Tax123.ie

We've had a busy time here in Tax123 and partly because we will be relaunching.

Yikes! New name, new website, new look - all to be found at a new location at www.redoaktaxrefunds.ie.

Our official launch date is set for Friday 3rd April, but we will continue to be available under the same contact details after that date. We'll provide more details on the launch over the coming days.

Is the sky about to fall in? or judging by the news reporting, we may settle for every tax in the land being raised, a few new ones invented and count ourselves lucky. Time to turn off the radio for a while and enjoy the calm before the storm.

Given that Tax Revenues are back down at 2004 levels (and will sink further as people have developed wallet allergies) and our Budget deficit forecast is at €6,000 per man, woman and child in this country next year unless changes are made, the Budget will likely be severe. It's just a matter of where. and every water diviner, tea leave reader, economist, journalist and blogger have joined in the prediction frenzy.

These wide ranging Budget predictions have included on the tax side of the coin:

• Increasing the higher rate from 41% to 42%
• removing the maximum threshhold on PRSI payments, so that people earning over 50,700 pay PRSI on that income.
• The introduction of a new Levy (similar to the Health Levy) of 1-2% of your gross income (Ouch!)
• Increased airport taxes.
• Reduce the relief on Medical expenses from the higher rate (if you are on it) to only allowed at the standard rates (20%).
• possibly, the introduction of new carbon taxes and/or increases in Motor taxes and VRT
• Medical cards for the over 70's, currently available to all, restricted to those on low incomes
• Relief on Pension contributions curtailed to the standard rate (20%). At the moment, you get relief at 41% if you are a higher rate payer.
• And, of course, increases in taxes on cigarettes, petrol and booze.

We'll be working as hard to get our Budget Calculator live as soon after the Budget is announced as possible, so you can see what impact the actual change will have on your take home income and the cost of your basics.

Some of the main proposed provisions of the Civil Partnership Bill, currently being drafted, have been revealed by the Irish Times here.

From a social perspective, it's fascinating to read of the significant (though not overwhelming) mindshift in Ireland towards same-sex couples.

From a Legal perspective, I'd be concerned that living with someone for 3 years, having chosen not to formalise the relationship, could still confer legal rights to your property to that other individual. Will it remove the right not to be in a relationship?.

From a Tax perspective, changes are suggested in the areas of CGT, Gift Tax and Income Tax.

Looking at Income Tax, being considered a couple by the Tax office confers a lot of advantages. These are probably the benefits which would be given through the Civil Partnership Bill or through a subsequent Finance Bill. These include:

• Where one partner earns at the higher rate and the other at the lower, Tax bands can be transferred between them. This can be worth over €2,000.
• Where one partner does not have an income, the other partner may be able to get Home Carers Credit, worth €900
• where one partner does not work or use all their personal tax credits, they can be used against the other partners income - this is a €1,830 possible tax saving in 2008
• If you are on maternity leave and not earning again in that calendar year, you can transfer Tax Credits to your partner for that period, saving tax - even if receiving maternity benefit.
• Rent Tax Credits are double (€400 to €800 in 2008 for under 55's, double that again for over 55's)
• Mortgage Interest Relief may be doubled where married and the property is in just one persons name.
• And for lower income earning couples, your exemption limits are doubled...

So if you don't get married for love, maybe the tax savings will tempt you!

Already Married?
Have you told Revenue you are married? Many people think that Revenue will know of your change in circumstance, but unless you tell them/invited them to the afters, they will not know.
If any of the situations above relate to you and you have not told Revenue, it's worth checking out as you could have refunds for each of the last 4 years.

And as you can see from above, they can add up.

This has to be the best research I have seen into the mechanics of a scam.

Have a look at the paper trail of the investigation by Conor Pope in his
Pricewatch Blog

Residential Home Stamp Duty Clawback
Great excitement and reportage was generated by news of the changes in Stamp Duty for Residential Property in Budget 2008. One significant change in the application of stamp duty got lost in this brouhaha. This is the change in how Clawback of Stamp Duty is applied.

What is Stamp Duty Clawback?
Stamp Duty Clawback refers to the situation where a person received an exemption from stamp duty on the purchase of property, but this exemption was granted subject to terms. Where in the event of these terms being breached the Government has the right to claim the original amount of the stamp duty that was exempted, this act of reclaim is called Stamp Duty Clawback.

As it was
Some homebuyers received an exemption from paying Stamp Duty on the basis that this would be their home. A provision was built in to say that should the homebuyer rent out the house within 5 years of the stamp date, they would have to pay the amount of the Stamp Duty on which they were originally exempted. The point of this provision was to allow the government to promote homebuying, without subsidising investors. The clawback only takes places in the event of the house being rented and not where it is sold.

The Changes
The stamp duty clawback provision proved to be very unpopular. In particular, the 5 year stamp duty clawback was deemed excessively long. So in Budget 2008, the term was changed from 5 years to 2 years with effect from the 5th December 2007.
This change refers to all pre-existing houses and not just houses bough after this date. If you bought a house with a stamp date of 12-12-2005, then you will be able to rent your house from 13-12-2007 without triggering the Stamp duty clawback. However, if you bought a house on the 01-12-2005 and rented if from 02-12-2007, you will be liable to a clawback, as you rented the house before the new terms became effective on the 5th December 2007.

A note on the Stamp Date
The Stamp Date is not the same as the date you purchased your house on. If you are planning on renting your house around the 2 year mark, be careful to check this! To find out what the Stamp Duty date on your house is, contact your regional revenue stamp duty office, give them your PPS number and they will be able to tell you there and then the stamp date.

Finally, a concise explanation of the Subprime crisis! (We don't know who wrote this but kudo to whoever you are!)

Probably the least understood of the common Tax Reliefs is the Medical Insurance Tax Relief.

If you pay for Medical Insurance to an Insurer direct or through your employer, you will receive this relief at source. i.e. your premium is reduced, so you pay a lesser amount.
However, if your employer pays for your medical insurance, they pay the full premium. but you can then separately claim the tax relief on this. The tax relief is given at 20%.

If you have not received this tax credit in the past, you can claim for the last 4 years.

Example 1
Your employer pays for the medical insurance for you and your family. This amounts to €2,000. No tax relief is given at source, but you are allowed an additional Tax Credit of €400 (being €2,000*20%).

In other cases, the employer splits it 50:50 with you.
Example 2
An employer discharges the full amount of the premium and recovers 50% of the premium (net of TRS) from the employee.
Assume the Gross Premium is €1,000
TRS (Tax Relief at Source) €200
Net Premium € 800
Recovered from employee €400

The employer pays over €800 to the authorised insurer (€400 of which is recovered from the employee) and pays €100 TRS (amount attributable to the €400 paid by the employer) to Revenue.

The taxable benefit (notional pay) is:
Cost to employer €900 (€800 premium paid + €100 TRS paid)
Less amount made good by employee €400
Notional Pay €500

The employee is entitled to a tax credit of €500 @ 20% in his or her certificate of tax credits. He or she has already received credit by way of TRS of €100 by paying the net (of TRS) premium of €400 direct to the employer.

It may come as a surprise to you but for the majority of people in Ireland, dentistry is very cheap due to your PRSI entitlements (or if you are on a medical card).

In general, a normal person with healthy teeth will get one dental examination and two cleanings per year. You're also entitled to significant cost reductions on fillings/extraction/root canal and host of other pleasurable treatments under PRSI. Furthermore, you can also claim tax back on more complicated treatments via the Med2 form (Note that you can even claim against dental work done in another EU country! But make sure you bring the Med2 form as you will need the dentist to sign it)

The problem (as I discovered myself recently) is that dentists will approach the PRSI entitlements in one of two ways:
- good dentists will do their best to discover if your entitled to PRSI benefits before the treatment. They'll either take your word that your covered by PRSI or they'll make a phone call to check (which can take a few minutes). If your covered then the dentist will charge the department, or if your partially covered for the treatment then you pay the difference.

- alternatively, the dentist will charge you the full amount of the treatment there and then, and say that they'll follow up with the department about your PRSI (and if your covered will send you the refund). If this happens, make sure you follow up with your dentist about it. It takes around a month for the department to pay the dentist, so if you are due a refund and none is forthcoming, you may need to chase them!

At the end of the day, it's your responsibility to know if your covered or not (as is the case with your general tax affairs), not the dentists, so find out what your benefits are and know your rights! If you are in any doubt, get in touch with the department. If you suspect 'sharp practice' on the dentists part (i.e. they're claiming your benefit but not passing it on), also get in touch with the department or the Irish Dentists Association about it.

Note that if your spouse is dependent on you, they are covered on your PRSI. Also note that children are not covered, you either have to bring them privately or you can go through your local health board to have them treated. If you need help with your Med2 claims (or general tax affairs), contact us.

Given that the Tax123 website is build using Drupal, I was very pleased to see this announcement this morning ($7 million raised - thats staggering!)

I've been a very happy user of Drupal for some time now and always considered it to be quite underrated in comparison to other open source CMS tools of its kind - it was almost like it was a well kept secret! Watching how Acquia grows and develops (and how exactly it will spend all that money! ;-) is going to be very interesting, and hopefully they will succeed in their aims of growing Drupal by a factor of 10.

Along with Drupal, all of the software that we use in Tax123 is open source, PHP and Flex SDK being our two main development tools. We're also particularly excited about Adobes latest open source announcement - kudos Adobe Labs!

Thanks to everybody who completed our survey that accompanied the Budget Calculator. The feedback was extremely useful and pertinent and has generated a lot of improvements we will make.

One of the questions we asked in the Survey was if people felt they were receiving their full entitlements to Tax Credits and Tax Reliefs. We expected the 'Yes' results to this question to exceed that of the general population, as the type of user who would use a Budget calculator is probably more knowledgeable of tax matters than the average. So we were a little surprised that only 42% of respondents felt they were getting their full entitlements.

This percentage ties is with other independent research and shows that people are leaving money in the tax system uncollected. We aim to make it easier for people to claim their full entitlements. With average refund of €600 - €800 being quoted, this is more than just pocket money for those who are missing out.

The survey is still open. If you would like to add your responses it is at http://www.surveymonkey.com/s.aspx?sm=wmqjGZfPfvwnJcXZbV3WNA_3d_3d