm land to be leased is owned in one name only, consideration should be given to transferring it into joint names to avail of the greater tax relief. This can be done without incurring any tax charges.
Total Tax Exemption
A tax exemption applies for income earned from child minding services. The income earned cannot exceed €15,000 per annum. This is specifically aimed at people who mind children in their own homes. This is a very good tax relief and means a stay at home spouse could earn up to €15,000 per annum tax free and the working spouse could still claim the Home Carer Tax Credit.
A brief summary of the rules is as follows:
– This exemption applies if the payments received in a tax year do not exceed €15,000 per annum. The full amount is taxable in the normal way if the payments received exceed this amount.
– The service cannot be provided to more than 3 children at a time.
– The exemption must be claimed in the annual tax return. The claim must be supported by evidence that the service provider has notified the appropriate person, recognised by the health service executive, that they are providing child-minding services. The notification can be made at any time during or after the tax year to which it relates provided that it is before the 31st October of the following year.
– A separate notification must be made in respect of each tax year where the exemption is claimed.
– A claim for relief under this section does not effect a persons entitlement to mortgage interest tax relief in respect of their principle private residence or the capital gains tax exemption when selling your private residence.
– Payment up to €10,000 for 2006 and thereafter €15,000 to which this section applies will not be taken into account in determining entitlement to the home carer tax credit.
Income qualifying for this relief is liable for a flat rate PRSI charge due of €253 for years up to 2012 and €500 from 2013 on.
Tax relief is available for individuals and companies in relation to donations to a charity or other approved body in any tax year. To qualify for tax relief the minimum donations in the year must be €250.
The tax relief is allowed in different ways depending on whether the tax affairs are dealt with solely through the PAYE system or under our self-assessment tax system.
For PAYE tax payers the charity involved claims the tax relief from the Revenue based on the donation made to them.
When your affairs are dealt with under our self-assessment system you must claim the tax relief in your tax return.
From 2013 onwards all individuals will be treated the same regardless of whether paye earners or self assessed and the rate of tax relief will be at 31% and allowed directly to the charities’ involved.
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. Please contact us for more details if required.
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.
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.
Who can claim?
Any person who makes investments in a qualifying film relief company during the period to 31st December 2020.
Tax Relief Due
The annual ceiling for tax relief is €50,000 which is allowed at your top tax rate. if this is 41% the tax relief is worth €20,500.
This means a married couple could make a combine investment of €100,000 and receive tax relief of €41,000 provided each has sufficient income in their own right taxable at 41% to use up the film relief.
However form 2016 onwards it is proposed to change the tax relief to a tax credit basis which means tax relief will be allowed at 20% only and not at your highest tax rate.
These schemes are usually promoted by financial institutions and investment brokers. The promoters usually provide an explanatory memorandum outlining the rules and regulations applicable to the scheme.
An attractive feature of this relief is that you must keep your investment for a minimum period of 1 year only.
Up to 2008
The amount qualifying for tax relif was 80% of payment subject to a maximum of €25,400 and a minimum of €250. In cash terms this is worth €10,414 for a 41% top rate tax payer.
For married couples both spouses are entitled to make a claim provided each has income in their own right to cover same. For the tax year 2008 a married couple could make a combined film investment of €63,500 provided each has sufficient income in their own right to offset against the cost of the investment.
This is a sister of the Employment and Investment Incentive Scheme (EIIS).
Tax relief is available for individuals starting up their own company and can be claimed against the previous six tax years for qualifying investments.
The rules and regulations governing this relief are complex and depend on the individual investor meeting various requirements and also on the type of activity to be carried on by the company.
Tax relief can be claimed on sums up to €600,000 invested in a qualifying start up company against tax liabilities of the individual investor for the previous six tax years. The maximum annual claim is €100,000.
EIIS is a tax relief incentive scheme which was announced in Budget 2011 to replace the old Business Expansion Scheme (BES).
It provides income tax relief for investments in SMEs – certain corporate businesses which have less than 250 employees and an annual turnover of under €50 million.
Who can claim?
Any person making a qualifying investment during the period to 31st December 2020.
Tax Relief Due
The maximum amount which can be invested in any year is €150,000. The initial tax relief is at 30% of the amount invested. A further 11% may be allowed at the end of 3 years after the investment is made.
For married couples both spouses are entitled to make a claim provided each has income in their own right to cover same. A married couple could make a combined BES investment of €300,000 provided each has sufficient income in their own right to offset against the cost of the investment.
These schemes are usually promoted by financial institutions and investment brokers. The promoters usually provide an explanatory memorandum outlining the rules and regulations applicable to each scheme.
You must keep your investment for a minimum period of 4 years in order to claim full tax relief.
Who can Claim?
An Individual who pays a premium on a policy to secure the continuance of income and payment of benefits during disablement through accident, injury or sickness.
Conditions to Qualify
The policy must be approved by the Revenue Commissioners as a Permanent Health Benefit Scheme.
Tax Relief Due
The tax relief is allowed at your highest tax rate and in respect of premiums paid in the year subject to a maximum claim equal to 10% of income.
However any benefits paid under these policies are taxable under PAYE rules.
Health Expenses
Many people overlook the tax claim which is available in respect of medical expenses. Tax relief is available at the 20% tax rate for all medical expenses except for nursing home costs which qualify for tax relief at your top tax rate.
You must keep receipts for all expenses incurred during the year.
The most common expenses are GP visits and medicines, orthodontic costs tend to be a feature for teenagers and for older family members hospital stays and nursing homes are some of the likely areas for tax claims.
Any refunds from insurance companies or Health boards must be deducted from the expenses incurred before you get your tax relief.
No tax relief is allowed for routine dental and ophthalmic care.
Who Can Claim?
Who ever pays the medical bills can claim for the tax relief. Claims can be made for costs for yourself, family members and for any other person for whom you paid the bills.
What Can You Claim for?
Cost of Maintenance in a Nursing Home
This can be a very expensive matter for families who are paying nursing home costs for a parent or relative. The tax relief can be a very significant benefit in deciding how to meet the costs of same and can give rise to very substantial tax refunds for the persons paying the costs. An individual may claim tax relief in respect of the costs (less any amount paid by a public or local authority, insurance scheme or other compensation) of maintaining a relative in a nursing home, which has been approved by the Minister for Health and Children.
In some cases, the person residing in the nursing home may pay some of the costs from his/her own income and this can affect a claim. Before calculating the relief, any costs paid by the resident in the nursing home are deducted from the claim (or a maximum deduction of 60% of the resident’s income – it is Revenue policy to deduct this 60% of the dependent’s income regardless of whether or not it is used to actually defray the costs involved.)
Example:
You maintain a dependent in an approved Nursing Home and you claim relief in respect of the expenses, which total €15,000. Your dependent has an income of €8,000.
Health Expenses attributable to Dependent €15,000
Deduct: 60% of Dependent’s Income (€4,800)
Health Expenses claimable by you €10,200
Qualifying Dental Treatment
This covers the following treatments:
· Orthodontic Treatment
· Crowns
· Veneers
· Tip Replacing
· Gold Posts
· Gold Inlays
· Endodontics – (Root Canal Treatment)
· Periodontal Treatment
· Surgical Extraction of Impacted Wisdom Teeth
· Bridgework
· Dental Implant Treatment
When and How do I get the Tax Relief ?
Our software systems will automatically produce the required tax forms to make your claim. However you must have a Med 2 form if claiming relief for specialist dental work. The Med 2 form will be completed by the dentist and certifies the type of work performed and that it qualifies for tax relief.
Relief can be claimed for expenses paid in each tax year, or for the year in which the expenses were incurred. Claims can be in respect of the health insurance subscription year or for expenses incurred in the actual tax year but must be on a consistent basis year on year. Relief is given by way of repayment after the end of the year.
Treatment received abroad
If you need to recieve treatment abroad i.e. it is not available in Ireland you can claim relief on
How do I calculate the amount of Qualifying Expenses?
Our medical expenses claim calculator will do this for you. You will need to have all your receipts sorted into the relevant tax year and category of expense and have the totals for each category ready to input into our calculator.
The allowable figure is then claimed in your tax return and the Revenue will refund you whatever amount of repayment you are due.
Example
Mr. Smart and his family incurred the following medical expenses;
|
Medical Expenses |
2020 |
2021 |
|
Nursing Home Costs |
€6,000 |
|
|
Visits to G.P/ Medicines |
€1,900 |
|
|
Orthodontic Work (Train-Tracks) |
€2,500 |
|
|
Total |
€6,000 |
€4,400 |
|
Less: |
||
|
Amount recovered from VHI |
€340 |
€120 |
|
Qualifying for Tax Relief |
€5,660 |
€4,280 |
|
Amount of tax relief |
€2,264 |
€856 |
This is the amount of the tax relief due and will be refunded by the Revenue after the end of the tax year.
* For the Nursing Home costs tax relief is at 40% (assuming top rate tax applies) but for the other expenses tax relief is at 20%.
You don’t need to spend hours searching for answers with our intuitive Irish Tax Return software.
Save time by completing your tax Return Now using Paylesstax.ie
