Tax implications of Civil Partnership & Co-habitation

The Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (Act) was signed into law on 19 July 2011. The purpose of the legislation is to extend to registered civil partners the same tax treatment as is currently provided to married couples under the Tax Acts. It was anticipated that the Act would extend a similar tax treatment to cohabitants however the rights of cohabitants with regard to tax legislation have not been significantly increased in this Act.

Civil Partnership

A civil partnership is defined as a same sex relationship similar to a marriage where both parties have entered into a legal agreement under the Act. The Civil Partnership is required to register with the relevant Registrar in order to qualify for favourable tax treatment. Following the registration of the Civil Partnership, civil partners must notify their local Revenue office of the date of registration.

Thereafter the civil partners will be entitled to broadly the same tax treatment as is currently in place for married couples. To that end they will be entitled to the ‘married tax band’ and credits for Income Tax purposes. They will be entitled to transfer assets to each other without triggering Capital Gains Tax and Stamp Duty. Likewise any gift or inheritances made between civil partners will be exempt from Capital Acquisitions Tax.

In the year of registration, both partners will continue to be taxed on a single assessment basis. In subsequent years, the civil partners can elect for joint assessment, separate assessment or separate treatment as appropriate. Where a civil partnership is legally dissolved, Revenue will record the dissolution and each party will be treated as individuals for tax purposes from the date of dissolution.

Cohabitants
A qualifying cohabitant is defined as a person who has lived with another for 2 years or more in the case where they have one or more dependant children and 5 years or more in any other case. As noted above, the Act does not extend the tax treatment of married couples to cohabitants. However under the legislation, a qualifying cohabitant will have the right to seek redress from the courts similar to married couples. For example where a relationship has ended and a qualifying cohabitant can demonstrate that he/she was financial dependant on the other cohabitant the court may order:

1. That property be transferred from one party to another
2. That maintenance be paid
3. That a pension adjustment order be granted
4. That a cohabitant be provided for from the estate of a deceased cohabitant

Those wishing to avoid the effects of the new Act will need to enter into a cohabitants’ agreement.

If you wish to discuss the implications of civil partnership or cohabitation on your personal tax position, do not hesitate to contact Anthony Casey at 01 6766 476 or by email at acasey@noonecasey.ie

Unfortunately Elvis is not a client

Noone Casey has extensive experience within the media and entertainment industry. We understand the lives of artists and performers, and how the nature of their work leaves little time to look after finances. We believe we have a structured approach to ensure that your financial affairs and taxes are in order. Whether you are looking for international tax advice to reduce overseas withholding taxes or are starting a new band, we can sort you out.

With a diverse portfolio of international clients, including Rodrigo y Gabriela, Tommy Tiernan and many others, we not only appreciate the issues you face, but we enjoy helping you park your financial concerns so that you can enjoy your success.

Unfortunately Elvis is not a client.

Budget 2012 – video and newsletter

Welcome to the Noone Casey Budget 2012 summary.

As austerity measures kick in & disposable income reduces, we are very conscious of the ongoing struggle to keep business afloat. Noone Casey is offering you a free financial review to assess the key financial issues you are facing.

Contact noone casey to arrange this review.

Our Budget 2012 Newsletter is now available to download in PDF format (475kb).

Watch our Budget 2012 video.

TAX LIABILITY FACING PROFESSIONAL CONTRACTORS

Many IT, Engineering and other Professional Contractors who use composite company structures may be facing large PRSI liabilities as Revenue and DSFA challenge the PRSI status of such contractors.

Contractors who hold only15% of the shares in a composite company may not be entitled to Class S PRSI status; employers PRSI of 10.75% will fall due in those circumstances. Class S status is only applicable to those shareholder/employees who control their companies. A 15% shareholding with up to 6 other contractors who may not know each other does not suggest control.

Noone Casey has developed I-Finance an online realtime accounting solution for professional contractors to address this concern & to legitimately maximise the tax advantages of contracting.

Have a look at our short video here to get a better understanding of the issues involved. If you feel this affects you, contact Noone Casey for an independent assessment of your position.

I-Finance uses the Limited Company type structure thus avoiding the employers PRSI issue. The table below gives you an idea of how each of the common contracting structures compare.

Company Structure Type Limited Company Umbrella Company Composite Company
Ownership You own 100% of your own company You have no ownership You own 15% of an externally controlled company
Directorship You and your appointee are directors of your own company You have no directorship You and up to 6 others are directors of the company. You may not know the other directors.
Employment You are the employee of your own company You are an employee of the umbrella company You are an employee of the composite company
Expenses You are entitled to tax deductible expenses through your own company You are not entitled to any expenses You may be entitled to a lesser amount of expenses
Tax planning You can use your own company to assist in appropriate tax planning opportunities You cannot use the umbrella company to assist in your tax planning You cannot use the composite company to assist in your tax planning
Tax appropriateness We ensure you manage your affairs in full compliance of all taxation and PRSI legislation You are treated as an employee and have taxes deducted appropriately The Revenue Commissioners are examining the appropriateness of the PRSI structures of composite companies

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