Revenue and Ordinary Residence-what is the story?

Hi all,
I sent in my tax return for 2011 in which I explained on the cover letter that I was non-resident but still ORDINARILY resident for the year (I am now no longer so and am completely non-resident).

As far as I know (from my own readying), ordinarily resident taxpayers are entitled to the very same tax treatment as resident taxpayers.

I therefore claimed a personal tax credit for the tax year.

Revenue wrote to me to inform me that "as a non-resident you are not entitled to tax credits".

Can someone here pleeeease confirm or deny this. I was non-resident but ordinarily resident. I had the same messing around in 2010 when they admitted that someone hadn't read my cover letter and they reduced their initial demand by several hundred Euro on appeal.

I am getting sick of them tbh. I put together a careful tax return with cover letter explaining my circumstances and they just seem to skip to the Form 12 entries and ignore what I have put down in black and white.

Even if they are correct, their letter was vague. They should state "non-residents who are ordinarily resident are not entitled to x" or "you were not ordinarily resident according to our tests.." but they don't mention ordinary residence at all in their letter, which is the cornerstone of my return!!

I'm sort of looking forward to my 2012 return as I won't be claiming ordinary residence any more and won't be entitled to any reliefs so I won't have to go fighting for them.

On a side note, I requested a TCS2 from them recently and they told me I owed them €200 from 2008!! Which I probably do in hindsight...because looking at my records I see they refunded my cheque that year without explanation. I asked them why they didn't request that money and they said they don't bother if it's under a certain threshold...go figure.

murphaph said:

Hi all,
I sent in my tax return for 2011 in which I explained on the cover letter that I was non-resident but still ORDINARILY resident for the year (I am now no longer so and am completely non-resident).

As far as I know (from my own readying), ordinarily resident taxpayers are entitled to the very same tax treatment as resident

Click to expand...

http://www.revenue.ie/en/tax/it/leaflets/res1.html

No need the explain it the box is on the form to indicate if you are non resident or non ordinarily resident.

If you are not resident then you are entitled to the credits x Irish income / worldwide income.

I presume that you are a non resident landlord taxable only on your rental income, have you an Irish agent collecting your rent to avoid the tenant having to withhold tax?

Hi Joe,
Thanks for your response.

Yes, I have an agent now (family member) doing the collection for me and only taxable in Ireland on rental income. I work a normal job in Germany.

I am struggling to understand the point of ordinary residence for someone who has just left the country, if they don't get to be treated the same for tax purposes as a resident.

The fact I can get an apportioned tax credit is however undoubtedly more financially advantageous to me over the long haul, than getting a full credit for a period of ordinary residence and none thereafter, so while taking a bigger hit this year, I shouldn't be too upset about it ;-)

Do you know am I entitled to ALL Irish credits on an apportioned basis? (I am in PAYE type employment in Germany, so I wonder am I entitled to both the single tax credit and the PAYE credit (both apportioned against German income))

From RES 1:

Non-resident individuals

Individual who is non-resident but is ordinarily resident in the State for the tax year in respect of which tax liability is to be calculated

Such an individual is, for that tax year –

treated in the same way as an individual who is tax resident (see Tax Resident Individuals above);

but

will not be taxable on -
the income derived from a trade or profession no part of which is carried on in the State;
the income derived from a non-public office or a non-public employment all of the duties (except incidental duties) of which are performed outside the State (but see Non-resident directors of Irish incorporated companies below re Irish public offices);
other foreign income (e.g. investment income) which, in the tax year, does not exceed €3,810.
Where such an individual has income chargeable to Irish tax, he / she may be entitled to any reliefs (including credit for foreign tax paid) that may be due under the terms of a double taxation agreement.

A non-resident individual is taxable on specified gains only - see Individual who is non-resident, non-ordinarily resident and not domiciled in the State for the tax year in respect of which tax liability is to be calculated below.

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I don't understand what they mean by "treated in the same way as an individual who is tax resident" if that doesn't include getting the same reliefs.

murphaph said:

I don't understand what they mean by "treated in the same way as an individual who is tax resident" if that doesn't include getting the same reliefs.

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You're quoting that sentence out of context; what it says is "treated in the same way as an individual who is tax resident (see Tax Resident Individuals above, but...".

So you have to read it by reference to the paragraph on tax resident individuals, which says "An individual who is tax resident in the State for a tax year is liable to Irish tax on his or her worldwide income and gains for that tax year. Where appropriate, a credit against Irish tax may be due under the terms of a double taxation agreement in respect of foreign tax paid on foreign source income and gains that are assessable here."




So clearly they are talking about how you are treated in terms of identifying what items are taxable or not. A non-resident but ordinarily resident individual will be liable as above, but... "will not be taxable on -

1. the income derived from a trade or profession no part of which is carried on in the State;
2. the income derived from a non-public office or a non-public employment all of the duties (except incidental duties) of which are performed outside the State (but see Non-resident directors of Irish incorporated companies below re Irish public offices);
3. other foreign income (e.g. investment income) which, in the tax year, does not exceed €3,810"

The leaflet doesn't make mention of what personal tax credits are available. Section 1032 TCA 1997 sets out the position, as Joe90 has already clarified above (have a look here http://www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/part45.pdf), and then here http://www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/part15.pdf).

As for your query about the PAYE tax credit, this is only available against income charged to tax under Schedule E - your income from your foreign employment as a non-resident is not charged to tax here, therefore you can't have the credit here, I hope that makes sense!

Thanks mandelbrot, appreciate it