Grandparents will be forced to fill out childminding tax forms in new rules
Published 08/03/2014 | 02:30
Grandparents minding their offspring's children may be targeted as Revenue begins a clampdown on childminders.
It has been warned the new tax rules affecting all childminders could cause problems for parents and may not be in the best interests of children.
Childminders who earn less than €15,000 a year are exempt from paying tax but they will now be obliged to fill in a 26-page tax return form for the first time.
The new rules even apply to grandparents who are minding their son's or daughter's children if they are being paid, Revenue confirmed.
Some childminders last night told the Irish Independent the new rule could result in headaches for parents who discover fewer people in their locality willing to mind their children.
And some childminders will be less inclined to register themselves for any regulation in order to avoid the extra red tape.
The spokeswoman for Revenue said just 450 people were claiming a tax exemption for minding children in their home, but it is thought that thousands more are looking after children without telling the authorities.
Childminders warned the new rule would be counterproductive to efforts to encourage people to register as childminders.
Teresa Heaney, chief executive of Early Childhood Ireland, said: "This move indicates to me that Revenue is aware there is an awful lot of unregulated childcare and they are trying to discover the extent of it.
"It could result in more people going into the black economy where childcare is not subject to inspection. That would be a poor outcome for any initiative and not in the best interests of children."
And it has emerged that people minding children in their homes may be unaware that they are due to make pay related social insurance (PRSI) payments on the money they get for caring for children.
People who mind children in their home are exempt from income tax if they register with the HSE, and if their income from childminding does not exceed €15,000.
But a new briefing document issued by Revenue this week stresses that anyone claiming this relief must submit an annual tax return. This is known as Form 11 and runs to 26 pages.
Senior tax consultant with Taxback.com Christine Keily accused Revenue of clamping down on childminders.
"The fact that Revenue issued this reminder would suggest that they do intend to clamp down on individuals who have been availing of this relief but not meeting their obligations under self-assessment. For any individual in these circumstances we would suggest that they reconcile their position without delay."
She said there was a concern among the tax authorities that thousands of childminders were availing of the income tax relief but failing to formalise this by filing an annual tax return.
Tax practitioner with PayLessTax.ie Cathal Maxwell said that thousands of childminders, who avoid income tax under the income tax exemption rule, may be unaware that they are still supposed to pay PRSI.
He said anyone with childminding income of greater than €5,000 has to pay a flat rate of PRSI of €500.
An exemption from income tax for earnings up to €15,000 has been in place since 2006.
A spokeswoman for Revenue said: "The relief is available only to individuals who provide childminding services in their own homes within the State on a self-employed basis, and is not available to individuals who are employees of a childminding service."