Dáil Éireann Debate, Wednesday - 29 June 2022
25. Deputy Paul Murphy asked the Minister for Finance if tax relief (details supplied) for taking care of an incapacitated individual at the same time as tax relief on employing a home carer will be applied to the previous years when the legislation was the same; if persons that would have qualified for both tax reliefs will be contacted to make them aware of this e-Brief and the consequences for their entitlements. [34722/22]
Amharc ar fhreagraWhile the particular tax relief that may be available will depend on the specific facts and circumstances of a case, in broad terms, where an individual is responsible for the care of an incapacitated individual, the reliefs available include:
1. relief where the individual employs a carer to look after the incapacitated person (provided for under section 467 TCA 1997); and
2. relief where the individual looks after the incapacitated person themselves (the home carer tax credit as provided for under section 466A).
Some of the other reliefs which may be available where an individual is responsible for an incapacitated person include:
1. the incapacitated child tax credit (provided for under section 465 TCA 1997); and
2. the dependent person tax credit (provided for under section 466 TCA 1997).
With regard to employing a carer to look after an incapacitated individual, I am advised by Revenue that eBrief No. 128/22 relates to Tax and Duty Manual Part 15-01-20, and has been updated to provide further clarity on the interaction between the tax relief available to an individual who employs a carer to care for an incapacitated individual, and the incapacitated child and dependent relative tax credits.
It should be noted that the updated guidance does not refer to the home carer tax credit nor does it reflect a change in the existing statutory position.
Section 467 TCA 1997 provides for tax relief where an individual incurs costs in employing a person to take care of an incapacitated individual. The incapacitated individual can be the claimant themselves, or the claimant’s spouse or relative. The tax relief is given by way of a deduction and is equal to the lower of the cost incurred and €75,000.
The incapacitated child tax credit of €3,300, as provided for in section 465 TCA 1997, is available to an individual who proves that he or she has living, at any time during the year of assessment, a child who:
1. if under the age of 18, is permanently incapacitated by reason of mental or physical infirmity to such an extent that there is a reasonable expectation that the child would be incapacitated from maintaining him or herself if they were over the age of 18; or
2. if over the age of 18, is permanently incapacitated by reason of mental or physical infirmity from maintaining him or herself and had become so incapacitated either before attaining the age of 21 or whilst in full-time instruction at any university, college school or other educational establishment.
The dependent relative tax credit of €245, as provided for in section 466 TCA 1997, is available to an individual who maintains, at his or her own expense, a relative who is unable to maintain him or herself or a widowed parent. The credit is also available where an individual depends on his or her own child, due to infirmity, and resides with and maintains the child at his or her own expense. Eligibility for the dependent relative credit is subject to the requirement that the relative, child or widowed parent’s income for the year does not exceed a specified amount provided for in the legislation.
Where the individual employs a carer to look after an incapacitated person and also qualifies for either the incapacitated child tax credit or the dependent relative credit in respect of that same incapacitated person, he or she may claim relief under both section 467 and section 465 and/or 466 TCA 1997 as appropriate.
However, it should be noted that tax relief under section 467 TCA 1997 cannot be claimed where the individual employed to take care of an incapacitated person is the same individual in respect of whom the claimant receives either the incapacitated child or dependent relative tax credits.
The Deputy also refers to the home carer tax credit in his Question. The home carer tax credit of €1,600, as provided for in section 466A TCA 1997, is available to jointly assessed married couples or civil partners where one spouse or civil partner stays at home to take care of a dependent person. The carer may earn up to €7,200 per year without affecting the value of the credit awarded, however once the carer’s income exceeds this amount the value of the credit will be impacted.
Where an individual employs a carer to take care of an incapacitated individual it is unlikely that he or she will also be eligible to claim the home carer tax credit as it is a requirement, under section 466A TCA 1997, for the individual to care for the dependent person himself or herself in order to qualify for the home carer credit. The facts and circumstances of each individual case determine the entitlement to tax relief however, additional tax relief will generally not be due in such a scenario.
In relation to the issue of making taxpayers aware of their tax credit entitlements, I am advised that Revenue pro-actively corresponds with different cohorts of taxpayers to publicise the range of credits which they may be entitled to claim. For example, Revenue is currently in the process of writing to all PAYE taxpayers whose final tax position for the years 2019, 2020 and 2021 is not yet balanced. This communications process may also prompt individual taxpayers to claim as yet unclaimed tax credits.
Detailed guidance material on each of these credits and reliefs is available on Revenue’s website and can be found at the following links:
- www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-20.pdf
- www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-05.pdf
- www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-27.pdf
- www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-29.pdf
Any individual who requires assistance in determining the full range of tax credits and reliefs which he or she may be entitled to claim, should contact Revenue through MyAccount -
www.revenue.ie/en/online-services/support/data-and-security/security/revenue.ie-and-myaccount.aspx
