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.