DOMINIC COYLEanswers your questions
Relief on legal fees
QIs there any reason why legal fees incurred in separation/divorce proceedings are not eligible for income tax relief?
- Mr E.K., email
AThe main reason, as far as I am aware, is that legal fees are not allowable against personal income in any circumstances under the Irish tax code. For instance, you cannot claim relief on legal costs incurred in buying a home or pursuing any other civil action through the courts.
That being the case, they would hardly be eligible in separation or divorce proceedings.
Double income PRSI
QRecently you explained the reason(s) why a retired teacher should continue to pay Class K PRSI. I am a retired member of the Defence Forces and as such I also pay PRSI under Class K from my pension. However, I am also in full-time employment and as a consequence I (quite rightly) pay PRSI on my present salary. Am I not paying the health contribution "on the double"
- Mr M.N., email
AI know it might feel like that but it does not appear to be the case. You have two sources of income - your pension and your other, current employment. The PRSI - including the health levy - being deducted from the earnings on your current employment relate only to the income you earn from that source, not your total income including your pension.
Thus the Class K deduction covers the health levy on your pension income and the other PRSI deduction relates to the balance of your earned income.
CGT exemption
QI read your advice regarding tax on shares with interest. I was of the understanding that the exemption was €1,270 a year and that the return needed to be submitted within one month of selling the shares?
- Mr P.R., Limerick
AAs far as the first element goes, you are absolutely correct. My apologies for the error last week. I confused the exemptions allowed on capital acquisitions tax (CAT or inheritance/gift tax) with that available on capital gains.
The capital gains tax (CGT) annual exemption limit is €1,270 while CAT provides for a €3,000 exemption each year from each benefactor. The CGT exemption is strictly non-transferrable, even between spouses. Each individual has the exemption and the only way a couple can "double up" on that is by jointly owning the asset, be it shares or property or whatever.
On the second point, capital gains made on assets sold in the first nine months of any given year must be returned to Revenue by October 31st of the same year. It doesn't matter whether the gain arose in January or on September 30th.
Any gains realised over the remaining three months of the year must be returned to Revenue by January 31st of the succeeding year.
This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering questions. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
