While the October 2022 deadline for filing your 2021 Income Tax Return is months away, now is a good time to consider getting your tax affairs in order. Below we have provided a number of tax planning tips to bear in mind for the year ahead.
Small gift exemption
The small gift exemption allows Irish taxpayers to receive a gift of up to €3,000 from any person in the current tax year without having to pay Capital Acquisitions Tax. It is beneficial to consider this at the beginning of the year to ensure that the maximum relief available has been utilised throughout the year. It is also important to note that the €3,000 exemption is per disponer, i.e. the person making the gift. Therefore, an individual may receive €6,000 in total from their parents (€3,000 from each) and still be covered by the small gift exemption. This can be a very tax-efficient way to provide a gift to a member of your family, or friends without incurring a charge to tax for the recipient.
If you have incurred medical expenses during the year 2021 and they have not been fully reimbursed under a policy or insurance, you can claim a tax credit of 20% in your 2021 tax return which is due for submission on or before 31 October 2022. This applies to a broad category of medical services, including GP services, physiotherapy services, treatment in a hospital, diagnostic procedures, prescription costs and costs incurred on medical appliances. Qualifying non-routine dental expenses may also be claimed, however, you must provide a Form Med 2 which has been completed by the dental practice that provided the services.
From 1 January 2022, you can claim remote working relief for the 2021 tax year. To do this, receipts and images of utility bills paid in 2021 can be uploaded on Revenue’s Online System. Alternatively, this may be claimed in your 2021 tax return. For 2021 you can claim relief for 30% of internet costs and 10% for electricity and heating costs. However, from January 2022, relief can be claimed for 30% of electricity, heating and internet costs. It should be noted that receipts relating to the claim must be retained for a period of six years in the event that further inspection from the Revenue Commissioners is required.
Deadline for claiming joint assessment
There is an option to elect to be jointly assessed for tax purposes. Being jointly assessed may be beneficial as under joint assessment, you may transfer most of your tax credits, reliefs and rate band with your spouse. Should a loss arise for one spouse during the year, the option to transfer this loss may be given consideration. The deadline for the assessable spouse election form to be submitted to Revenue for the 2022 tax year is 31 March 2022.
There is also a time limit of 31 March if you wish to go from joint assessment to separate assessment or separate treatment for married couples or civil partners.
On 21 December 2021 the extension to the current debt warehousing scheme was announced by Revenue. This extension is for businesses that are already eligible for the warehousing scheme. The extension applies for periods up to the end of April 2022 and applies to all taxes that have already been warehoused. To benefit from this extension, an application must be made to Revenue. It is important to note that under the warehousing scheme, 3% interest will apply from January 2023 to any warehoused liabilities up until the date of repayment.
If you wish to discuss any of the above points that are applicable to you, please feel free to contact any member of our Private Client Division.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars private client team below:
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