We all agree we pay too much tax. Here’s how you can get some back
The taxpayer is lumbered with the bill for everything, from water charges to public sector pay … but it doesn’t have to be all one-way traffic
In old cowboy films, the cavalry would ride to the rescue in the nick of time to save the day. In Irish politics, another military-sounding old gentleman fulfils this role – General Taxation. He’s a grand fellow who’ll pay for everything without a quibble, no matter what it is or how much it costs.
Half the country doesn’t want to pay for water? No worries, our old friend will foot the bill, the commission on water charges decided this week.
Billions wanted for yet more unplanned pay rises in the public sector? No bother. The General will pay, trade unions reason.
They are not the only ones. Many people hate paying a specific charge – yet happily welcome General Taxation paying for everything instead.
It’s like greenhorn investors who object to paying a €150 fee for advice and prefer to have €3,000 surreptitiously extracted by a less scrupulous adviser in semi-hidden commission.
Because they can’t see him actually trousering their three grand, it’s as if it didn’t happen.
They can retain the happy illusion that they have got their advice ‘for free’. Weren’t they the savvy ones!
It’s the same with general taxation. Half the country was up in arms over a €160 water bill because water is tangible… and so is a cheque. Yet we cough up several thousand in USC every year with hardly a quibble.
But this is OK because, like commission, we don’t see it being surreptitiously trousered by the State through the payroll system.
Anyway, we have decided, via the findings of the Expert Commission, that we would prefer to pay over €5,000 in USC per average couple rather than €260 in water charges.
The good news is that there are ways to get some of that back as the tax year draws to a close.
Here’s are some suggestions:
TAKE YOUR BONUS AS A VOUCHER
Instead of paying the top tax rate on your Christmas bonus, get your
employer to give it to you as a voucher. The maximum amount to be given in this way tax-free was doubled to €500 in the 2015 Budget.
Other tax-free stuff your employer could provide include laptops, mobile phones and highspeed internet at home, provided they are mainly used for business purposes.
CLAIM MEDICAL EXPENSES
Get or download a Med1 form for medical expenses and Med2 form for dental costs and submit them both to the Revenue at the end of the year.
You don’t have to send in receipts alongside them but do keep them handy just in case they are sought.
Eligible for 20% tax relief are unreimbursed general medical expenses and qualifying non-routine dental expenses, including implants.
PENSION
December 31 is the deadline to save tax on pension contributions for employees in company pensions.
Ask your personnel department to top up your Additional Voluntary Contributions (AVCs) through your payroll system and there will be no need to make a claim to Revenue.
The relief is subject to the maximum contribution limits and earnings cap.
RENOVATIONS
The Home Renovation Incentive Scheme has been extended to the end of 2018. It allows you to claim back VAT of up to €4,050 on home renovation costs up to €30,000.
JOB-RELATED ALLOWANCES
Flat-rate expenses for certain trades and professions can be quite lucrative depending on the profession.
Freelance actors on PAYE income get €750 and RTÉ concert musicians, for example, get nearly €2,500 a year to keep their cellos tuned and their shoes nice and shiny.
TUITION FEES
Fees for approved courses can be written off at the lower rate of tax. Relief is available for certain language and information technology courses, for example, where the fees are above €315.
The maximum relief for these is capped at €1,270.
RENT CREDIT
Rent credit is set to be phased out by the end of 2017. However, some taxpayers still have an opportunity to claim it back to 2010 if you are eligible for this.
RENT A ROOM RELIEF
This will go up to €14,000 in 2017 from €12,000 currently and is well worth cashing in on as it exempts you not only from income tax on rent but also Capital Gains Tax complications when you sell your home.
SHARES
The end of the year is a crucial opportunity to take advantage of reliefs that go out the door when the New Year is rung in. For example, if you’re lucky enough to have made a nice profit on shares, you could sell them at the end of December (and buy them back in January if you wish) to use up your 2016 Capital Gains Tax allowance of €1,270.
You’ll have to pay stockbroker’s fees, of course, but it should still be worth it.
With CGT running at 33%, that would save €419 per person – or €838 for a married couple who jointly hold shares.
GIFT TAX
The same goes for gift tax. If you wanted to give anyone a gift for Christmas, you could maximise the €3,000 allowance by giving half in December and the other in January.
CATCH UP ON ADMIN
You are allowed four years’ grace to claim tax rebates. So December 31 next is the cut off point for claiming for any of the above for 2012.