Money Times - November 22, 2076
Posted by Jill Kerby on December 27 2016 @ 09:00
POSTBAG PROMISES A HAPPY CHRISTMAS FOR SOME
A recent column warned readers who haven’t claimed tax refunds going back to 2012 that they have only until December 31 to do so. Our last postbag of the year includes some questions about what exactly you can claim:
Mr JM writes: I spotted your article about tax refunds. My wife stopped work at the end of 2013 when our second child was born. I work for the County Council but have not seen any deduction for the Home Carer’s grant on my payslip. I was told they do not have anything to do with it. Can I still apply for it on my wife’s behalf or does she have to claim it?
As the single earner in the family, the refund comes to you. If you wish to claim the €1,000 for this past year and €810 for 2015 and 2014 – a total of €2,620 - either go directly to the Revenue website (www.revenue.ie) and register your details under ‘myAccount’ and then follow the instructions to claim the refund or go to a tax adviser such as the excellent www.taxback.com which just last week produced a nationwide survey that estimated that up to 65% of all single earning families that are entitled to this annual tax credit do not know about it, or don’t bother to collect it. I hope this makes your Christmas and New Year much happier.
Mr DG writes: I am receiving a redundancy payment from my employer but there is tax due on the amount. Can I offset tax by diverting the money into an AVC?
You can offset some of the tax on your redundancy payment in a roundabout way, says tax adviser Sandra Gannon of TAB Taxation Services. Before you leave your employment, you can take out or make a contribution to an AVC to boost your final pension fund value and enjoy the 40% income tax relief (this is assuming you are not already fully funded.) Keep in mind too that for the purpose of tax relief on pension contributions, net relevant earnings in any given year are €115,000. Sandra suggests you speak to the company accounts manager or pension trustee before you do anything to ensure that you get the correct income tax deductions.
Mr MD writes: My wife and I are thinking of retiring to Portugal, have not yet converted our pensions to ARFs or annuities and are looking at the 10 year NHR (Non Habitual Residence) system. I’ve done a tonne of research but still don’t know if the payments from an Irish Approved Retirement Fund will be paid tax-free in Portugal.
I asked Marc Westlake of Global Wealth Management in Dublin, (full disclosure – Marc is my financial adviser) about this issue and he explained that “This is a very good question and turns on the right of the Irish Revenue to recover the tax already relieved on the pension contributions vs the rights of the individual to retire where they please.” Much will depend on your permanent residency status and you need to get a definitive answer from Revenue before you base your retirement plans (like whether to opt for an ARF or annuity) on any assumptions about the tax status of your payments. “This is absolutely not a DIY area in my experience,” he said. A qualified, impartial review of your retirement plan from a fee-based financial planner is probably the best next step you can take.
Ms AM writes: I have a house that I have rented since 2013 when I moved abroad, but I wasn’t aware until now that the tenant was supposed to deduct 20% and pay it to Revenue each month. I am a registered landlord and have declared the income and paid all the tax due. I am worried sick now that the tenant should be paying this amount every month to the Revenue, even though I don’t think they should be responsible for doing so.
My understanding is that this rule was introduced to ensure that at least the standard rate of income tax on rents was paid to the Revenue where a property is owned by a non-resident landlord who would be very difficult to chase for the money. The fact that you have diligently reported your income and paid any tax due each year means that there is no tax shortfall issue in your case. A tax adviser I spoke to – unofficially – said “Let sleeping dogs lie”. He also said that you could register/contact the ‘myEnquiries’ helpline at www.revenue.ie to ask their opinion on your current arrangement.
Mrs HW writes: I have inherited a sum of money and would like someone to manage it for me as I have really no experience. I understand certain firms do this and that their charges can be high. Also that a good stockbroker can also advise costing possibly less. I feel very vulnerable and would like your advice.
I can understand your concerns, but ‘vulnerable’ women with money to invest are often the unwitting victims of unsuitable, commission-driven “advice” from banks, stock broking firms and investment salesmen. You need to engage the services of a fee-based, impartial, independent financial adviser – certainly not a stockbroker - who will review your situation and make suitable suggestions for your circumstances. I suggest you check out the website of the Society of Financial Planners of Ireland (see www.sfpi.ie) and find such an adviser near you. Dublin based members usually service clients nationally.