Helping Taxpayers claim their Entitlements

Background

Revenue has in recent years taken a range of measures to simplify the administration of taxes and duties for individuals. The reason for these measures was to make it easier for individuals to claim their tax reliefs.

For example, Tax Relief at Source (TRS) was introduced in 2001 for medical insurance and in 2002 for mortgage interest. More recently, as well as putting additional resources into dealing with telephone callers, Revenue has developed a number of self-service channels on the Revenue web site, via the telephone, through a texting service and through its latest on-line service (ROS) to allow PAYE employees to request or amend certain tax reliefs.

Revenue has also just completed a major publicity campaign to highlight the range of reliefs available and the various means in which they can be claimed.

Revenue is now developing a series of additional measures to make it easier for PAYE employees in particular, to receive their entitlements.

Measures to come into operation in 2007

Automatic granting of age-related credits:

Revenue will develop its systems to automatically grant certain age related tax credits without the need for the taxpayer to apply. For example an annual age tax credit is granted to those reaching 65 years of age and an increased tax exemption limit also applies. The granting of the reliefs will depend on Revenue having a verified date of birth for the taxpayer.

Operation of DIRT Free accounts for those over 65 years or permanently incapacitated

DIRT can currently be refunded by Revenue to an individual who is exempt from income tax if the person, or the person's spouse, is aged over 65 or permanently incapacitated. These refunds currently have to be individually claimed each year from Revenue.

The rules relating to such individuals are now being changed so that, in future, they may notify their financial institution of their entitlement to exemption so as to allow the institution to pay the interest on their account free of DIRT. This will ensure they will receive the interest gross and not have to make a formal application directly to Revenue each year for a refund of the DIRT. The details will be included in the 2007 Finance Bill.

Tax Credit on Trade Union subscriptions

We believe that many trade union members are currently not claiming tax relief on their trade union subscriptions. A credit of €60 per annum is given to members of trade unions. Revenue will develop their systems to allow individual trade unions to give details of membership directly to Revenue who will then apply the tax credit automatically.

The active co-operation of trade unions will be necessary to make this measure successful.

Measures to come into operation in 2008

Tax Credit where Medical Insurance is paid by employer

The operation of tax relief at source for medical insurance does not currently apply to individuals whose medical insurance is paid for by their employer and individuals have to apply directly to Revenue for the appropriate tax credit. Revenue is making arrangements to have the necessary medical insurance details provided by employers on the annual P35 employer return and Revenue will apply the appropriate tax credit automatically.

Automatic repayments – where a refund claim has not been made

We believe that many individuals who are entitled to tax repayments for specified expenses do not claim their entitlements from Revenue. Revenue is making arrangements with specified third parties to “assemble” details of relevant expenditure and, where appropriate, to make an automatic repayment to these individuals.

The expenditure involved covers,

• Hospital expenses – both inpatient and outpatient expenses not covered by medical insurance.
• Pharmacy costs – non-reimbursed amounts paid on prescribed drugs under the drugs payment scheme. For example, a person on long-term medication and spending €85 per month on prescribed drugs, will incur annual expenditure of €1,020. This could be eligible for a refund at their marginal rate of tax.
• Tuition fees – amounts paid on approved courses in certain colleges

The feasibility of extending this approach to Nursing Homes fees, Medical Practitioner expenses and Dental practitioner expenses will also be examined.

Revenue will continue the consultation process with all interested parties and will announce further details in due course as the scheme progresses.