466A Home carer tax credit

Summary

This section provides for a tax credit of €1,600 for married couples and civil partners where one spouse or civil partner works at home to care for children, the aged and incapacitated persons.

Details

Definitions

(1) “dependent person” means a person (other than the spouse or civil partner of the qualifying claimant) who lives with a qualifying claimant and who is –

• a child in respect of whom Social Welfare child benefit is received by the qualifying claimant or by his or her spouse or civil partner,
• a person aged 65 years or more, or
• a person who is permanently incapacitated by reason of mental or physical infirmity.

“qualifying claimant” means a person—

• assessed to tax under the joint assessment rules of section 1017 or 1031C, and
• who, or whose spouse or civil partner (described as the “carer spouse” or “carer civil partner”) cares for one or more dependent persons.

“relative” includes a relation by marriage and a person of whom that claimant is or was the legal guardian.

The relief

(2) Where an individual proves for any year of assessment that he/she is a qualifying claimant, the person will be entitled for that year to a tax credit of €1,600.

(3) Where the “dependent person” is a relative of the qualifying claimant or the claimant’s spouse or civil partner he/she shall be regarded as residing with the qualifying claimant if—

• the relative lives in close proximity to the qualifying claimant (next door, on the same property or within 2 kilometres of each other),
• a direct system of communication exists between the qualifying claimant’s residence and the residence of the relative.

(4)&(5) Only one home carer’s tax credit will be allowed irrespective of the number of dependent persons being cared for and only one qualifying claimant (the person with whom the care recipient normally resides) is entitled to the tax credit in respect of any dependent person.

(6) Where in any year of assessment the carer spouse or carer civil partner is entitled to an income in his/her own right (disregarding the Social Welfare Carer’s Benefit and Carer’s Allowance) exceeding €7,200 in that year, the tax credit is reduced by one half of the amount of that excess.

(7) The home carer’s tax credit will be granted for a year of assessment notwithstanding the income of the carer spouse or civil partner exceeds the permitted limit (€7,200), where the claimant qualified for the tax credit in the immediately preceding year, but it shall not exceed the amount of the tax credit granted in the immediately preceding year. This provision does not apply to succeeding years of assessment.

(8) A person may not avail of both the home carer’s tax credit and the increased standard rate tax band for certain two earner couples (section 15(3)) but may opt for whichever is the more beneficial for a particular year.

Relevant Date: Finance Act 2019