Section 472 [Employee tax credit]
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Amendments
Section 472 and heading substituted by Finance Act 2001 section 2(3) and Schedule 1 para 1(o) for 2001 and later tax years.
Employee (PAYE) Credit: Tax Briefing Issue 68 - 2008
(1)(a) In this section-
"appropriate percentage", in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;
"emoluments" means emoluments to which Chapter 4 of Part 42 applies or is applied, but does not include-
(i) emoluments paid directly or indirectly by a body corporate (or by any person who would be regarded as connected with the body corporate) to a proprietary director of the body corporate or to the spouse or child of such a proprietary director, and
(ii) emoluments paid directly or indirectly by an individual (or by a partnership in which the individual is a partner) to the spouse or child of the individual;
"director" means-
(i) in relation to a body corporate the affairs of which are managed by a board of directors or similar body, a member of that board or body,
(ii) in relation to a body corporate the affairs of which are managed by a single director or similar person, that director or person, and
(iii) in relation to a body corporate the affairs of which are managed by the members themselves, a member of the body corporate,
and includes any person who is or has been a director;
"proprietary director" means a director of a company who is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other indirect means, to control, more than 15 per cent of the ordinary share capital of the company;
"specified employed contributor" means a person who is an employed contributor for the purposes of the [Social Welfare Consolidation Act 2005,]1 but does not include a person-
(i) who is an employed contributor for those purposes by reason only of [section 12(1)(b) of that Act,]2 or
(ii) to whom Article 81, 82 or 83 of the Social Welfare (Consolidated Contributions and Insurability) Regulations, 1996 (S.I. No. 312 of 1996), applies.
(b) For the purposes of the definition of "proprietary director", ordinary share capital which is owned or controlled as referred to in that definition by a person, being a spouse or a minor child of a director, or by a trustee of a trust for the benefit of a person or persons, being or including any such person or such director, shall be deemed to be owned or controlled by such director and not by any other person.
Amendments
1 Substituted by Finance Act 2007 section 128 and Schedule 4 para 1(o)(i) as on and from 2 April 2007.
2 Substituted by Finance Act 2007 section 128 and Schedule 4 para 1(o)(ii) as on and from 2 April 2007.
(2) The exclusion from the definition of "emoluments" of the emoluments referred to in subparagraphs (i) and (ii) of that definition shall not apply for any year of assessment to any such emoluments paid to an individual, being a child (other than a child who is a proprietary director) to whom subparagraph (i) or (ii) of that definition relates, if for that year-
(a)(i) the individual is a specified employed contributor, or
(ii) the [Income Tax (Employments) (Consolidated) Regulations 2001 (S.I. No. 559 of 2001)]1, in so far as they apply, have, in relation to any such emoluments paid to the individual in the year of assessment, been complied with by the person by whom the emoluments are paid,
(b) the conditions of the office or employment, in respect of which any such emoluments are paid, are such that the individual is required to devote, throughout the year of assessment, substantially the whole of the individual's time to the duties of the office or employment and the individual does in fact do so, and
(c) the amount of any such emoluments paid to the individual in the year of assessment are not less than [€4,572]2.
Amendments
1 Substituted by Finance Act 2002 section 138 and Schedule 6 para 3(i) as on and from 1 January 2002.
2 Substituted by Finance Act 2001 section 2(3) and Schedule 1 para 2(k)(i) for 2002 and later tax years.
As the spouse or child of a propietary director, can I claim the PAYE employee tax credit?
(2) No. The employee tax credit may not be claimed by you as a spouse or child of a proprietary director. However, it may be claimed if you are a child who is not yourself a proprietary director, and:...
(3) Where an individual is in receipt of profits or gains from an office or employment held or exercised outside the State, such profits or gains shall be deemed to be emoluments within the meaning of subsection (1) if such profits or gains-
(a) are chargeable to tax in the country in which they arise,
(b) on payment by the person making such payment, are subject to a system of tax deduction similar in form to that provided for in Chapter 4 of Part 42,
(c) are chargeable to tax in the State on the full amount of such profits or gains under Schedule D, and
(d) if the office or employment was held or exercised in the State and the person was resident in the State, would be emoluments within the meaning of that subsection.
What if I am an Irish resident for tax purposes who receives foreign PAYE or pension income?
(3) The employee tax credit may also be claimed by you where you pay tax in another country under that country's equivalent of the PAYE system. For example, the allowance would be available to you if you live in Ireland, work in Northern Ireland and ...
(4) Where, for any year of assessment, a claimant proves that his or her total income for the year consists in whole or in part of emoluments (including, in a case where the claimant is a married person assessed to tax in accordance with section 1017, any emoluments of the claimant's spouse deemed to be income of the claimant by that section for the purposes referred to in that section) the claimant shall be entitled to a tax credit (to be known as the "employee tax credit") of-
(a) where the emoluments (but not including, in the case where the claimant is a married person so assessed, the emoluments, if any, of the claimant's spouse) arise to the claimant, the lesser of an amount equal to the appropriate percentage of the emoluments and [€1,830]1, and
(b) where, in a case where the claimant is a married person so assessed, the emoluments arise to the claimant's spouse, the lesser of an amount equal to the appropriate percentage of the emoluments and [€1,830]1.
Amendments
1 Substituted by Finance Act 2008 section 3 and Schedule 1 para (i) for 2008 and later tax years.
(5) Where a tax credit is due under this section by virtue of subsection (2), it shall be given by means of repayment of tax.
If I am an employee who is also the child of a proprietary director, how do I receive the employee tax credit?
(5) If you are a child of a proprietary director and a full-time employee of the company, the employee tax credit is given to you by repayment of tax. In other words, the tax credit is not given in your weekly tax free allowance; it is given by repay...
