Spouses sole income chargeable at higher rate?

J

jocmccoy

Registered User
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I work, and pay tax at the higher rate. My wife has no income currently.

If I buy dividends (or generate another non paye income) in my name I would expect to pay tax on them at the higher rate.
However, If my wife bought the shares and received the dividends, i would expect that this would be treated as her income and taxed at 20%.

I checked this out on grabe's calculator as an other income/benefits input against 'spouse' ([broken link removed], excellent tool).
This seems to treat it as effectively my income.

Is this correct?
 
Yes, have just done this on ROS and the increased standard rate band for spouses does not apply to dividend income, only employment / pension / social welfare income.
 
Graham_07 said:
Yes, have just done this on ROS and the increased standard rate band for spouses does not apply to dividend income, only employment / pension / social welfare income.
Click to expand...

Not too sure on this one. I was of the opinion that any income in spouse's name increases the band. In my opinion the only time the spouse doesn't receive the increase is when the home carer's credit is being claimed. Open to correction though
 
Graham_07 said:
Yes, have just done this on ROS and the increased standard rate band for spouses does not apply to dividend income, only employment / pension / social welfare income.
Click to expand...

Thanks Graham,
I'd love to be with Clarkey on this one, but suppose ROS gotta be right.

So to confirm, dividend income, rental income, interest income would all be chargeable at the higher rate of either spouse, regardless of whose name it is in.
 
ROS is not infallible. It is simply a software programme that performs calculations on the basis of an interpretation of legislation. The legislation itself is the ultimate authority.
 
ubiquitous said:
ROS is not infallible. It is simply a software programme which interprets legislation. The legislation itself is the ultimate authority.
Click to expand...

True, and recently, in a slightly unusual case, had ROS not charging PRSI where it was due. Contacted ROS who said, yes , it can't deal with that situation, they said contact district. Contracted district, who said they could not manually adjust even though there was a problem. They said contact DSFA ??? I'm still on the phone trail......!

That being said, I've put in a few scenarios as OP described and they all come up with the div income at higher rate, including some with spouse having some other income. Does seem a little strange.
 
jocmccoy said:
Thanks Graham,
I'd love to be with Clarkey on this one, but suppose ROS gotta be right.

So to confirm, dividend income, rental income, interest income would all be chargeable at the higher rate of either spouse, regardless of whose name it is in.
Click to expand...

NO, certainly not. Rental income of spouse would be chargeable at the spouses rate to their cut-off point. ( again subject to whether a home carer credit was claimed or not )
 
ubiquitous said:
ROS is not infallible. It is simply a software programme that performs calculations on the basis of an interpretation of legislation. The legislation itself is the ultimate authority.
Click to expand...

Well, if we want to debate infallibility and ultimate authority, we could either take it to the courts or the God channel!

But short of doing that Ubiquitous, can ROS be taken as a reasonably accurate representation of Revenue's interpretation of legislation, particularly referring to this case.
 
jocmccoy said:
Well, if we want to debate infallibility and ultimate authority, we could either take it to the courts or the God channel!

But short of doing that Ubiquitous, can ROS be taken as a reasonably accurate representation of Revenue's interpretation of legislation, particularly referring to this case.
Click to expand...

No.

If you see the Revenue leaflet IT66 (Home Carer's credit) you will see from their worked examples that they increase the standard rate cut off point when the non-working spouse has investment income.
 
Nige said:
No.

If you see the Revenue leaflet IT66 (Home Carer's credit) you will see from their worked examples that they increase the standard rate cut off point when the non-working spouse has investment income.
Click to expand...


Nice one - thanks
 
Nige said:
No.

If you see the Revenue leaflet IT66 (Home Carer's credit) you will see from their worked examples that they increase the standard rate cut off point when the non-working spouse has investment income.
Click to expand...

Ah, but are Revenue leaflets infallible ???
 
Graham_07 said:
Yes, have just done this on ROS and the increased standard rate band for spouses does not apply to dividend income, only employment / pension / social welfare income.
Click to expand...

Actually, in the example you were using, would it have been more beneficial for the spouse to claim the Home Carers credit? If so, the Revenue will not increase the band.
 
Nige said:
Actually, in the example you were using, would it have been more beneficial for the spouse to claim the Home Carers credit? If so, the Revenue will not increase the band.
Click to expand...

OP did not state whether H/C Credit would have been due. If it had, the band would not have been increased. In the example I did, I did not claim the H/C Credit and yet ROS didn't increase the band.
 
I input the following two scenarios on ROS.

A. One earner with salary of €60,000. ROS gives €41,000 @ 20% and €19,000 @ 42% which is correct.

B. One earner with salary of €60,000 as above but spouse with Irish dividend income of €19,000. ROS gives €60,000 @ 20% and balance @ 42% which would also appear correct but contradicts what ye are saying about ROS not giving increased band.
 
Clarkey said:
I input the following two scenarios on ROS.

A. One earner with salary of €60,000. ROS gives €41,000 @ 20% and €19,000 @ 42% which is correct.

B. One earner with salary of €60,000 as above but spouse with Irish dividend income of €19,000. ROS gives €60,000 @ 20% and balance @ 42% which would also appear correct but contradicts what ye are saying about ROS not giving increased band.
Click to expand...

Yes, you are correct. Have now inputted several other scenarios and get increase in all. Original was self €41K PAYE and Spouse €2K divs , got €43K at 20% which for 2006 is correct. Was thinking SRB for 2007 of €43K not SRB for 2006 of €41K. Spouse does get increase in SRB up to Cut-off point , as should be the case. Mea culpa. ( can't explain Grabes result tho )
 
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