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How much is taken in tax

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24

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    #32
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    "The income that is taken into account in determining whether the relief applies is
    the amount arising to an individual for the use of a room or rooms in the qualifying
    residence in respect of their use as residential accommodation. Any amounts arising
    for meals, cleaning, laundry or other similar goods and services that are incidentally
    provided in connection with the residential use are also taken into account"

    https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf


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    #33
    Pkiernan
    Registered Users Posts: 4,315 ✭✭✭Pkiernan


    davindub wrote: »
    There's no need to do this, flat charges would be income, if you have a bill of 200 euros and it is split 2 ways, that is not income

    You are mistaken and giving bad advice.


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    #34
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,845 Mod ✭✭✭✭L1011


    davindub wrote: »
    I'm not offering a theory......and I do know this so I don't know where you are getting that from?

    If you bill the lodger directly = income.

    If you share an expense = not income.

    You can of course confirm this with Revenue.

    The Revenue rule are quite clear and do not vaguely agree with you, indeed they are specifically designed to stop your attempt to work around them.

    If someone follows your bad advice and gets caught having taken 14001 they are liable for tax on the lot

    Do not give this unsafe "advise" here again


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    #35
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    L1011 wrote: »
    davindub wrote: »
    I'm not offering a theory......and I do know this so I don't know where you are getting that from?

    If you bill the lodger directly = income.

    If you share an expense = not income.

    You can of course confirm this with Revenue.

    The Revenue rule are quite clear and do not vaguely agree with you, indeed they are specifically designed to stop your attempt to work around them.

    If someone follows your bad advice and gets caught having taken 14001 they are liable for tax on the lot

    Do not give this unsafe "advise" here again

    I have helpfully & safely advised to confirm with Revenue, they have a helpdesk for PAYE which handles rent a room.

    Or is it a breach of forum charter for a moderator to have given incorrect information?


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    #36
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    davindub wrote: »
    There's no need to do this, flat charges would be income, if you have a bill of 200 euros and it is split 2 ways, that is not income

    It may not be income but asking the person to pay their half of a bill is charging them and is added to the rent. It is the gross amount collected which determines whether rent a room relief applies or not. The bill is in the landlords name, hence the landlord is providing the utility to the tenant and then seeking to recoup outlay. In a normal tax situation the income would be cancelled by the outlay so there would be no taxable profit, but rent a room is different. It is the gross collected with no allowance for outlay.


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    #37
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    davindub wrote: »
    I have helpfully & safely advised to confirm with Revenue, they have a helpdesk for PAYE which handles rent a room.

    Or is it a breach of forum charter for a moderator to have given incorrect information?

    Per the link and text posted earlier, what you described as splitting the bill is rental income. That's the official line. If I encountered it on a case that's how I'd describe it refering to the tax and duty manual posted.


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    #38
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    davindub wrote: »
    I have helpfully & safely advised to confirm with Revenue, they have a helpdesk for PAYE which handles rent a room.

    Or is it a breach of forum charter for a moderator to have given incorrect information?

    It follows from that that you did not confirm anything with revenue, which in any case only means getting some junior official on the end of a phone. The Revenue have been quite explicit on this point whenever it has commented publicly. what might seem logical to you does not man that it is correct.


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    #39
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    Claw Hammer wrote: »
    It follows from that that you did not confirm anything with revenue, which in any case only means getting some junior official on the end of a phone. The Revenue have been quite explicit on this point whenever it has commented publicly. what might seem logical to you does not man that it is correct.

    I actually have confirmed it with Revenue this year, I wouldn't really recommend anyone follow advice online so confirm it themselves.

    Simple enough for anyone to confirm and safe enough to follow Revenues own advise. You might not respect the junior officials but they answer quite a few queries, it's as much as you can do.

    https://www.revenue.ie/en/contact-us/customer-service-contact/pay-as-you-earn-paye.aspx


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    #40
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    relax carry on wrote: »
    Per the link and text posted earlier, what you described as splitting the bill is rental income. That's the official line. If I encountered it on a case that's how I'd describe it refering to the tax and duty manual posted.

    "The income that is taken into account in determining whether the relief applies is
    the amount arising to an individual for the use of a room or rooms in the qualifying
    residence in respect of their use as residential accommodation. Any amounts arising
    for meals, cleaning, laundry or other similar goods and services that are incidentally
    provided in connection with the residential use are also taken into account"


    Where are 3rd party bills mentioned?

    There is one document online somewhere that would have supported what you are saying, but I was informed that it applied if you charge a monthly amount for bills. E.g. 100 per month.


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    #41
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    davindub wrote: »
    I actually have confirmed it with Revenue this year, I wouldn't really recommend anyone follow advice online so confirm it themselves.

    Simple enough for anyone to confirm and safe enough to follow Revenues own advise. You might not respect the junior officials but they answer quite a few queries, it's as much as you can do.

    https://www.revenue.ie/en/contact-us/customer-service-contact/pay-as-you-earn-paye.aspx

    talking to a junior official on a phone safe! you have to be joking. Such advice is quite often wrong and when it goes wrong there will be no junior official to admit they made a mistake.
    Unless you can find a practice direction setting out exactly what should happen in the exact situation contemplated you need to look to the letter of the Act.


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    #42
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,845 Mod ✭✭✭✭L1011


    davindub wrote: »
    I have helpfully & safely advised to confirm with Revenue, they have a helpdesk for PAYE which handles rent a room.

    Or is it a breach of forum charter for a moderator to have given incorrect information?

    You were misinformed by a call centre staff member. You may have some legal comfort from this (if you can prove it happened), other people you further misinform do not.

    Do not post in this thread again


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    #43
    Gumbo
    Moderators, Society & Culture Moderators Posts: 38,526 Mod ✭✭✭✭Gumbo


    davindub wrote: »
    "The income that is taken into account in determining whether the relief applies is
    the amount arising to an individual for the use of a room or rooms in the qualifying
    residence in respect of their use as residential accommodation. Any amounts arising
    for meals, cleaning, laundry or other similar goods and services that are incidentally
    provided in connection with the residential use are also taken into account"


    Where are 3rd party bills mentioned?

    There is one document online somewhere that would have supported what you are saying, but I was informed that it applied if you charge a monthly amount for bills. E.g. 100 per month.

    Services


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    #44
    YakerK
    Registered Users Posts: 72 ✭✭YakerK


    L1011 wrote: »
    You were misinformed by a call centre staff member. You may have some legal comfort from this (if you can prove it happened), other people you further misinform do not.

    Do not post in this thread again

    Actually, he is right. I’ve also confirmed this is writing with Revenue and the explicitly confirmed that bill sharing is not part of the income you need to consider towards the €14k.

    There is nothing on any revenue guidance which suggests you need to count “income” for a service that you didn’t provide.


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    #45
    sean8n
    Registered Users Posts: 14 ✭sean8n


    Claw Hammer wrote: »
    The bill is in the landlords name, hence the landlord is providing the utility to the tenant and then seeking to recoup outlay. In a normal tax situation the income would be cancelled by the outlay so there would be no taxable profit, but rent a room is different. It is the gross collected with no allowance for outlay.

    This makes the most sense to me, even though it's not what I want to hear.

    So my options are:

    1) Include the electric and keep the total under 14k, pay no tax, PRSI or USC.

    2) Charge for the electric, then pay 20% of the rental income, plus PRSI and USC, minus all expenses. And have to deal with all this paperwork.

    I'd probably end up with the same amount.

    I will go with option 1. How to report this to the taxman though, the assumption with rent-a-room seems to be that it's a side income. It falls between all categories, not a B&B, not renting out a whole property, not self-employed business and yet in my case it would be my sole income.


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    #46
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,845 Mod ✭✭✭✭L1011


    YakerK wrote: »
    Actually, he is right. I’ve also confirmed this is writing with Revenue and the explicitly confirmed that bill sharing is not part of the income you need to consider towards the €14k.

    There is nothing on any revenue guidance which suggests you need to count “income” for a service that you didn’t provide.

    I don't see how Revenue can provide this advice when it is clearly a service and hence included in the 14k cap.

    At best it leaves people at the mercy of the opinion of an individual tax inspector which is not vaguely safe


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    #47
    yaboya1
    Registered Users Posts: 4,610 ✭✭✭yaboya1


    So let's say you charge less than €14k rent and instruct the tenant to put the electricity bill in their own name.
    Is that a legal way of charging the tenant for the electricity, but avoiding tax?


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    #48
    Peregrinus
    Registered Users Posts: 26,123 ✭✭✭✭Peregrinus


    yaboya1 wrote: »
    So let's say you charge less than €14k rent and instruct the tenant to put the electricity bill in their own name.
    Is that a legal way of charging the tenant for the electricity, but avoiding tax?
    I think the problem is that the tenant's room is unlikely to be separately metered, or be the subject of a separate electricity account.

    Typically, there'll be a single account for the house, and that account will be in the name of the householder, who is letting the room. It's unlikely that the electricity supplier would allow the account to be put in the name of someone who is not the householder. If the tenant pays a sum which is designated as "contribution to electricity account", that's not based on a measurement of how much electricity the tenant has used, since there is no meter to measure that. It could, in theory, be based on an estimate of how much the tenant is likely to have used, but far more likely is that it will simply be an apportionment of the electricity bill.

    If the contribution is simply stated as "x euros per month towards electricity", I think you simply add that x euros to the amount characterised as rent, and if the total exceeds 14k per year, you're cactus.

    What if the contribution is stated as x% of the electricity bill? I still think that on a strict reading of the legislation (Taxes Consolidation Act 1997 s 216A) in paying a share of the electricity bill the tenant is discharging an obligation of the householder (since the householder is liable to the electricity supplier for the entire bill) and that's a "relevant sum" which counts towards the 14k limit.


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    #49
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    L1011 wrote: »
    I don't see how Revenue can provide this advice when it is clearly a service and hence included in the 14k cap.

    At best it leaves people at the mercy of the opinion of an individual tax inspector which is not vaguely safe

    I would like to see this written advice. Revenue issue guidance notes generally and don't offer hypothetical advice on these situations. Putting a bill in the tenants name is something any live-in landlord is unlikely to do, patricularly if the landlord is going to have to pay a share of it. It could also be seen as artificial avoidance. It might work if a tenant paid directly for a tank of heating oil.


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    #50
    Peregrinus
    Registered Users Posts: 26,123 ✭✭✭✭Peregrinus


    4ensic15 wrote: »
    I would like to see this written advice. Revenue issue guidance notes generally and don't offer hypothetical advice on these situations. Putting a bill in the tenants name is something any live-in landlord is unlikely to do, patricularly if the landlord is going to have to pay a share of it. It could also be seen as artificial avoidance. It might work if a tenant paid directly for a tank of heating oil.
    Only if the tenant had a separate heating system, I think. If the tenant is paying for oil to heat the entire house, I can't see the Revenue taking the view that that's not a "relevant sum".


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    #51
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,521 Mod ✭✭✭✭Amirani


    L1011 wrote: »
    I don't see how Revenue can provide this advice when it is clearly a service and hence included in the 14k cap.

    At best it leaves people at the mercy of the opinion of an individual tax inspector which is not vaguely safe

    Revenue: "The income that is taken into account in determining whether the relief applies is the amount arising to an individual for the use of a room or rooms in the qualifying residence in respect of their use as residential accommodation. Any amounts arising for meals, cleaning, laundry or other similar goods and services that are incidentally provided in connection with the residential use are also taken into account"

    It's important here to understand the meaning of "goods and services that are incidentally provided in connection". If you as a landlord are charging €13,999 to your tenant, and one night you decide to order a pizza together and split the bill, you don't automatically go over the threshold despite the "amounts arising for meals" in the Revenue statement.

    "Incidentally" in the Revenue definition is important here. If a rent-a-room tenant runs up a massive phone bill or electricity bill, then this use wouldn't count as "incidental" and hence wouldn't be provided for within the scope of Revenue's text. Regular use of electricity etc. would be incidental.


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    #52
    YakerK
    Registered Users Posts: 72 ✭✭YakerK


    L1011 wrote: »
    I don't see how Revenue can provide this advice when it is clearly a service and hence included in the 14k cap.

    At best it leaves people at the mercy of the opinion of an individual tax inspector which is not vaguely safe
    4ensic15 wrote: »
    I would like to see this written advice. Revenue issue guidance notes generally and don't offer hypothetical advice on these situations.

    It’s quite surprising that people are seeing allocation of utilities as being counted towards the €14k.

    It’s defined as being your income before your expenses. Money going to ESB for example is the ESBs income, not yours. Where you provide a service e.g. dinners or laundry, and charge for that, this is income. As you can’t deduct expenses under the rent-a-room scheme, then it’s the full income and not your profits.

    I was quite clear from the guidance that I didn’t need to count it, If the intention was to include bill shares, Revenue would have said so outright in their examples. but given the conflicting online advise on this, I decided the safest thing to do was confirm my understanding with Revenue.
    Here is extract from the correspondence I had with Revenue. (edited only for names)
    Revenue online service wrote:
    YakerK
    The money for bills used to pay the bills does not have to be declared as income under the Rent a Room Scheme.
    Regards
    [Name]
    PAYE Service for Compliance
    Galway
    me wrote:

    05/01/2018 14:26
    Hi, I have a query relating to rent a room relief. I am looking to declare income that I received in 2017 under this scheme. I am unclear if money received in respect of utility bills should be included in this. For clarity, these are passed directly on to tenant who then pays an equal share of the bill. E.g. If I received an ESB bill for ?100 - it'd be split 50/50 between tenant and myself. The bill is in my name though so he would pay the ?50 to me rather than directly to the ESB. Section 5.2 of https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf makes clear that where services such as cooking or laundry is provided the income must be declared, however it's not clear to me if that would include allocation of bills where I am not providing a service myself. Regards, YakerK

    If anyone doubts this, best thing for them to do is to check directly. I don’t know why people are so adamant on here when they haven’t taken steps to confirm if they are right or wrong. I didn't assume that my interpretation was correct on this one, so I asked the relevant person and now I know the right answer to this.

    Personally, I’d advise against putting bills in name of a licencee. Remember they are not a tenant, so can walk away at any time leaving you with the headache of not having your name on the bills for your own house.

    It is also unnecessary given how this actually works, but even if it were to be the case that Revenue intended to count bill shares towards the income – I think they would be wise to scams like this and discount it leaving you with potentially a tax bill should you go over the €14k


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    #53
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,845 Mod ✭✭✭✭L1011


    By your logic, the mortgage or master rent is the banks or master landlords income, though. That doesn't explain away the bills

    Your email provides sufficient cover to you, at least. It still isn't something I'd expect others to rely on.


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    #54
    wonski
    Registered Users Posts: 13,687 ✭✭✭✭wonski


    I would never class electricity as a similar service to laundry, meals or cleaning to be honest.

    If that was to include esb bills, why would revenue wouldn't just list utility bills along with laundry etc to avoid confussion?

    By any logic electricity is not a service provided by landlord. Of course better to be safe than sorry and ask at source.


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    #55
    YakerK
    Registered Users Posts: 72 ✭✭YakerK


    L1011 wrote: »
    By your logic, the mortgage or master rent is the banks or master landlords income, though. That doesn't explain away the bills

    Your email provides sufficient cover to you, at least. It still isn't something I'd expect others to rely on.

    Two people on this thread have queried with revenue and got the same response. Why do you insist on saying your interpretation is the right one when there is evidence to the country?

    The example of mortgage or master rent is spurious as in both cases you have significant rights to the property which is not given to the licencee. You don't have such rights over the power or gas coming in.

    The fact is, Bill shares are not part of income.


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    #56
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,845 Mod ✭✭✭✭L1011


    Because Revenue call centre staff are far from infallible (indeed, in the case of LPT, they're usually just outright wrong) and most people do not see the interpretation of the legislation that you do. And its clear that in both cases it has just been call centre staff replying.

    The original 12k and then 14k limit was designed to be an incredibly generous allowance. It is obvious that the intent of the legislation was for it to cover everything. Some interpretations may be different but you are reliant on the whims of an inspector if audited. It is still dangerous for people to trust advice given to a third party, particularly by a call centre operative.


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    #57
    Seve OB
    Registered Users Posts: 15,846 ✭✭✭✭Seve OB


    What about the Sky Bill?
    Maybe you get Sky Sports in just to please your lodger. You were quite happy with Saorview beforehand, but are happy to split the cost with your tenant. What happens here?

    Internet Wi-Fi?

    Phone land-line.

    Etc.


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    #58
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,521 Mod ✭✭✭✭Amirani


    L1011 wrote: »
    The original 12k and then 14k limit was designed to be an incredibly generous allowance. It is obvious that the intent of the legislation was for it to cover everything.

    Obvious to you maybe. I don't agree that the intent of the legislation was to cover absolutely everything. There's been examples given on household expense that clearly would not be within the scope of the allowance.

    On what basis are you making your assertion? Are you a taxation professional or are you just going by your own interpretation?


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    #59
    Peregrinus
    Registered Users Posts: 26,123 ✭✭✭✭Peregrinus


    YakerK wrote: »
    It’s quite surprising that people are seeing allocation of utilities as being counted towards the €14k.

    It’s defined as being your income before your expenses. Money going to ESB for example is the ESBs income, not yours. Where you provide a service e.g. dinners or laundry, and charge for that, this is income. As you can’t deduct expenses under the rent-a-room scheme, then it’s the full income and not your profits . . .
    The issue we're discussing here, though, is not whether the contribution to the ESB bill is "income" in the hands of the householder, but whether its a "relevant sum" which counts towards the 14k limit for determining whether the arrangement comes within the rent-a-room scheme or not. If the total of all the "relevant sums' exceeds 14k then you are not within the scheme, even though your actual taxable income (in respect of letting out the room) may be less than 14k. It seems to me (from the extracts you quoted) that your correspondence with the revenue focussed on the question of whether the ESB contribution was income, and didn't directly address the question of whether it was a "relevant sum".

    Relevant sums are "all sums arising in respect of the use for the purposes of residential accommodation, of a room or rooms in a qualifying residence". A contribution to the household electicity bill that you pay because you lodge in a room in the house looks pretty clearly to be a relevant sum.


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    #60
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    YakerK wrote: »
    Two people on this thread have queried with revenue and got the same response. Why do you insist on saying your interpretation is the right one when there is evidence to the country?

    Two people? One with a low post count who appears after the other was stopped from posting! Quotes from the Revenue that don't identify the level of official or quote from the legislation! Any opinion I have ever seen from the Revenue quotes the principal legislation and says how it is to be interpreted. I don't believe a word of it.


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    #61
    YakerK
    Registered Users Posts: 72 ✭✭YakerK


    4ensic15 wrote: »
    Two people? One with a low post count who appears after the other was stopped from posting! Quotes from the Revenue that don't identify the level of official or quote from the legislation! Any opinion I have ever seen from the Revenue quotes the principal legislation and says how it is to be interpreted. I don't believe a word of it.

    Why don’t you produce a copy of this opinion that you’ve seen?

    I’m most definitely not the same person as the other person. I’m an occasional browser and saw that incorrect advise was being given out so decided to correct it.


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