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employing a spouse

  • 10-06-2008 3:51pm
    #1
    rmcc1978
    Closed Accounts Posts: 27 ✭


    Hello all,

    My question is regarding a self employed individual whose spouse does not work.

    On their 2006 tax return their accountant has allocated 23,000 of his income to his wife and claimed the PAYE tax credit.

    Is this allowed as he is not a registered employer and no PAYE / PRSI was paid during the year?.

    If it's allowed where why this amount?


    Thanks.


Comments

  • #2
    dooloo
    Registered Users, Registered Users 2 Posts: 62 ✭✭dooloo


    This is not allowed if he is not an registered employer. PAYE/PRSI should have been deducted. As the wife of a sole trader, she is not entitled to the PAYE tax credit.

    By the way, the €23,000 (2006) comes from this:

    Cut-off point for spouse- €32,000
    less maxmium transfer to husband - (€9,000)

    Remainder €23,000

    i.e. this is done to avail of the wife's remaining 20% band. The €23,000 is taxed at 20% rather than 42% (2006) if the salary was not paid.


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