This may have real significance where there is an age difference between the two spouses and where the dependent spouse would satisfy a means test.
In such cases the so called dependent spouse might be far better off not applying to Social Welfare for partnership treatment as this will mean that they will not receive the pension until they are at least 66, depending on their age.
Qualifying for the IQA
The Increase for a Qualified Adult (IQA) allowance is means tested whereby your means have to be assessed at less than €100 per week to get the full allowance or less than €310 per week to get any allowance.
Apart from earnings from employment, capital is also taken into account such as savings, investments or property.
While the first €20,000 in value is not assessed, the greater part of the remaining value is assessed at €4 per €1,000 per week.
It is important to note that divesting oneself of assets or income solely for the purpose of qualifying for the IQA will be treated as if you are still in possession of the assets or income.
Failure to make accurate declarations when completing the application form is likely to cause problems for you or your successor(s) in the future.
Qualifying for treatment as a farming partner
Where the IQA is not an option and the farm accounts are not being returned on a partnership basis, but could be, you should apply to Social Welfare to be assessed for qualification as a farming partner.
In determining whether a partnership has existed you will need to satisfy some or all of the following:
Bank Account in joint names and/or cheques written by both spouses.
Both spouses actively involved in running the farm
Land in joint names (not essential)
Invoices issued to both partners
The profits of the partnership are shared by each partner
To apply for retrospective partner status you should contact Scope Section, Floor 1, Oisin House, Pearse Street, Dublin 2.
For the actual pension application you should apply three months before your 66th birthday.
Forms can be got from your local Post Office, your local Department of Social Protection office or online on www.welfare.ie.
Backdating of payment beyond six months is no longer possible so timely application is important.
Martin O'Sullivan is the author of the ACA Farmers Handbook. He is a partner in O'Sullivan Malone & Company, Accountants & Registered Auditors. www.som.ie Ph: 051 640397
Mary is married to John and has been working in the home and on the farm for all of her married life. Mary is 50 and John is 56. Mary has no property or savings of any consequence and would certainly satisfy a Social Welfare means test currently. She would also satisfy the partner test whereby she could qualify for a contributory pension which would not be means tested and would be worth €1,232 more per year than the Increase for a Qualified Adult (IQA) at current rates.
Pension age is still a long way off so she decides in the interest of getting a higher pension and also having the freedom to accumulate some means, to seek approval from Social Welfare for retrospective partner status.
Assuming she is granted partner status the farm accounts will be prepared on a partnership basis from now on so she will be deemed to share in half of the farm profit. Mary's problem is that she will have to wait an extra six years after John receives his pension to get her pension whereas if she had retained her qualified adult status she would be getting €7,956 per year at current rates as soon as John gets his pension.
This would mean that she will lose out on €47,736 over the years leading up to the point that she became eligible for her own contributory pension. At current payments rates it would take nearly 39 years before she would have recovered the payment foregone. In the circumstances, clearly Mary would have been far better off to have retained her qualified adult status.