Q: I run a family farm in Louth, and my 16-year-old nephew helps me for about 10 hours a week during school time with some administration and light help on the farm. He has been a great help, and during school holidays I would like to employ him full-time while he is off school. I want to register him for tax so that he is set up properly. Will this be allowed by Revenue, as he is family?
A: It is common practice in many family farms and businesses to engage children, spouses or other close relatives as employees.
Wages paid for work done by family members are an expense of the business, and the tax deductibility must be considered like any other expense, according to CEO of Taxback.com Joanna Murphy.
She said paying wages to a family member through the PAYE system can save a significant amount of tax.
The central provisions for deductibility are that payments are bona fide, the duties are genuinely performed wholly and exclusively for the purposes of the trade, the remuneration is commensurate with the work and time input, and the payment is received by the family member. Under the Protection Of Young Persons (Employment) Act 1996, the maximum working week for people aged 16 and 17 is 40 hours, with a maximum of eight hours a day.
Regulation allows the detail of the act to be modified in relation to employment of close relatives in a family business or farm, provided the conditions of employment meet the terms of the EU directive, and the health and safety of the young people concerned are not at risk.
The minimum wage since January, is €9.80 per hour. Under-18s can earn up to 70pc of that: €6.86 per hour. Revenue will require that the wages are actually seen to be paid, so he would need a bank or credit union account, Ms Murphy said.