Timing of tax expense

C

cremeegg

Registered User
Messages
4,156
I have a very large one off tax deductible expense in 2016, Its a nursing home bill.

40% of the expense will take me out of the higher rate tax band. Is it allowable to save 60% of the expense until next year when I expect to have more income at the higher rate.

Thanks for any advice
 
In that case the expenses can only be deducted in 2016.

There is provision for a deduction for health expenses in the year they were paid, if that differed from the year in which they were incurred.
 
Thanks for that. I thought that was the case, but I don't understand why it is different from the usual 4 year rule. Do you have a reference for it . Thanks
 
Extract from Revenue leaflet:

Health expenses paid over different years
You may receive health care in one year, but pay for it the following year. In this case, you can choose to claim the relief either:

  • in the year you received the care
  • in the year you paid for the care.
Example 1
You have an illness in December 2016 which requires treatment. Your health expenses cost €1,000 in total. You pay €700 in 2016 and the remaining €300 in 2017.

You have two options when claiming tax relief for these health expenses.

Option 1 - you can claim €1,000 for the 2016 tax year

Option 2 - you can claim €700 for the 2016 tax year and €300 for the 2017 tax year
 
That seems to claim early, i.e. claim in 2016 an expense that was paid in 2017. My case is different. I want to claim an expense of 2016 partly in 2016 and partly in 2017.

For normal expenses, if they are not claimed for whatever reason in they year they are incurred, they can be claimed up to 4 years later. There is a different rule for pensions, I am wondering if there is anything special about nursing home costs.
 
As you both incurred and paid the health expenses in 2016, the deduction can only be given in 2016, subject to the usual 4-year time limit for claims.

The only concession for nursing home expenses is that that, in certain circumstances, they can be claimed during the year in question rather than by end-of- year review.
 
I am still not clear if there is any reason why I should not defer claiming part of this expense until next year, when I expect to be able to get relief at the higher rate.

Any advice welcome. Thanks
 
cremeegg said:
I am still not clear if there is any reason why I should not defer claiming part of this expense until next year, when I expect to be able to get relief at the higher rate.
Click to expand...

Because the rules, and presumably the underlying legislation, state that medical expenses are only claimable for income tax purposes in the years in which they are either incurred or paid. Otherwise we'd be at this all the time.
 
cremeegg said:
I am still not clear if there is any reason why I should not defer claiming part of this expense until next year, when I expect to be able to get relief at the higher rate.
Click to expand...

Because the legislation does not allow it.

Health Expenses is covered by TCA 1997 s 469.

Section 469(5) deals with the election for the year in which relief is taken.

Extract from the Notes For Guidance:

"Where an individual makes a claim for a year of assessment and after the end of that year the claimant pays expenses in relation to health care provided in that year, the claimant may elect to have such payment allowed in the year in which the claim is made and not for the year in which the payment is actually made. If this election is made, any deduction for health expenses paid in subsequent years must also be taken on the same basis."
 
Sophrosyne said:
Because the legislation does not allow it.
Click to expand...

Thank you Sophrosyne, for that reference. However I read this section as permitting a taxpayer to elect to be allowed to claim a medical expense a year earlier than would otherwise be permitted.

I cannot see where it prohibits a taxpayer from claiming a medical expense up to four years after it is incurred.

T McGibney said:
Otherwise we'd be at this all the time.
Click to expand...

Well yes, but that is hardly reason enough to walk away from a valuable tax planning opportunity. If its not prohibited.


Maybe I am only seeing what I want to see, but at the same time I cannot read the legislation as prohibiting a later claim.
 
You're only seeing what you want to see, and I think you should actually read the relevant legislation before deciding what you can or can't read it as saying! ;)

The provision Sophrosyne quoted is about the election, you need to read S469(2) which is the provision for tax relief in the first place.

The critical bit is, "where an individual for a year of assessment proves that in the year of assessment he or she defrayed health expenses... the income tax to be charged on the individual… for that year of assessment shall be reduced by...".

So the relief starts as a relief available against this year's tax for amounts paid this year.

S469(5) then broadens this out to allow you to elect to spread the expense across the years that the health care giving rise to the expenditure was provided.
 
T McGibney said:
Because the rules, and presumably the underlying legislation, state that medical expenses are only claimable for income tax purposes in the years in which they are either incurred or paid.
Click to expand...

What rules ?

Here we are getting closer.

torblednam said:
The critical bit is, "where an individual for a year of assessment proves that in the year of assessment he or she defrayed health expenses... the income tax to be charged on the individual… for that year of assessment shall be reduced by...".

So the relief starts as a relief available against this year's tax for amounts paid this year.

S469(5) then broadens this out to allow you to elect to spread the expense across the years that the health care giving rise to the expenditure was provided.
Click to expand...

I still do not see that this means you cannot claim 4 years in arrears.

Todays Indo, (not necessarily authoritative I know) suggests that you can. "you can claim back for up to the last four years and don't need to submit the original expenses when sending in the form" see here http://www.independent.ie/business/...w-to-claim-back-health-expenses-31091526.html

Can anyone refer me to the general 4 years provision. ?
 
"Revenue advises that there is a general right to repayment of tax provided for in … the Taxes Consolidation Act 1997, where a person has paid an amount of tax which is not due. However that right is subject to a statutory limit of four years from the end of the chargeable period to which the claim relates".

I can't find the basis in legislation for this.
 
Surely (without having read all the links above) you can claim the expenses anytime you like (within the 4 year rule) but revenue will go back and amend the balancing statement of the year they were incurred. So if you incurred them in 2014 for example and don't submit the claim until 2017 then they won't allow them against 2017 tax but will go back and recalculate 2014 tax being the year the money was spent by you.
 
Last edited:
cremeegg said:
What rules ?

I still do not see that this means you cannot claim 4 years in arrears.

Todays Indo, (not necessarily authoritative I know) suggests that you can. "you can claim back for up to the last four years and don't need to submit the original expenses when sending in the form" see here http://www.independent.ie/business/...w-to-claim-back-health-expenses-31091526.html

Can anyone refer me to the general 4 years provision. ?
Click to expand...

cremeegg said:
"Revenue advises that there is a general right to repayment of tax provided for in … the Taxes Consolidation Act 1997, where a person has paid an amount of tax which is not due. However that right is subject to a statutory limit of four years from the end of the chargeable period to which the claim relates".

I can't find the basis in legislation for this.
Click to expand...

Section 865 TCA 1997 provides the time limit for a repayment of tax. It's been 4 years for a long time. So you absolutely can claim for up to 4 years in arrears, but that is very different from what you asked in your OP, which is in bold below, and is the question that people have been trying to answer for you.

Your OP was
cremeegg said:
I have a very large one off tax deductible expense in 2016, Its a nursing home bill.

40% of the expense will take me out of the higher rate tax band. Is it allowable to save 60% of the expense until next year when I expect to have more income at the higher rate.

Thanks for any advice
Click to expand...

The answer to this is no, for the reasons that have been set out by several posters, all of which stems from S.469 as I quoted to you from. The tax relief is due against your tax for the year of assessment that the expense is incurred, or if you so elect, against your tax for the years during which the healthcare service was provided.

You must claim your tax relief (for the year the expense was incurred or the service was received) within 4 years, and if you don't then you won't get any tax relief / repayment of tax.
 
Monbretia said:
Surely (without having read all the links above) you can claim the expenses anytime you like (within the 4 year rule) but revenue will go back and amend the balancing statement of the year they were incurred. So if you incurred them in 2014 for example and don't submit the claim until 2017 then they won't allow them against 2017 tax but will go back and recalculate 2014 tax being the year the money was spent by you.
Click to expand...

Thank you this is it.
 
You must log in or register to reply here.
Back
Top