Employing daughter in business

M

Mirsix

Registered User
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Hi,
We are hoping to add our 15 year old daughter to payroll, and it looks like because of her age (under 16) she will not need to pay any prsi or USC and we will not be liable for payment of employer prsi as she is in prsi Class M. However I have come across two differing figures for the annual amount which we can pay her before she incurs a tax liability, i.e €8,000 or €8,250? Cannot find a definitive amount anywhere. Does anyone happen to know the max tax free annual payment for a 15 year old? Are there any other associated employer costs which I am not aware of?
Any and all advice or assistance on this would be very much appreciated, Thanks
 
Bear in mind the limits on weekly work:

Children aged 15 may do 8 hours a week light work in school term time. The maximum working week for children outside school term time is 35 hours, or up to 40 hours if they are on approved work experience.
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How much will she be working? Working all the legal hours at NMW of €7 won't even pull in €10k a year.

I am guessing Revenue may look more closely at this type of arrangement. High earners in family businesses sometimes "employ" family members to take advantage of their tax credits.

I'm sure you are not doing this of course.
 
NoRegretsCoyote said:
How much will she be working? Working all the legal hours at NMW of €7 won't even pull in €10k a year.

I am guessing Revenue may look more closely at this type of arrangement. High earners in family businesses sometimes "employ" family members to take advantage of their tax credits.

I'm sure you are not doing this of course.
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Not sure how much she'll be working, as it's totally dependent on future workload and how the economy goes on account of the corona crisis, but it will definitely not be more than the legal hours regardless, as she will be working long enough as an adult and needs to enjoy her youth, and they have enough pressure with schoolwork and exams etc. It will be mostly during school holidays to keep her occupied and gaining experience for her CV, and I would say up to maybe 900 hours in total a year, although if she can get a job elsewhere to give her more diverse employment experience for her CV then it would be less.

So any advice on the hourly rate and/or annual rate to minimise her tax liabilities would be greatly appreciated. I think it's €8,000 or €8,250, definitely less than €10,000 anyway, but I could be wrong, so was hoping for some guidance from anyone who knows more about this than me. Employing family members in family businesses is fairly commonplace, especially on farms for example, and as far as I am aware revenue treat them as with all other employees, but I wouldn't be an expert on revenue matters, so if anyone knows any different I'm open to advice.
 
Once she's actually working and not being paid an unrealistic amount for what she's doing, revenue won't have a problem with it.

As you say, there's no PRSI as she's under 16. USC is chargeable as normal if she earns over €13,000 a year.

I'm open to correction but she should be entitled to a personal tax credit of €1,650 and an earned income credit of €1,500 which would allow her to earn €15,750 before paying income tax.
 
Ciru75 said:
Once she's actually working and not being paid an unrealistic amount for what she's doing, revenue won't have a problem with it.

As you say, there's no PRSI as she's under 16. USC is chargeable as normal if she earns over €13,000 a year.

I'm open to correction but she should be entitled to a personal tax credit of €1,650 and an earned income credit of €1,500 which would allow her to earn €15,750 before paying income tax.
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Great thanks, I think €15,750 might be the amount if she was working full time, but she would just be part time as she's at school. But good to know she can earn up to that amount tax free.
 
In a Revenue audit, they might look to see which account her wages are paid into.

Would this jeopardise those other reliefs where they commonly ask is your child in receipt of a fulltime education etc (to establish they're a dependant); does earning a full-time wage (as low at as it may be) characterise you differently or have other implications? *

*trying to play Devil's advocate here, teasing this out further
 
Setanta12 said:
In a Revenue audit, they might look to see which account her wages are paid into.

Would this jeopardise those other reliefs where they commonly ask is your child in receipt of a fulltime education etc (to establish they're a dependant); does earning a full-time wage (as low at as it may be) characterise you differently or have other implications? *

*trying to play Devil's advocate here, teasing this out further
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Good questions, and haven't a clue about the answers to be honest, so if anyone out there can shed any light that would be great. Naturally she would be paid wages into her own account.

Regardless anyway, she's still in full time education until at least leaving cert, and hopefully well beyond, so she wouldn't be earning a full-time wage, just part-time in school hols/weekends etc, like most kids probably try to do if they can get a job, or at least I assume this is still the norm these days...she is our eldest, so just trying to learn about these things for the first time in the 21st century :) I know it was certainly the case in my time that if you could earn any part-time money at all or get any kind of work experience in evenings or weekends from age 14 onwards you did.
 
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