The Gazette 1994

GAZETTE

JULY 1994

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.

Calculation of income

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

This point is brought out by way of

example in the section entitled

; "marginal relief' further on in this

article. The income exemption

threshold is reduced to £25,000".

Where combined assessable income is

not in exact multiples of £1,000, the

income is rounded down to the nearest

full £1,000

. In addition, where the

owner/occupier or joint

owners/occupiers are incapacitated

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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.

Rates of Residential Property Tax

The Finance Act, 1994 introduced the

following new rates where the market

value exceeds the exemption

threshold:

Up to £25,000

i.e. £75 , 000 - £100 , 000

On next £50,000

1.5%

! i.e. £100 , 000 - £150 , 000

Balance

i.e. excess over £150,000.

Where the value of the property is less

than £100,000 a banding system has

been introduced.

Value Band

Tax

£75,000 - £80,000

£25

£80,000 - £85,000

£75

£85,000 - £90,000

£125

£90,000 - £95,000

£175

£95 , 000 - £100 , 000

£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.