Families' outlook
COHABITING COUPLE
JOHN AND Mary, who are not married, have been living together for the past nine years. They jointly own their family home in Westmeath. John also owns an apartment in Dublin, where he lived before moving in with Mary.
He rents this property to young professionals.
John works as a bank manager. His annual salary and rental profit amount to €95,000 a year. Mary stays at home to look after their two children, aged seven and eight.
John and Mary are disappointed that for income tax purposes they are still treated as single persons; friends of theirs who are married and in similar circumstances appear to pay significantly less each month in income tax.
Once again, they hope the Minister will address this issue by treating cohabiting couples the same as married couples.
They also hope, given the recent economic slowdown, that the Minister does not increase the higher rate of tax as this will further increase the disparity between cohabiting couples and married couples.
They also have concerns in relation to the amount of capital acquisitions tax which Mary would have to pay if John were to die and pass his rental property to her, and they hope the Minister will address this issue.
SINGLE-INCOME FAMILY
ROSS AND ELEANOR head a single-income family living in Dublin in their family home with their three young children, two of whom are under six.
Ross works as a restaurant manager and earns €75,000 a year while Eleanor stays at home to care for their children on a full-time basis.
Ross has heard rumours that the PRSI ceiling applicable to employees will be removed, leaving him to pay PRSI on his income in full, and he hopes this does not happen.
He also hopes that the Minister for Finance will continue to increase the home carer credit and personal/employee tax credits and the rate band for single-income couples to take account of the inflation rate.
As the two eldest children have now started school, Eleanor is having to consider the possibility of returning to work.
However, the cost of childcare for their youngest child is currently prohibitively expensive.
Ross and Eleanor hope that the Minister will introduce some relief in respect of childcare costs this year to make her return to work a viable option.
They are also considering moving to a larger family home to provide more space for their children as they grow older.
They therefore hope that the Minister will introduce further stamp duty relief for owner- occupiers who are non-first-time buyers.
SINGLE WORKER
EMILY, who is single and aged 30, has lived in Kildare for four years. She works as a physiotherapist and earns an annual salary of €67,000. She commutes to work in Dublin each day.
Emily owns her own two-bedroom apartment and rents the spare room for €600 a month. She avails of the rent-a-room relief and, therefore, does not have to pay income tax on the rental income. She is considering selling the apartment and is looking at buying a new three-bedroom property in a nearby development. If she does this, she will rent the two extra bedrooms and would expect to yield rental income of €11,500 per annum.
She hopes the Minister will continue to raise the rent-a-room relief so she does not have to pay income tax on this amount, as it would affect her ability to afford mortgage repayments on the new property.
Emily hopes the Minister will raise the mortgage interest relief available to non-first-time buyers. Emily is also considering pursuing a part-time course in sports medicine and hopes the Minister will introduce changes to allow her to claim tax relief for tuition fees on part-time courses.
SINGLE PARENT
CIARA IS a single parent living in rented accommodation in Limerick with her son aged four. She is a part-time hairdresser and earns €25,000 a year. She also qualifies for the family income supplement.
While she appreciates the €1,100 early childcare supplement for children under six-years-old, she hopes that this amount will be increased in the budget.
Ciara hopes to purchase an apartment shortly and has placed her name on the affordable housing scheme list.
Her parents are prepared to help her with the deposit required if she is successful in her application, and she hopes to obtain a mortgage from her local authority.
However, as she will find the mortgage repayments difficult to meet, she hopes the Minister will increase the mortgage subsidy available to low-income individuals.
Ciara also hopes that there will be an increase in her personal tax credits, including the one-parent family tax credit this year.
PENSIONERS
CIARÁN AND Marie are married and living in Galway. Ciarán, in his late 60s, is retired, while Marie is about to turn 65 and works part-time.
Ciarán has an occupational pension of €37,000 and gets dividends of €5,000 per annum, along with the State contributory pension. Marie earns €14,000 from her part-time job and is not in an occupational pension scheme.
Marie hopes the Minister will do away with the State transition pension so she may continue to work part-time and also claim the State contributory pension when she turns 65 shortly, rather than have to wait until she is 66 to get a State pension while continuing her part-time job.
Ciarán and Marie also own a property in Dublin that their children occupied while at university. Their youngest daughter has recently left it and, given low rental yields currently available, they are considering selling it in order to buy a holiday home. they hope the capital gains tax rate will remain at 20 per cent.
They also hope the Minister will continue his trend of increasing the standard rate band and personal tax credits and they hope he does not raise the higher rate of tax.
HIGH-INCOME BUSINESS OWNER
DANIEL AND JESSICA, who are married, are in their early 60s and live in the Dublin suburbs.Daniel owns a graphic design company and employs four staff, while Jessica does not work outside the home. They have two children, both at university. Daniel's salary as a company director is €162,000. He maximises his personal pension contributions to the 40 per cent limit on which tax relief is available.
Jessica's father lives nearby and has Alzheimer's disease. As he needs assistance caring for himself, Daniel and Jessica pay €25,000 towards the cost of home nursing care each year. They claim the dependent relative tax credit and the qualifying medical expenses for the home care. They hope that the Minister does not limit the tax relief on this expense to the standard rate of tax.
Daniel hopes the Minister does not increase the higher rate of tax beyond 41 per cent. As staff costs continue to rise in the face of a slowdown in business, he is facing the prospect of having to reduce staff levels. To help avoid this, he is hoping for a fall in the employer's PRSI rate of 10.75 per cent, or a cap on the amount on which small businesses must pay the employer's PRSI.
Daniel and Jessica hope the Minister does not bring in changes whereby higher-earning families would be obliged to pay for third- level undergraduate studies. They hope they will continue to be able to claim tax relief for university fees they pay for their eldest child's postgraduate studies.
LOW-INCOME WORKER
JAMES, a single man in his late 20s, lives with his parents in Co Meath.
James was made redundant from his job as a construction worker in early 2008 and has since been receiving the jobseeker's benefit.
He is finding it very difficult to make ends meet and is reliant on his parents for additional support. He hopes that the Minister will increase the level of the jobseeker's benefit available to him.
James also owns a six-year- old car on which he pays motor tax based on engine size. He hopes that the Minister will introduce further changes to base the motor tax on older cars on CO2 emissions rather than on engine size, as he would be paying significantly less in motor tax if he could afford a similar new car.
James is also a smoker and he hopes that the Minister will not significantly increase the duty on cigarettes in the Budget.
He also hopes the Minister will continue the trend of increasing the personal and employee tax credits in anticipation that he will be successful in finding new employment in 2009.
DUAL-INCOME COUPLE
PAUL AND Claire, who are in their early 40s, live in Co Wicklow with their two children, aged seven and nine.
Paul works as a laboratory technician and earns an annual salary of €45,000. He makes pension/AVC contributions of €240 a month.
Paul's employer pays his annual family health insurance of €2,300 along with his gym subscription of €500.
Claire works as an office administrator and earns €28,000.
As their after-school childcare costs are €500 a month, they hope that the budget will bring in some form of tax relief for childcare costs. Otherwise, Claire is considering a reduction in her working hours to care for their two children after school hours.
As both Paul and Claire are paying tax at the higher rate, they hope that the Minister will also increase the standard rate band to take them out of the high rate of tax or, at the very least, that the Minister does not increase the higher rate of tax.
As their children grow older, Paul and Claire are also considering moving to a bigger house.
As a result, they hope that the Minister will introduce further changes to the stamp duty thresholds for owner-occupiers who are non-first-time buyers.
- PricewaterhouseCoopers
