Wednesday 7 December 2016

Get your tax back and save a bundle

It's not too late to claim refunds for previous years

Published 13/01/2011 | 10:59

LAST month's Budget took a harsh approach to many of the tax reliefs available to ordinary PAYE (pay as you earn) workers.

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But the good news is that the changes are not retrospective and people still have an opportunity to claim tax refunds due to them for previous years.

Also worth noting is that some of the main tax reliefs and credits PAYE workers can claim were left untouched in the Budget.

This means that there is still a long list of tax reliefs available to people that could result in savings of hundreds of euro.

Tax specialist with www.taxback.com Darren Byrne says workers are losing out.

"Many of these reliefs go unclaimed every year," he says.

And tax practitioner Cathal Maxwell of www.paylesstax.ie advises: "A number of reliefs have been removed so people should act now to make sure they claim what they can."

Mr Byrne says a lot of people still find filing a tax return confusing or complicated, resulting in them paying more tax than is necessary and losing out on entitlements.

Revenue has made attempts to educate taxpayers as to their entitlements regarding tax credits and reliefs. However, despite this Mr Byrne believes that there is still millions of euro going unclaimed each year.

There are very few ways to beat the January blues but a cheque from the Revenue could certainly help. For this reason we have outlined six areas where tax relief may be claimed:

MEDICAL EXPENSES:

Luckily for consumers this relief was not touched in the Budget and, although tax relief on qualifying medical expenses was slashed from 41pc to 20pc at the beginning of 2009, this has not deterred people from applying for tax relief.

If a person has incurred medical expenses such as doctors' bills, prescription medicines, or even laser eye surgery they can claim tax relief on all of these.

However, other lesser-known medical expenses such as costs incurred for in-vitro fertilisation, gluten-free food for coeliacs, and diagnostic procedures and physiotherapy carried out on the advice of a practitioner may all also qualify for this valuable tax relief.

If you are claiming for money spent on a GP, consultant or prescriptions in 2007 or 2008 and you are a higher-rate taxpayer, then your claim should be granted at 41pc.

In other words, if you spent €100 on medical matters in 2006, and this money was not reimbursed by a private health insurer, you can claim back €41.

But since 2009, the rate you can claim back dropped to 20pc.

Download a form called Med 1 from www.revenue.ie and act now to claim back medical expenses incurred in the past four years.

You do not need to submit receipts, but you do need to keep them. Fill out the form and send it to your local tax office.

In addition, tax relief for private medical insurance premiums paid by individuals to authorised insurers is granted at source. Subscribers pay a reduced premium (80pc of the gross amount) to the authorised medical insurer and no further claim needs to be made.

Employees whose private medical insurance premiums are paid on their behalf by their employer as a taxable benefit-in-kind will not have received this tax relief at source and a claim may be made to Revenue to receive this credit.

TUITION FEES:

Tax relief at the standard rate (20pc) may be available in respect of tuition fees paid for both approved undergraduate and postgraduate courses in approved colleges.

This relief has not been affected by the Budget. The maximum limit for qualifying fees is €5,000 and so individuals may be entitled to a tax credit as high as €1,000 (€5,000 x 20pc).

Tax relief is also available for tuition fees paid for certain approved training courses in the areas of information technology and foreign languages.

In these cases, relief applies to fees ranging from €315 to €1,270 per course.

Since the 2007 tax year there does not need to be a defined relationship between the person paying the tuition fees and the person undertaking the course of study and so this tax relief can be claimed by anyone that incurs the cost of qualifying tuition fees.

It's important to note, however, that registration fees, administration fees and examination fees, although they may be high, unfortunately do not qualify for tax relief, Mr Byrne added. The Revenue Commissioners publishes a list of courses that qualify for this valuable relief each year.

INVESTMENTS:

The current rate of capital gains tax in Ireland is 25pc. Given current market conditions many individuals may find that they are making a loss on the disposal of their investments. All is not lost, however.

In many cases losses arising on the disposal of one asset may be used to offset gains arising on the disposal of another asset.

Unutilised losses may also be carried forward indefinitely for use in future years. The rate of 25pc has not changed for capital acquisitions tax, but the Budget saw changes announced to the thresholds for this tax.

The threshold has been reduced by 20pc. Before the Budget a child could inherit -- or be given as a gift -- €414,799 from a parent without incurring any tax penalties. This has now fallen to €332,984.

Someone who was able to inherit €41,481 from a related person tax free can now only inherit €33,208 while non-related people who were able to inherit €20,740 can now inherit just €16,604 without paying any penalties, according to information supplied by Irish Life.

HOME CARER'S CREDIT:

The Budget introduced a reduction of 10pc in tax credits.

However, where a married couple is jointly assessed and where one spouse works in the home caring for their children, the couple may still be entitled to an additional tax credit of up to €900 in certain instances.

This credit has been slashed to €810 commencing January 2011.

ACCOMMODATION RELIEFS:

Where an individual rents out a room, or rooms, in their principal private residence and the gross income received, including sums received for food, laundry or similar goods and services, does not exceed €10,000 in the tax year, this income will be exempt from income tax.

Tax relief is also available to tenants for rents paid by them for private rented residential accommodation which is their sole or main residence. A single individual aged under 55, for example, may receive a credit of up to €400 in the tax year in which they pay rent.

This credit is being phased out by the Budget, seeing a reduction of 15pc in the credit from this month.

It is now more important than ever to claim this credit before it's too late. So, start this year as you mean to continue and get what is owed to you.

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