“Claiming all your credits and reliefs?” – Donegal Democrat 22 October 2009

Question from Joe in Raphoe: Every year I hear in the media that millions are lost in unclaimed tax credits and reliefs. Could you outline a comprehensive list of exactly what one would be entitled to claim?

Personal tax credits – non-refundable

1. Basic Personal Tax Credits

• Single Person’s Tax Credit €1,830
• Married Person’s Tax Credit €3,660
• Widowed Person’s Tax Credit €2,430

2. One-Parent Family Credit

• €3,660

3. Widowed Parent Tax Credit

• Year one following bereavement €4,000
• Year two following bereavement €3,500
• Year three following bereavement €3,000
• Year four following bereavement €2,500
• Year five following bereavement €2,000

4. Home Carer’s Tax Credit

• €900

5. Incapacitated Child Tax Credit

• €3,660

6. Age Tax Credit (65 or over)

• €325 for a single person and €650 for a married couple

7. Blind Person’s Tax Credit

• €1,830

8. Employee Tax Credit

• €1,830

9. Dependent Relative Tax Credit

• €80

10. Rent Credit (at standard rate of tax)

• Under 55 years of age: €2,000 for a single person and €4,000 for a married/widowed person
• Over 55 years of age: €4,000 for a single person and €8,000 for a married/widowed person

11. Relief for fees paid for third level education

• €5,000 (maximum) at standard rate of tax

12. Tax Credit for service charges

• €400 (maximum) at the standard rate of tax

13. Relief for trade union subscriptions

• €350 (maximum) at the standard rate of tax

14. Medical and Dental Insurance

Tax Relief for medical insurance is granted at source (TRS). With a standard rate of income tax of 20% for the 2009 tax year, the policy holder pays a reduced premium (80% of the gross amount) to the medical insurer. Revenue will give a credit for the remaining 20% to the medical insurer.

15. Relief for premiums under qualifying long-term policies

Tax relief is available in respect of premiums on qualifying insurance policies designed to provide cover, in whole or in part, for future care needs of individuals who are unable to perform at least two activities of daily living or are suffering from severe cognitive impairment. The relief is similar to that available for medical insurance premiums. The relief is at the standard rate and is given under a relief-at-source system, i.e. the subscriber can deduct the relief from the gross premium due. The amount deducted is refunded by Revenue to the insurer.

Tax Credits – Refundable

Refundable tax credits arise in respect of specific tax payments. They represent tax actually paid and are therefore refundable where they exceed the net tax liability after the deduction of non-refundable credits. They include the following:

• PAYE – Pay As You Earn Taxes
• DWT – Dividend Withholding Tax
• PSWT – Professional Services Withholding Tax
• RCT – Relevant Contracts Tax
• Tax on Annual Payments, for example a Deed of Covenant
• DIRT – Deposit Interest Retention Tax

Allowances and reliefs deductible at Marginal Rate

16. Employed person taking care of an incapacitated individual

• €50,000

17. Medical Expenses

Up until 2008, all medical expenses were granted at the individual’s marginal rate of tax. However, from the tax year 2009 medical expenses with the exception of nursing home expenses are granted at the standard rate of tax.

18. Permanent Health Benefit Schemes

• Limited to 10% of the individual’s “total income”

19. Donations to Eligible Charities and Other Approved Bodies

• Minimum €250 (no maximum)

20. Relief for gifts of money to the State

• No minimum and no maximum

21. Donation to certain sports bodies

• Minimum €250 (no maximum)

22. Relief for the long term unemployed

• Personal Tax deduction of €3,810 year one, €2,540 year two and €1,270 year three
• Child Tax deduction of €1,270 year one, €850 year two and €425 year three

23. Relief for Investment in Corporate Trades (BES)

• Minimum €250 (maximum €150,000)

24. Seed Capital Investment (SCS)

• Maximum €100,000

25. Investment in films

• Maximum €25,400

26. Share subscription schemes

• Maximum €6,350

27. Retirement Relief for Sportspersons

• Upon retirement, 40% of gross earnings are ignored for the last 10 years of assessment

Low income exemption

28. Low Income – Age Exemption

There is total exemption from income tax for an individual over 65 years if gross income does not exceed the following limits:

• €20,000 – single person/widow(er)
• €40,000 – married couple (jointly assessed)

Increased by €575 for each of the first two dependent children and by €830 for each dependent child in excess of two

29. Relief for Pension Contributions

Maximum amount of pension contributions for which the individual may receive tax relief varies with age and ranges from 15% to 40% subject to an overall €150,000 limit for 2009.

30. WHAT WOULD YOU LIKE NIALL TO DISCUSS IN HIS NEXT ARTICLE?

Please feel free to write to Niall at the e-mail address provided below. Niall welcomes suggestive topics/questions that you would like him to address in subsequent articles. Alternatively, you can make an appointment with a Chartered Accountant and a Registered Tax Consultant by contacting the office directly.

31. CONTACT DETAILS

Office                                                                     Contact Details

Tráighéanach                                                     Direct: +353 (0) 74 9121399

80 Hawthorn Heights                                     Mobile: +353 (0) 86 3062893

Letterkenny                                                       Website: www.nialldohertytaxconsultants.ie

Co. Donegal                                                         E-mail: nialldohertytaxconsultants@eircom.net

The views expressed in this article are the views of the author and do not necessarily reflect the views or policies of Niall Doherty & Co. Tax Consultants Limited, or its Board of Directors. Niall Doherty & Co. Tax Consultants Limited makes no representation concerning and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented herein. This article does not represent advice and no action should be taken on foot of any commentary made herein. Always consult a Registered Tax Consultant before implementing tax planning or tax structuring of any nature.

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