Saturday 3 December 2016

With this ring, gay diabetics in wigs save big

Wigs, gay marriage, trips to Ulster, diabetes, gold teeth... why not grab the few legal tax dodges still out there, asks Louise McBride

Published 25/09/2011 | 05:00

GLAD TO BE GAY: A same-sex couple display their wedding rings after exchanging vows in San Francisco
GLAD TO BE GAY: A same-sex couple display their wedding rings after exchanging vows in San Francisco

though we've been stung with a raft of tax hikes over the last few years, a few of us are better off tax-wise than we've ever been. Those of us that aren't can pocket some handsome tax rebates if we use our imagination.

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IF YOU'RE GAY

If you're part of a gay or lesbian couple, you could save hundreds of thousands of euro in tax if you opt for civil partnership -- a legal agreement between same-sex couples that is similar to marriage.

Until the start of this year, same-sex couples who inherited an investment property from their loved one when he or she died will have usually paid through the nose in tax. Unlike their married counterparts, a partner in a same-sex couple was not exempt from inheritance tax if he or she inherited an investment property from the other partner, regardless of whether or not they were living together or if they were in a civil partnership.

Also, unlike married couples, if you gave an investment property as a gift to your gay or lesbian partner, you would usually have had to pay capital gains tax (CGT) -- a tax on profits made from the sale of assets -- on the difference between what you initially paid for the property and the market value of the property at the time you gave it as a gift. Similarly, unlike married partners, a same-sex partner usually had to pay stamp duty if part or all of a property were transferred to them by their partner -- even if the couple were living together in that property.

That all changed at the start of the year when the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 kicked in. Couples in civil partnerships are now entitled to the same tax and social welfare advantages as married couples. Before the new law was introduced, for example, a gay or lesbian partner would have been hit with a €250,000 inheritance tax bill if he or she inherited an investment property worth €1m from their partner. As long as he or she is now in a registered civil partnership that is recognised by the State, that partner does not have to pay any inheritance tax on that property today.

If you're in a civil partnership, you can also opt to pay tax as civil partners, rather than individually, which is worthwhile if the tax you pay as two single people is greater than the tax you would pay as civil partners. "This could save the couple thousands of euro in income tax a year," said Paul Dillon, tax partner with chartered accountants, Duignan Carthy O'Neill.

CHOP 20 PER CENT OFF YOUR FOOD BILLS

If you must eat special foods because you're a coeliac or diabetic, make sure to put a health expenses claim to the taxman. You can get back a fifth of the cost of certain foods, such as gluten-free foods for coeliacs, in tax relief on health expenses. You must have a letter from your doctor confirming you have the condition that requires the special diet.

GET MONEY BACK FOR YOUR WIG BILLS

No matter how off the wall your medical treatment, it's worth checking out if it qualifies for tax relief.

Since 2009, you can claim back a fifth of the cost of certain medical expenses in tax relief. You can claim back up to 41 per cent tax relief on medical expenses you ran up before 2009 -- as long as those expenses don't go back more than four years.

"Modern health costs such as laser eye surgery, in vitro fertilisation (IVF), root canal treatment, dental inlays and veneers are eligible for tax rebates," said Christine Kelly, senior tax manager with taxback.com.

Other costs that qualify for tax relief include wigs and exercise bikes -- as long as they are medically necessary. If you've just given birth, you could save more than €1,300 by claiming tax relief on expenses you ran up while pregnant, according to Kelly. A new mother who, for example, used IVF could have dished out about €6,900 on medical fees by the time she gave birth to her baby, according to Kelly. That includes €4,000 on IVF, €2,000 on consultant's fees, €200 on prescription medicine, €300 on scans, €300 on physiotherapy and €100 on ambulance transport. As she could claim back a fifth of all these fees in tax relief, she could save €1,380.

GET A COURT ORDER IF YOU SPLIT UP AFTER 'LIVING IN SIN'

Until recently, unmarried couples who lived together in a property which they bought together faced major tax bills if they split up or if their partner passed away.

If one of the partners decided to hold on to the property by buying out the other's share, he or she usually had to pay stamp duty on the share bought out. If one of the partners inherited an investment property from the other, inheritance tax had to be paid. If one of the partners gave an investment property to another, the partner giving the property was usually hit with a CGT bill -- even if he or she didn't sell the property.

Married couples who split up don't face the same predicament -- and since the start of this year, neither do those in civil partnerships.

If you've split up with a partner that you've been living with for some time, you can now avoid these massive tax bills if you go to court when transferring any property between you.

Under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act, there is a redress scheme for unmarried couples and same-sex couples not in civil partnerships which aims to ensure these people are not left in financial dire straits if their partner dies or if a relationship breaks up. Therefore, if you're living with your partner and the relationship ends or your partner dies, transfer any property between you as part of a property adjustment order -- a court order which usually arises during a separation or divorce. If you do this, you won't usually have to pay any CGT, inheritance tax or stamp duty. To qualify for the redress scheme, you usually must be living with your partner for five years -- or for two years if you and your partner have children together.

COMMUTE TO THE NORTH FOR YOUR JOB

If you live near the border and your employer is based in both the North and South, you could save a fortune in tax if you commute to the North for your job for most of the year. This is because you can claim trans-border relief to ensure you pay Irish income tax only on the income you earn in the South. You will still have to pay British tax on the income earned in the North. However, as Irish workers must now pay the universal social charge and PRSI on top of an income tax rate of up to 41 per cent, the amount of British tax paid on their wages could be a lot less than the Irish tax paid. "British tax is lower so a worker could potentially save on tax with this relief," said Dillon.

To qualify for the relief, you must commute to the North for at least 13 weeks a year, and for every week you work in the North you must stay in the South for at least one day a week.

GET A FREE EYE TEST

Before the start of this year, you could get some money back on the cost of contact lenses and glasses if you paid PRSI. You could also get your teeth cleaned for free. Although these particular benefits are now gone, you can still get a free dental check up once a year and a free eye test if you pay PRSI. Make sure the optician and dentist has a contract with the Department of Social Protection before booking your test -- otherwise, the test won't be free. If you have a particular eye condition and need certain contact lenses on medical grounds, you can still get up to half of the cost of your lenses back (up to a limit of €760) as long as you have a doctor's recommendation.

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