MONEY It’s tax time again – know your entitlements

It’s tax time again – know your entitlements


Money matters
Brid Conroy

It appears my destiny is to live in the past. I can’t fully embrace the year 2011 until I have filed all of the 2010 tax returns, which this year will be on November 15. Most of us, in theory, don’t mind paying our share of the taxes, but we still welcome anything that can reduce that bill. So, even if you don’t have to file a tax return, this is a good time to pay attention to the tax credits and reliefs you are entitled to and do a review of your tax.

Exempt income
Firstly, it may come as a surprise but some income is exempt from income tax. The most well known is the artists’ exemption, where income from a book or a musical composition is exempt from income tax up to €40,000. Others include patent income, leasing of farm land, rent-a-room relief up to €10,000, childcare income up to €15,000 and profits from woodlands and stallion fees. There are many other smaller obscure incomes that come under this category. However, these incomes are liable in most cases to PRSI and levies, so therefore need to be filled in on a tax return nevertheless.

Residency rules
Secondly, there are a few areas to watch out for when determining whether tax is due in the State or not. The most important rule is residency. If you are a travelling salesman, for example, and spend 183 days abroad, then you may not be liable to Irish tax.
If you’re not domiciled here (no intention to reside here permanently), you will only be liable for tax on non-Irish income to the extent it is brought into Ireland.

Capital gains
Let’s not forget capital gains must be included on your return. Items like aircraft, cars, bloodstock, livestock or yachts that have a life of less than 50 years are exempt from Capital Gains Tax. For those with companies, there may be instances where profit gained can be taxed as capital at 25 per cent instead of income at up to 55 per cent.

Tax credits
Lastly then when doing a tax return, the most common tax credits to claim are health expenses, rent relief (being phases out), trade union subscriptions (expiring in 2011), age tax credit, third-level tuition fees, flat rate expenses, water charges, bin charges, pension payments and home carers.
Often missed is the relief on top-up mortgages and personal loans taken out to repair or improve your main residence.
Make sure you have receipts to support the repairs. Remember home carers can be claimed for looking after someone over 65 or infirm. If it is claimed one year and your income is too high the next, you can claim on a ‘look-back basis’.
Another quirky one is the single parents’ relief to claim even if the children only live with you for the holidays. Health Insurance Premium paid by your employer must be claimed separately. One client got a refund of €600 for this.
Medical cards holders, you need to make sure your employer knows you have a card, so that you get a reduced Universal Social Charge. If you haven’t worked for the full year, you may be entitled to a rebate and those going back to work after a year or more unemployed can get extra tax credits for three years.
Other credits available are for works expenses not reimbursed by your employer – and don’t forget the new insulation relief available in 2011 for improving the heating efficiency of your home.

So, it looks like breeding horses in the woods with extra insulation on your house and six months in Spain before you sell the yacht is the way to go.
See you there!

Brid Conroy FCCA is a Chartered Certified Accountant with a practice in Louisburgh.
She works on improving personal finances and the profitability of small and medium-sized businesses. To contact Brid, call 098 66870 or theoldschool@iolfree.ie.