How much is taken in tax

YakerK · 13-12-2018 9:41am

Peregrinus wrote: »

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.

None of that is right, the revenue clearly talk about income and what qualifies as income in this case.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/index.aspx

professore · 13-12-2018 9:48am

Sounds like putting in a separate meter is the best solution here. Would pay for itself very quickly.

Peregrinus · 13-12-2018 10:27am

YakerK wrote: »

None of that is right, the revenue clearly talk about income and what qualifies as income in this case.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/index.aspx

Yes, I know, but that's just a summary of the legislation, which I quoted, and summaries are inevitably simplified and don't include all relevant details. The legislation, of course, prevails over the summary.

Furthermore, if you follow through the link on the word "income", you'll find an explicit statement that "income" from renting property "service charges for services connected [to] the tenant occupying the property". So if you're passing on a service charge for electricity, that's both a "relevant sum" as defined in the legislation, and "income" as referred to on the website.

YakerK · 13-12-2018 3:02pm

Peregrinus wrote: »

Yes, I know, but that's just a summary of the legislation, which I quoted, and summaries are inevitably simplified and don't include all relevant details. The legislation, of course, prevails over the summary.

Furthermore, if you follow through the link on the word "income", you'll find an explicit statement that "income" from renting property "service charges for services connected [to] the tenant occupying the property". So if you're passing on a service charge for electricity, that's both a "relevant sum" as defined in the legislation, and "income" as referred to on the website.

A service charge is a charge for provision of services. So for example if you charged €50 a month for services and included bills in that you'd need to include that in "income". However if you just allocate the bill out evenly as it comes in you are not.

The act itself refers to "relevant sums, chargeable to income tax under Case IV or Case V of Schedule D." This is income. The wording of the actual act uses the same wording as is in the guidance, so still I can't see how an allocation of household expenses gets included. https://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/sec0216A.html

I've produced the correspondence with revenue, as well as quoting both the guidance and the acts. Another poster also has checked with revenue. Anyone saying that bill splitting is counted towards the income hasn't posted any back up and hasn't checked with Revenue.

Peregrinus · 13-12-2018 5:07pm

An electricity supply is a service. If the charge you make for the room includes an amount in respect of the electricity supply, that's a service charge. I think on a strict analysis, since it's part of the amount the lodger pays in return for his lodgings, it would be income assessable under Sch D Case V, but you'd get a corresponding deduction for the amount actually laid out in securing an electricity supply for the lodger, and it would all come out in the wash. All of which means that, strictly speaking, the amount the tenant pays towards electricity (or other services) should count towards the 14k limit.

But I accept that you have the correspondence you have with the revenue and, although it doesn't directly address the "relevant sum" issue, I think it will cover you - the revenue will accept that you sought to clarify the position, and any lack of clarity in their response is something they will take responsibility for. But as far as the revenue is concerned it's private correspondence between you and them; no other taxpayer can rely on it. Others in your situation should make their own enquiries, and I suggest should explicitly ask the revenue whether contributions to household utility bills are relevant sums which count towards the 14k limit.

Seve OB · 13-12-2018 9:56pm

Electricity is not a service.

It's a utility

4ensic15 · 13-12-2018 9:58pm

Seve OB wrote: »

Electricity is not a service.

It's a utility

Providing lights and switches and sockets for use is a service.

Peregrinus · 14-12-2018 1:48am

Seve OB wrote: »

Electricity is not a service.

It's a utility

You seem to think that "utility" and "service" are mutually exclusive categories. They're not.

"Utility" is the quality of being useful. A useful service (like, say, the supply of an electricity ) is a utility, but it's still a service.

14-12-2018 7:12am

L1011 wrote: »

Revenue would not agree with you

Any bills of any description are part of the 14k

You are wrong, the section pointed out to does not refer to utilities

"Any amounts arising
for meals, cleaning, laundry or other similar goods and services that are incidentally"
A utility is not a service provided by the householder.
Its a shared living expense, now if they were trying to charge over the odds that might be deemed a means to try extract income.
meals cleaning and laundry are services which the homeowner might provide are included, the provision of electricity or gas utility is not one which the homeowner could provide and are in no way a similar service to providing meals or ironing.

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

It is clearly a utility and not a service, not one provided by a householder. ANd that is why revenue are giving that advice, your interpretation is a mile off.

L1011 wrote: »

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.

Its your own interpretation, for a start, the original was never 12k it was 10k, but you are incorrect the original intent never specifically covered "everything", if that was the intent it would be available to see, and it is not, nor has ever been.

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.

That original guy was right, and so is this following person, as am I, will I be accused of being one of them too?

14-12-2018 7:17am

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?

You could tell them that room rent/letting cost is x and bills are shared, typically if there is broadband, thats shared, as for gas and electricity.
If someone was in digs and getting an all inclusive deal, then that could be different, that is not the usual situation outside students who in a lot of cases are in a house Sunday evening to friday morning/evening mainly.

from revenue
"This limit applies to the gross amount of income received for the room or rooms in your home."

L1011 · 14-12-2018 8:43am

A utility is also a service.

Splitting hairs to try find ways to avoid paying tax and/or relying on a call centre staff members interpretation given specifically to someone else are both not safe and could lead to paying tax on the whole amount and penalties for false declaration. And everyone who says bills aren't included is splitting hairs over definitions of "service" or "income" in a manner which is not always consistent

Dav010 · 14-12-2018 9:36am

L1011 wrote: »

A utility is also a service.

Splitting hairs to try find ways to avoid paying tax and/or relying on a call centre staff members interpretation given specifically to someone else are both not safe and could lead to paying tax on the whole amount and penalties for false declaration. And everyone who says bills aren't included is splitting hairs over definitions of "service" or "income" in a manner which is not always consistent

When you have a query about income tax, it would seem obvious to most that Revenue themselves would be the best resource for the information required. And the person charged by Revenue to inform the public of their rights would also seem to be a good authority on it. YaherK has been given clarification, in written form on this very subject by Revenue, are you saying Revenue are wrong in their advice/interpretation? And if you can't trust Revenue to give advice on it, who should you trust?

Seems a little odd to be honest.

L1011 · 14-12-2018 9:43am

I'm saying that trusting a customer service answer (given in a quite confused manner) to a different taxpayer is not safe; particularly when it contradicts the obvious interpretation of the rules and relies on hair-splitting.

There is no legal comfort from advice given to someone else

4ensic15 · 14-12-2018 9:51am

1874 wrote: »

from revenue
"This limit applies to the gross amount of income received for the room or rooms in your home."

Income is the gross amounts received. The liability of the tenant for the electricty bill arises from the occupation of the room. the owner is not allowed deduct a share of the house insurance before reaching the 14k figure, nor deduct the cost of advertising. The LL charges the tenant a portion of the bill for a service which arises from the occupation of the room.

Dav010 · 14-12-2018 9:52am

L1011 wrote: »

I'm saying that trusting a customer service answer (given in a quite confused manner) to a different taxpayer is not safe; particularly when it contradicts the obvious interpretation of the rules and relies on hair-splitting.

There is no legal comfort from advice given to someone else

Its an unambiguous response, in written form, given by Revenue's customer service, I think the Revenue part of that is very important. Are Revenue in the habit of misinterpreting the tax system?

Seve OB · 14-12-2018 10:04am

What about a fella who is renting a room and has all sorts of machinery whirring at all hours of the days and nights and racks up a proper mental leccie bill. Let's say 500 in a month above normal.

Should the landlord have to suck that up?

L1011 · 14-12-2018 10:04am

Dav010 wrote: »

Its an unambiguous response, in written form, given by Revenue's customer service, I think the Revenue part of that is very important. Are Revenue in the habit of misinterpreting the tax system?

Revenue customer service staff are. They are call centre staff working off very limited info. Anything complicated is not guaranteed to get the same answer twice or match what inspectors would apply

14-12-2018 10:09am

a portion of an electric bill is not income to a homeowner, it is an expense, something a long-term occupant in a homeowners home can expect to pay a portion of, or what would limit someone from cranking the max use out of the heating and electric. Statements to the contrary contradict what people have said they have been directly informed of by the revenue and which are stated on their website. Electricity is not some means of income creation for a homeowner and is not like any agreement to provide meals or do laundry, and is therefore not an income.

4ensic15 · 14-12-2018 10:11am

Dav010 wrote: »

Its an unambiguous response, in written form, given by Revenue's customer service, I think the Revenue part of that is very important. Are Revenue in the habit of misinterpreting the tax system?

It is not an unambiguous response. It gives no reasoning and as Pereginus has pointed out it doesn't address the core issue of whether liability for an electricty bill is incidental.

Dav010 · 14-12-2018 10:12am

L1011 wrote: »

Revenue customer service staff are. They are call centre staff working off very limited info. Anything complicated is not guaranteed to get the same answer twice or match what inspectors would apply

It would certainly lend credence to your interpretation if you could provide something to substantiate your interpretation and your lack of confidence in the knowledge of Revenue staff about taxation matters. YaherK has posted the text of a written letter from Revenue, can you please provide any proof that Revenue are wrong about this? It would really help.

Dav010 · 14-12-2018 10:14am

4ensic15 wrote: »

It is not an unambiguous response. It gives no reasoning and as Pereginus has pointed out it doesn't address the core issue of whether liability for an electricty bill is incidental.

Taking the answer in context to the question asked by YaherK about a shared electricity bill, it's pretty succinct.

YakerK · 14-12-2018 11:15am

I think there are a number of folks here who are willing to just keep arguing and arguing rather than admit that they interpreted something wrong.

They'd rather think that I must have got some incompetent call centre staff (rather disrespectful to the revenue customer service agents I must say) than consider the possibility that their "interpretation" is incorrect.

I'll ask again, if anyone has any evidence (i.e. not their interpretation, but some form of published guidance, or written advice given to them) to support their view that utility bill sharing does count towards income in this case, please do share. Otherwise I think really it's quite clear based on all the inputs to this debate so far, that although there is potential to misinterpret the act/guidance - that it was not intended to be read as including bill shares and that any potential landlord is OK not to include this.

The one good piece of advise that L1011 does make though, is that if in doubt consult. No harm can come from doing that (revenue are very fast to revert via the online service), but I can guarantee you what their response will be!

Seve OB · 14-12-2018 11:54am

4ensic15 wrote: »

Providing lights and switches and sockets for use is a service.

that's just being a smart arse.
and you are wrong.
that stuff forms part of the infrastructure of the building.

Seve OB · 14-12-2018 12:05pm

Amirani wrote: »

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

Have to make a point on this comment which is aimed at L1011.

L1011, you never replied stating how you come to your assessment. answer the question. are you a taxation professional? all your posts have been assumptions and you haven't backed up anything. actually you quite clearly stated it was your interpretation of the rules. so what makes you right? we need proof.

clearly the rules from the revenue are open for interpretation with so many differing views.

at least 2 people have written confirmation from revenue stating electricity does not form part of the capped income. yet you choose to belittle the revenue staff as incompetent and you used your moderator privledges into bullying davindub to not post in the thread again because his views (confirmed by the revenue) differ to your interpretation of the rules.

you have also chosen to ignore my questions regarding excessive use of electricity by a tenant and the what the landlord can do with the likes of broadband, sky bills etc.

i'm not a tax expert but I am an accountant and I have my own opinion, and I believe that shared bills for utilities are separate. the services as I read it are services provided directly by the landlord. the landlord doing laundry is a service provided. it states similar services. the landlord paying an bill is not a service provided...…. and it is no way similar to laundry.

My view is if revenue wanted electricity to be included, it would be explicitly stated as Laundry is.

Amirani · 14-12-2018 12:09pm

Seve OB wrote: »

What about a fella who is renting a room and has all sorts of machinery whirring at all hours of the days and nights and racks up a proper mental leccie bill. Let's say 500 in a month above normal.

Should the landlord have to suck that up?

Exactly. Everyone claiming that it's absolutely within the 14k aren't considering the "incidental" clause in Revenue's definition. It's not cut and dry that absolutely all electricity expense must be covered within the 14k.

AlmightyCushion · 14-12-2018 12:18pm

I always thought that the reason it mention services like laundry and cooking is because these would be easy ways for the home owner to increase their earnings over the €14000 annual limit. E.g. Rent is x per month, cooking is y per month and laundry is z per month. The rent would be charged at a rate that would be under the €14000 limit for rent a room and the cooking and laundry would be extra money on top of this. I can see why revenue would want to prevent this. Splitting bills like the electricity, gas, tv and broadband are not the same so I can see why they would allow this.

Seve OB · 15-12-2018 3:43pm

Gone mighty quiet in here.
L1011 care to back up your interpretations?
Or even answer the questions posed?

Captain Obvious · 15-12-2018 5:52pm

Ideally the tenant would be paying for things such as electricity and gas separately and the landlord would have no input. But this is often not feasible or simple to do so the landlord acts as a middle party for the tenant to obtain services from a third party. The landlord is not the service provider.

Claw Hammer · 17-12-2018 1:56pm

From the Revenue guidance notes.
https://psc.ie/wp-content/uploads/2016/07/A-guide-to-rental-income.pdf
"What if a premises is only partly let?
If part of a premises is let, only expenses incurred on the let part are taken into account in computing rental income. For example, if rooms are let in a private house and the income received exceeds the ‘Rent-a-Room’ relief limit “shared” expenses, for example, heating, electricity, etc., should be apportioned based on the occupancy of the house, i.e. the number of rooms occupied by tenants.

It seems to me that the shared expenses count as part of the income if deductions can be claimed in respect of them.

Mike3549 · 17-12-2018 7:40pm

Claw Hammer wrote: »

From the Revenue guidance notes.
https://psc.ie/wp-content/uploads/2016/07/A-guide-to-rental-income.pdf
"What if a premises is only partly let?
If part of a premises is let, only expenses incurred on the let part are taken into account in computing rental income. For example, if rooms are let in a private house and the income received exceeds the ‘Rent-a-Room’ relief limit “shared” expenses, for example, heating, electricity, etc., should be apportioned based on the occupancy of the house, i.e. the number of rooms occupied by tenants.

It seems to me that the shared expenses count as part of the income if deductions can be claimed in respect of them.

But what if a licensee has no cc or enough funds in bank acc and asks you to buy plane tickets or something else what isnt cheap and pays you back later, will this count as a "service"?
We are getting too much into details,
Id say if youre not sure and want to cover your a**, just double check with revenue.

How much is taken in tax

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