I understand that the Deputy’s query relates to the tax treatment of an individual who, along with their spouse or civil partner, is not resident in the State for tax purposes, but has income which is chargeable to tax in the State.
I am informed by Revenue that in cases where neither spouse is resident in the State, but one spouse is in receipt of income which is chargeable to tax in the State, for example income from exercising an employment here, the statutory position is that he/she:
- is chargeable to tax on that income on the basis of separate treatment as a single person; and
- may be granted the single person’s tax credit, employee tax credit and reliefs, or a proportion thereof, in accordance with the provisions of Section 1032 TCA 1997.
However, where the following circumstances apply, I am advised by Revenue that aggregation basis may be applied in the normal way; where:
both parties are non-resident;
one party has income chargeable to tax in the State; and
the other party has no income, for example the earnings of the party working in the State are the only source of income of the couple.
Therefore, if Revenue is satisfied that the above circumstances apply, it is established practice that the aggregation basis may be applied in the normal way; that is, the married person’s/civil partner’s tax credit and the increased standard rate band may be granted to the person who is working in the State. A claim for such treatment may be made at the end of the tax year by the assessable spouse/civil partner, by completing a tax return form.
Furthermore, even if the other spouse or civil partner has income in his/her own right, a measure of relief may, depending on the level of that income, be due where the Irish tax payable under separate treatment in respect of the income chargeable to Irish tax exceeds the tax that would have been payable in respect of that income if the total income of both parties had been chargeable to tax on the basis of aggregation.
To avail of this treatment, the couple should make a specific election for aggregation basis and the spouse or civil partner with income chargeable to Irish tax should be requested to give details of the couple’s total income. This means the income of both parties including any income not chargeable to Irish tax.
As such, if the individual satisfies the above conditions, issues of equity or tax disadvantage do not appear to arise.
Further information on aggregation relief can be found in section 5 of Tax and Duty Manual Part 44-01-01, which can be accessed at the following link:
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-44/44-01-01.pdf
