Taxman Goes After Chilminders for PRSI

Rabidlamb

http://www.independent.ie/national-news/taxman-goes-after-women-who-mind-children-2163172.html

Taxman goes after women who mind children

Tuesday May 04 2010

WOMEN who look after children in their home will be targeted by a new Revenue charge that has been condemned as being like 'a tax on mothers'.

Mothers who have earned up to €15,000 a year child-minding without having to pay any form of tax will now be charged PRSI.

A flat-rate PRSI charge of €253 will now be levied on people who earn money by child-minding in their own homes, the Irish Independent has learned.

A spokesman last night confirmed the Revenue will now seek to collect the PRSI payment for last year from such women, who are considered to be self-employed.

Some 30,000 mothers currently mind the children of others in their own homes.

The move has come as a surprise to tax experts.

"I never heard of anyone getting demands from the Department of Social Welfare or Social Protection as it is now known or the Revenue for this PRSI," Cathal Maxwell of the paylesstax.ie website said.

This is despite the fact that income up to €15,000 from childcare carried out in the home is exempt from tax.

Mr Maxwell said it was never considered that PRSI would also be due on this.

Both the Revenue and the Department of Social Protection insisted the only change was that PRSI was now going to be collected from self-employed childminders by the Revenue, instead of the department.

The department confirmed that income from childminding in the home up to €15,000 has been exempt from income tax since Budget 2007.

"Initially income was exempt from both tax and PRSI, but a flat rate of €253 per annum, equivalent to the minimum rate for self-employed contributors was subsequently introduced," a spokeswoman said.

"The only difference for the 2009 tax year is that Revenue will be billing contributors for their PRSI liability rather than the Department of Social and Family Affairs."

Attempts to establish from the state bodies when a decision was made to impose PRSI on child-minding mothers were unsuccessful.

Benefit

Despite having to pay PRSI, people who mind children in the home will not be entitled to jobseeker's benefit if their work dries up.

But they would be able to build up entitlements towards a state pension.

Mr Maxwell likened the move to that of a tax on mothers, but added that it would help childminders get a pension.

"This could actually be a good thing for the people involved as for paying a flat sum of €253 per annum in PRSI presumably one gets full entitlement to contributory old-age pension which would be a very good investment," Mr Maxwell explained.

Patricia Murray, chief executive of Childminding Ireland, said it was important that self-employed childminders had an opportunity to get a state contributory pension.

Most parents pay between €100 and €200 a week to have a child minded in someone else's home.

- Charlie Weston Personal Finance Editor

Irish Independent

I don't believe that this scheme will raise much for the exchequer.
Wasn't the uptake on people officially registering as childminders ridiculously low anyway.
I wonder why they bother due to the additional paperwork required.

axel rose

Whats the issue? There is a recession, the government needs to up its tax take. My taxable pay has been increased- Is there a special reason why childminders should be the national exception?

Rabidlamb

axel rose wrote: »

Whats the issue? There is a recession, the government needs to up its tax take. My taxable pay has been increased- Is there a special reason why childminders should be the national exception?

Traditionally they're one of those professions that don't seem to go through the books.
Like window cleaning & flyer delivery.

axel rose

Rabidlamb wrote: »

Traditionally they're one of those professions that don't seem to go through the books.
Like window cleaning & flyer delivery.

Is that another way of saying that its ok for some services not to pay tax and PRSI?

Rabidlamb

axel rose wrote: »

Is that another way of saying that its ok for some services not to pay tax and PRSI?

No, read it again, I never said it was OK.
I did however acknowledge that are certain trades out there that remain off the books.
Probably because it is impossible to police them.

sam34

why shouldnt they pay PRSI?

Rabidlamb

sam34 wrote: »

why shouldnt they pay PRSI?

They definitely should, but they wont.
This piece in the Irish Times puts it better than I can.
http://www.irishtimes.com/newspaper/ireland/2009/0704/1224250039773.html
I don't condone it, it's just the facts.

axel rose

Sorry OP, I picked up from the word 'traditionally' that you felt it was ok.
Apologies

Rabidlamb

axel rose wrote: »

Sorry OP, I picked up from the word 'traditionally' that you felt it was ok.
Apologies

I doff my cap Axel old bean.;)

deisemum

Well I'm surprised at this report especially Maxwell claiming not to know anything about childminders PRSI liability because I'm a childminder for nearly 10 years and have been paying this for years and I know I'm not the only childminder paying it plus I've always being tax compliant and got that sorted before I started childminding.

Rabidlamb

I'm wondering what the logical conclusion to all this is.
Do the government eventually expect to charge people BIK if the granny minds the kids for free ?.

axel rose

I reckon that we are heading towards a massive clampdown on tax and SW fraud in all its forms (With the obvious exception of our fine politicians and their friends ).

It gives me an image of counting up that big bottle of change that has been growing over the years.

Billiejo

The taxman has always eagered after 'The Black Economy' and in a resession their crusade hots up!!
Childminding is a luacrative business and in the public eye staff involved pay their due's. Hidden behind closed doors is no excuse not to do the same.

cbyrd

Only problem with this is that the minder will essentially be self-employed, good luck with trying to get anything out of the state when you need it. Even if you go bust you have to wait 9 months before you can draw the dole. I have 3 kids and never got maternity benefit. I was back to work within 5 weeks with my first and 16 days with my second, and i had to take the kids with me cos i couldn't afford a minder!!:D
The only good thing i think would be you could show an income if you ever needed to
Its a bad law because its really unenforcible, i can have kids in my house but who's to know if i take money for it.

axel rose

cbyrd wrote: »

Only problem with this is that the minder will essentially be self-employed, good luck with trying to get anything out of the state when you need it. Even if you go bust you have to wait 9 months before you can draw the dole. I have 3 kids and never got maternity benefit. I was back to work within 5 weeks with my first and 16 days with my second, and i had to take the kids with me cos i couldn't afford a minder!!:D
The only good thing i think would be you could show an income if you ever needed to
Its a bad law because its really unenforcible, i can have kids in my house but who's to know if i take money for it.

Sigh, you have a choice. Its very simple. If you want to be a professional then you run your business as a professional. If you choose to do otherwise and not pay tax then admit that you are a commiting fraud. You are not professional you are just a another person who wants 'De Government' to sort out the country without actually making a contribution.


(I so hope you are a professional)

Moonbeam

I don't think it is a bad thing once they get prsi entitlements too.
Childminders can earn 15k tax free a year which isn't so bad.

deisemum

I had a friend and colleague who used to work 3 days a week, her friend and neighbour looked after her children for the 3 days and on her days off she would look after her friend's children and no money was exchanged.

cbyrd

I was until christmas i was a hairdresser...? i don't mind kids but the point i was making is if you don't pay tax you aren't entitled to benefits.. if you do but you are self employed you get treated differently.. which doesn't encourage people to pay it...
i couldn't get dental benefit couldn't claim back a lot of my expenses and if i needed to take time off nobody paid me.
where's the encouragement to pay PRSI what's the real benefit?? i paid it i had to give up work and i don't get anything for my 17 years paying tax and prsi.. it's a very unfair system for those willing to employ themselves and others.. i'm not saying you shouldn't pay it i'm just making the point that sometimes it's just not worthwhile for such a small amount..;)

axel rose

Put it this way- I'd love if the 1st 15k of my earnings were tax free! Id be delighted just to get away with just paying PRSI

deisemum

Not all childminders can avail of the €15,000 tax relief, there are certain criteria you have to meet. It relates to the total money you take in and does not allow for the expenses which are considerable if you're doing things as expected.

If the parents of the children I mind lose their jobs and pull their children out and I cannot get other children to mind I'm without an income and cannot claim any benefit.

I for one would like to see social welfare clamp down on those claiming benefits who are topping up their benefits by minding a number of children, often more than what the regulations specify and doing it at a lower rate without incuring some of the expenses that notified and voluntary notified childminders incur. It just makes it a lot more difficult for those of us who are childminding in a professional manner as well as furthering the belief that all childminders are rolling in it and doing it cash in hand, not declaring their income.

axel rose

wouldnt you able to offset your business expenses against your income?

Would you be eligable for Unemployment Assistance if you had to?

thesimpsons

I'd love to see SW to investigate the people claiming medical card, back to school allowances for own children, homecarer credits, etc. and all the while earning tax free money minding children. There are hundreds of minders out there like this - minding children "as a favour" to a friend or neighbour but still claiming they aren't working. If parents paying for childcare (whether in a creche or at a childminders) got credits against receipts produced, then there could be some accountability.

deisemum

axel rose wrote: »

wouldnt you able to offset your business expenses against your income?

Would you be eligable for Unemployment Assistance if you had to?

You can offset your business expenses alright but not for the €15,000 relief.

If what you take in is as much as 1c over the €15,000 before you subtract your expenses then you do not qualify for the €15,000 relief but are taxed on the whole lot minus your individual/joint personal allowance.

My husband is also self-employed and he enquired about unemployment assistance at our local social welfare office. He was told no and to go to CWO. The CWO told him we were entitled to nothing and that we should have planned for the recession.

deisemum

thesimpsons wrote: »

I'd love to see SW to investigate the people claiming medical card, back to school allowances for own children, homecarer credits, etc. and all the while earning tax free money minding children. There are hundreds of minders out there like this - minding children "as a favour" to a friend or neighbour but still claiming they aren't working. If parents paying for childcare (whether in a creche or at a childminders) got credits against receipts produced, then there could be some accountability.

I agree with you and I'd love to see that happen. I've no problem giving receipts, have offered them but parents don't want them but I do keep a record of all income. It's very easy for the Revenue to check my income because they can see the number of children I have and compare it with what's in the contracts etc.

cynder

Were planning on leaving the country when it his Greek levels. Why are we paying prsi ? We cant even get are teeth cleaned.....

cbyrd

the whole childminding issue in this country is a joke. i should be able to pay for a childminder/creche/montesssori and claim it back like an expense. i can claim bin charges dr.s and hospital visits moragage relief but i can't claim the 2nd biggest expense. it's a very child unfriendly country in a lot of ways

I wonder if one of the big international companies that employ big numbers of people insisted on reform would it happen?? they can usually get the government to bend over backways for them;)

StillWaters

Sloppy journalism. This is a non story.

Childminders who availed of the tax exemption ALWAYS had to pay the PRSI levy of 253e. When the exemption was brought in, initially there was exemption from PRSI, but there was uproar from Childminders who WANTED to pay the PRSI in order to avail of maternity benefit and non contributory pension, so it was changed immediately.

The only change is it is now paid to Revenue instead of Dept of SW, which makes so much more sense.

gaeilgegrinds1

They;re coming after everyone now, wait a minute not everyone, those alread paying tax yes! I gave grinds for years and was audited last year despite always having paid tax on them, they suggested the amount I had the year I paid the most was the average and I would have to pay that amount for all the other years, bunch of chancers, thank God I'd all ym paperwork in order! It'll be hard to prove in some instances that money was handed over for the childcare though.