Can I claim tax relief on college registration fees?
My son starts college this September and I'm footing the bill for his registration fee - which is currently €2,750 a year.
As this is a four-year course, these annual fees will use up all the savings I have. Furthermore, in September 2015, my daughter starts college so I will have two sets of fees to pay. Can I get tax relief on the registration fees?
John, Newbridge, Co Kildare
Pat O'Brien replies: Tax relief is available annually on tuition fees, including the student contribution, at the standard 20pc rate. However, as the first €2,750 of any claim for relief is disregarded, you will unfortunately not be able to avail of relief for 2014 (assuming you are not paying any additional tuition fees for your son).
The effect of this rule is that when you have one dependent in college for whom you are paying only the student contribution, you will be unable to claim any tax relief. However, when your daughter starts college in 2015, you will be entitled to claim tax relief on one contribution in full as you will have two children in college. As the student contribution is set to rise to €3,000 in 2015, you will be entitled to a tax rebate of €600 for the 2015 tax year.
This relief can be claimed through your annual tax return which is filed following the year end. Alternatively, you can make an application for relief during the year, once the fees have been paid, by requesting an amended tax credit certificate from your local Revenue office.
Relief for third-level tuition fees, including the student contribution, is available annually up to a maximum of €7,000 per individual, per course. If you pay tuition fees in addition to the student contribution you will be entitled to claim relief on these. This may apply if children are attending private colleges or are completing post-graduate qualifications, which do not qualify for 'free fees'. Relief is only available for fees paid in relation to an approved course in an approved college. You can request a full list of these approved courses and colleges from the Revenue Commissioners.
Employing a childminder
I am considering hiring a childminder to look after my children. Does this mean I will become an employer and will have to pay the normal employer taxes? I understand these taxes can be quite onerous - is there any way of avoiding having to pay them when I hire a childminder?
Ella, Roundwood, Co Wicklow
Pat O'Brien replies: You do not mention whether you will be employing the childminder to work in your own home or if the children will be cared for in the minder's home.
If you employ someone to work as a minder in your own home, then you may be considered as an employer for PAYE purposes. An individual who pays an employee €8 or more a week must register for and operate PAYE and PRSI. As you say, this can be an onerous obligation.
You would also incur an additional cost in the form of employer's PRSI contributions.
However you may not need to register for PAYE as an employer if you qualify for the 'Domestic Employer Scheme'. To qualify you must be an individual, have only one domestic employee, and pay less than €40 per week.
If the children are cared for in the minder's home, this would usually be considered to be a business carried on by the minder and you would not be required to register for PAYE in those circumstances.
Pat O'Brien is tax director at Ernst & Young
Sunday Indo Business