I am advised by Revenue that there is no statutory definition of employment or self-employment in tax law. In general, an individual is an employee if he or she is directed by a person on how, when and where to work, has set working hours, has no personal financial risk relating to the work, receives a fixed wage, supplies labour only and cannot subcontract the work.
The question of whether an individual is engaged under a contract of service (an employee) or a contract for service (self-employed) is a question of fact and general law. To make a determination on employment or self-employment status the full terms of the contract and the circumstances in which it was made must be established.
Some years ago, the Employment Status Group published a Code of Practice for determining Employment or Self-employment status of Individuals. This Group included representatives from the Department of Finance, the Department of Employment Affairs and Social Protection and the Office of the Revenue Commissioners, amongst other public and private bodies. The Code of Practice is for guidance only and the employment status of an individual in relation to an engagement may in some instances fall to be determined by the Courts.
Where an individual is an employee, his or her salary or wages is chargeable to income tax under Schedule E and is subject to deductions under the PAYE system by his or her employer. The employer is obliged to pay a PRSI contribution for employees under the PAYE system. This employer contribution is paid for employees whose employment is insurable under the Social Welfare Acts.
Where an employee is employed by an individual solely on domestic duties, including childminding, in the employer’s home and is paid less than €40 per week, and the employer concerned has only one such employee, then, the domestic employer is not required to register as an employer for the purposes of the operation of the PAYE system of deductions. However, the employer is obliged to pay employer’s PRSI. The PRSI liability is payable by the employer in a single sum at the end of the tax year to the Special Collection Section of the Department of Employment Affairs and Social Protection.
I have no plans to introduce a specific income tax relief for parents to assist with childcare costs but the Government acknowledges the continuing cost pressures on parents, particularly those with young children.
In recognition of these cost pressures, there are already a number of support measures in place to ease the burden on working parents. These include various tax-exempted child-care related supports provided by the Minister for Children and Youth Affairs and measures such as the Working Family Payment provided by the Minister for Employment Affairs and Social Protection.
With regard to taxation measures, the Accelerated Capital Allowances scheme for Childcare Services was introduced to encourage employers to develop childcare facilities onsite for their employees. Also, there is tax relief for individuals who provide child-minding services in their own home, provided that they do not receive more than €15,000 income per annum from the child-minding income.