The Gazette 1994

JULY 1994

GAZETTE

Who is liable to pay the tax?

The person assessable to tax is the owner of the property. As set out previously, the term "owner" has a specific and wider definition than strict legal ownership. An assessable person also includes a person entitled to exemptions under the income exemption limits. In addition, a person whom the Revenue Commissioners have reason to believe is an assessable person or the personal representative of an assessable person can be assessed for the tax. Income effectively means gross income from all sources. The total income of all "relevant persons" is taken into account in the income calculation. Income exempt from income tax may be treated as income for Residential Property Tax calculations". A relevant person is any person who in the year of i assessment normally resided in the residential property and who, or whose spouse, paid no rent or like payment, or who paid a rent under a lease, agreement or licence referred to in s.95(2) (b) (iv) Finance Act, 1983. These are in essence situations where the market rent is not charged or where the difference between the rent charged and an arm's length rent exceeds 20% of the latter amount. The Finance Act, 1994 amends the 1983 position where the assessable person/s are over 65 by disregarding the income of persons (other than the assessable person/s) who reside in the property. In addition, regardless of the age of the assessable person/s, if a person resides in property owing to that person being incapacitated, or who is an employee, or whose employment is mainly connected with the residential property such as a housekeeper, then the income of such a person will be disregarded 12 . This point is brought out by way of example in the section entitled ; "marginal relief' further on in this Where combined assessable income is not in exact multiples of £1,000, the income is rounded down to the nearest full £1,000 14 . In addition, where the owner/occupier or joint owners/occupiers are incapacitated article. The income exemption threshold is reduced to £25,000". Calculation of income

Where the value of the property is less than £100,000 a banding system has been introduced.

and a person resides in the property as a result of such infirmity that person's income will be disregarded. Where the owner/occupier is widowed, the income of a person who comes to reside there to care for the young child of the surviving parent will be disregarded". This would not cover a situation where a widowed person with a child went to live with a relative for the purpose of having the child cared for. In the case of Gallagher and Gallagher -v- AG and Others, the assessable person had an income of £1,400 per annum. She felt the household income exceeded the income exemption but her son refused to disclose his income. The Supreme Court held that the aggregation of income was not the basis on which the tax was charged but was merely a criterion for exemption. It is for the assessable person to show that the income exemption applies. The Finance Act, 1994 introduced the following new rates where the market value exceeds the exemption threshold: Up to £25,000 1% i.e. £75 , 000 - £100 , 000 On next £50,000 1.5% ! i.e. £100 , 000 - £150 , 000 Balance 2% i.e. excess over £150,000. Rates of Residential Property Tax

Value Band

Tax £25 £75

£75,000 - £80,000 £80,000 - £85,000 £85,000 - £90,000 £90,000 - £95,000 £95 , 000 - £100 , 000

£125 £175 £225

! Dependent child relief

There is an additional relief for an | assessable person who has children who reside with that assessable person. The conditions to be met pursuant to section 102 Finance Act, 1983 are that the children must normally reside at the relevant residential property of their parents and the children must not have income in their own right in excess of £720 per child. Where a child is permanently incapacitated | from maintaining itself, this income level is increased to £1,320. In addition the child must be maintained : by the assessable person or the spouse I of that assessable person. The relief includes a child who in a tax year ! ending on 5 April was in the custody ! and maintained at the expense of either the assessable person or the spouse of that person. It would appear, accordingly, that a child whose parents were dead or who was cared for by a relative would be a child for whom the ' assessable person could claim a deduction.

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