It was good while it lasted – but gone are the days when both parents could claim the One Parent Family Tax Credit (OPFTC) if they weren’t co-habiting and the child stayed with you at least one night during the year.
From the 1st January 2014, the OPFTC was replaced with the Single Person Child Carer Credit (SPCCC). The key difference between them is that only one parent can claim the credit and that is generally the person with whom the child lives for the whole or greater part of the year.
One Parent Family Tax Credit is now the Single Person Child Carer Credit (SPCCC)
Already, I have had clients questioning why they aren’t receiving this credit in their 2014 tax claim and really the answer was down to a Revenue shortcut for its implementation.
Not getting the One Parent Family Tax Credit anymore? Here’s why…
The introduction of the new SPCCC posed a bit of a problem for Revenue as they couldn’t be sure who was entitled to claim it. So from 1 January 2014, it adopted the approach of automatically allocating the credit to those people who had claimed the OPFTC in 2013 and were in receipt of the Child Benefit.
According to Revenue’s website, “this approach [was] taken on the assumption that, in line with Department of Social Protection’s guidelines in relation to parents who reside in separate households, Child Benefit is generally payable to the parent with whom the child resides for most of the time.”
Now, in many situations this has been allocated correctly, but in others it may not be the best option.
Who should get the Single Person Child Carer Tax Credit?
Revenue’s assumption for automatically allocating the credit to individuals in receipt of the Child Benefit is fair enough – however, as a Tax Agent, I can see that the value of this credit will be wasted for many people.
This happens because in many cases the person who fits Revenue’s criteria for the SPCCC, may be on a low income or may not be working at all – so the value of the credit is not used as they have not paid enough income tax.
In this situation, the best option for maximising the value of the tax credit is for the person who has been allocated the credit to transfer the SPCCC to the mother/father of the child, so long as they meet the following criteria:
- The child resides with them for at least 100 days in the year (Revenue defines “a day” as the “greater part of the day”)
- They are not married, in a civil partnership or co-habiting with a partner
This process is fairly straightforward and just requires both parties to fill out a bit of paperwork. But, most importantly, it ensures that the value of the credit is received and not left in the Government’s piggy bank. And since the credit is worth €1,650, it’s definitely worth getting the best benefit from it.
Transferring the Single Person Child Carer Tax Credit
Surrendering the tax credit is a fairly simple process, but understandably some parents have been concerned that once relinquished, they will have lost it forever. However, this is not the case.
Revenue states that “where [a person] gives up his or her entitlement to the credit, this surrender (relinquishment) of the credit will remain in place until such time as [they] withdraw it.” This means that should your circumstances change and you start paying enough income tax to benefit from the tax credit, then you can simply withdraw the transfer and the tax credit will be reassigned to you for the following tax year; i.e. if you withdraw the surrender on 15th May 2015, the tax credit will be restored for tax years 2016 onwards.
Of course, from 2011 – 2013, you can both still claim the OPFTC, but from 2014 onwards, this is restricted to one person.
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Written by Dalia Simanskyte
I thrive on getting my clients the best possible refund. With a history in payroll, I have an understanding of what happens on both sides of the fence. So, I also like to help my clients understand more about their taxes – particularly my Russian or Lithuanian speaking clients. Being from Lithuania myself, I understand that it can be very difficult to get your head around a new tax system.