Tax Briefing 75 clarifies the entitlement of couples on joint assessment to have an additional amount of income charged to tax at the standard rate where the high income individuals' restriction applies.

Section 15 TCA 1997 provides that where the joint basis of assessment applies, the amount of income chargeable to tax at the standard rate shall be increased by the lesser of the “specified income” of the spouses and a maximum amount of €25,000 in 2007 or €26,400 in 2008. Section 15 TCA 1997 defines “specified income” by reference to total income.

Tax Instruction 15.2A.1 advised that entitlement to the increase in the standard rate was not affected by the high income restriction, even though the spouse availing of the increased standard rate band may have recalculated taxable income which was greater than their total income.

Revenue have announced that, with effect from 2007, the increase to the standard rate band will be calculated by reference to recalculated taxable income where this is more beneficial than calculation by reference to total income. Where the revised treatment is applicable, then either direct contact should be made with the appropriate Revenue office where the return has been made for 2007 and/or 2008, or Revenue's attention should be brought to this matter when submitting the return.

Tax Briefing 75 is available at 2.05.