asked the Minister for Finance the changes, if any, which have taken place in the treatment of the tax affairs of a person (details supplied) in Dublin 6 who in previous years could deduct, as an allowance, the maintenance payments to his wife but who has now been told that he cannot and his tax free allowance has been adjusted downwards accordingly.
Written Answers - Income Tax Assessment.
49.
The Revenue Commissioners have advised me that the taxpayer is separated from his wife under a 1981 deed of separation. This information was not brought to the notice of the inspector of taxes until the end of 1984. As the deed of separation pre-dated the 1983 legislation in relation to the taxation of maintenance payments by one party to a marriage to the other party the provisions of section 3 or 4 of the Finance Act, 1983, do not apply in the present case.
The taxpayer is entitled, in computing his income for tax purposes, to a deduction in respect of the gross amount of the payment, which he makes to his spouse under deduction of tax, but he is chargeable to that tax at the standard rate (35 per cent) on that amount. The taxpayer's wife is assessed to tax in respect of the gross payment but is allowed a credit for the tax deducted from the payment made under the deed. Both parties to the agreement are entitled only to the single person's allowance.
The taxpayer had been granted the married personal allowance for all years up to 1985-86. Although the inspector became aware late in 1984 that the taxpayer was separated from his wife, due to an oversight in the tax office the allowances were not adjusted for 1985-86. The matter has been rectified for 1986-87 and it is not proposed to disturb the position for the earlier years.
The taxpayer may wish to explore whether there might be alternative ways of arranging his affairs with a view to coming within the reliefs provided by the 1983 legislation. He might consider approaching the inspector of taxes who would advise him on the matter.