Money Times - November 7, 2017

Posted by Jill Kerby on November 07 2017 @ 09:00



No one knows for sure what the total value of uncollected tax refunds is every year in this country, but it could be in the billions of euro.  Since 2008 this state collects a disproportionate amount of tax from individual income earnings, yet so may of us consistently fail to ensure that we pay only the correct amount of tax.

Fortunately, storms Ophelia and Brian came with a small silver lining:  the Revenue have slightly extended their final on-line file and pay tax deadline to Thursday, November 16 due to the disruption caused to so many individuals and small business. 

The paper filing deadline passed was October 31, but you can still register with ROS, the Revenue on-line service, to file and pay your 2016 Form-11 income tax liability and to claim refunds or, better still, make a pension contribution that will lower your bill.

The process is pretty simple once you register with ROS (which can take 1-2 days, so don’t leave it to the last moment) but on all matters tax, especially if you happen to be a novice filer, I highly recommend that you hire an accountant, or use the services of a popular and well-known tax refund firms, like www.taxback.com .

Missing your filing date, or not filing at all, can result in penalties and surcharges, which is another good reason to hire a tax expert who will not only ensure you don’t miss deadlines but can deal with any Revenue queries or represent you in the event of an audit.

So are you a “chargeable person”?  You are if you have non-PAYE income like rental income (including from AirBnB or holiday home), or you draw down dividend income from shares or you have any kind of part-time income, say, by selling stuff on-line, or from giving grinds, or from any kind of contract work.  Anyone receiving a foreign pension also needs to file, even if it is paid net of tax.

Landlords can claim certain property-related expenses and capital expenditure to reduce their income tax bill. The self-employed and sole traders have many business expenses they can claim, even if they work from home. Again, your accountant or tax adviser will have a comprehensive list of all these tax-deductible expenses, and of course, all your personal tax credits and allowances.

The other side of the file and pay process is that it is a chance to further reduce your tax bill, especially if you’re self-employed or if you are employed by a company but are not a member of an occupational pension scheme, by making a pension fund contribution. Depending on whether you pay income tax at the standard 20% or marginal 40% rate, you can claim tax relief up to the maximum allowable amount, based on your net relevant earnings (which are capped at €115,000) and your age.

For example, up to age 29 years you can contribute 15% of net relevant earnings; age 30-39, 20%; age 40-49, 25%; 50-54, 30%; 55-59, 35% and age 60 and over, 40%.  What this means is that for every €100 you contribute to your pension you can cut your tax bill by €20 or €40, depending on which rate of tax you pay.  The €100 will be invested in your fund but your cost will only be €80 or €60 to your when your income tax relief is claimed.

Pension (and income protection insurance) tax relief remains one of the few generous tax breaks left for all private and occupational pension fund holders because– like nursing home expenses – it can be claimed at the higher marginal rate as well as the standard rate of tax. Too many self-employed tax-payers leave this benefit behind (even people with access to occupational schemes in which employers can also make tax deductible contributions.) Meanwhile, only one in three people know to claim for qualifying tuition fees.

Some common standard rate tax breaks you should remember to claim if you are filing on-line by November 16, are for a long list of medical and dental expenses that include not just the usual GP and consultant’s fees (not already covered by medical insurance), but prescription drugs and medicine, prescribed medical, surgical, dental and nursing appliances, the cost of an ambulance, in vitro fertilisation, gluten free foods for coeliacs and dental treatments including crowns, veneers, orthodontic treatment (like braces for your kids.) 

You can also claim tax relief for payments for deeds of covenants, for taking part in the Home Renovation Scheme and if you qualify for the Help-to-Buy Incentive as a first time home buyer.

Best of all, while these tax breaks can reduce your tax liability, the most welcome news is that you may have up to four years of previously unclaimed expenses that you can claim. Use a tax expert to find them all. 

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