Revenue Note for Guidance
Chapter 1 of Part 7 provides exemption from income tax in respect of certain income, payments, pensions, etc, and also provides exemptions from income tax and in some instances capital gains tax, in the case of certain individuals and bodies.
This section provides exemption from income tax for individuals with income not exceeding €10,420, in the case of certain married persons, and €5,210, in the case of single and widowed persons. In addition, the exemption limits are increased by €575 in respect of each of the first 2 qualifying children and by €830 in respect of each subsequent qualifying child. The section also provides for marginal relief where an individual’s total income exceeds the appropriate exemption limit applicable to that individual, but does not exceed a sum equal to twice that exemption limit.
(1) In the case of an individual entitled to the married person’s tax credit under section 461(a), the exemption limit is €10,420. In any other case (that is, a single person, a widowed person or a married person assessed as a single person), the exemption limit is €5,210. The exemption limit is known as “the specified amount”.
(2) Where an individual proves that he/she has living, at any time during the year of assessment, a qualifying child, the exemption limit is increased by €575 in respect of each of the first 2 qualifying children and by €830 in respect of each subsequent qualifying child. Any question as to whether a child is a qualifying child is determined in the same manner as it would be for the purposes of section 462 (one-parent family tax credit). The additional amount for qualifying children applies also for the purposes of the age exemption provided for in section 188.
(3) Where 2 or more individuals would be entitled to an increase in the specified amount in respect of the same child —
(4)(a) Where an individual makes a return of his/her total income on the appropriate form and proves that his/her total income for a year of assessment does not exceed the appropriate exemption limit for that year, that individual is exempt from income tax.
(4)(b) Where an individual makes a return of his/her total income on the appropriate form and proves that his/her total income for a year of assessment does not exceed a sum equal to twice the exemption limit applicable to that individual for that year, the amount of tax payable by that individual is limited to 40 per cent of the amount by which the individual’s total income exceeds the exemption limit applicable to that individual.
(5) This section ceases to have effect on or after 1 January 2008.
Relevant Date: Finance Act 2019