An exemption from tax for certain providers of childcare services was introduced in 2006. This exemption was a positive measure, aimed at smaller providers of childcare services.
Individuals in receipt of income from childcare services are, in general, chargeable persons. However they can claim an exemption from income tax and USC, provided:-
- the gross amount of childcare income does not exceed €15,000 in the year,
- they are minding not more than 3 children, and
- the children are looked after in the home of the childminder.
They must also notify the relevant childcare authorities each year that they are providing childcare services in their home.While the childcare income is exempt from income tax and USC, PRSI is chargeable, however PRSI does not apply where:-
- the provider of the childcare is over 66 years of age; or
- the provider is under 66 and the person's only income source is childcare income which is less than €15,000 per annum.
Therefore, in the case of grandparents providing the childcare, once they are over 66 and meet the conditions of the exemption, they will have no liability to tax, USC or PRSI.