Brian Keegan: Tax credits offer some cushion for looming college fees
Many students will hope to get on to a third-level course, while many of their parents and guardians will hope that they can afford to fund it. Tax relief of up to €1,400 per annum or in some cases more is available when it comes to funding education.
Leaving Cert results and college offers are imminent. Academic achievement is not the only element of the secondary school experience, and formal third-level education is not suitable for everyone.
Yet, many students will hope to get on to a third-level course, while many of their parents and guardians will hope that they can afford to fund it.
The Student Universal Support Ireland (Susi) grant is a vital support for college affordability, but not everyone is eligible for such support. For those who cannot benefit from Susi, the tax system offers some help.
Tax relief of up to €1,400 per annum or in some cases more is available when it comes to funding education. Many, though by no means all, third-level course fees qualify for tax relief.
The relief is only granted for eligible courses from eligible institutions. A long-established course from a long-established third-level institute should be eligible for tax relief but newer offerings might not be. The list of eligible courses is available from the Revenue website.
For courses which do qualify, a claim of 20% of the fee up to a maximum amount of €7,000 per course can be made. Unfortunately, this tax relief often isn’t much help when parents have just one child in college. That’s because in many cases the college fee being paid is about the same as the so-called 'disregard amount' which is €3,000 for full-time students or €1,500 for part-time students. If the tuition fees are less than the disregard amount, there will be no relief given.
Where two or more people going to college are being supported, the relief becomes very useful because the disregard amount is subtracted only once from the total college fees paid in the year. The person being supported through college doesn’t have to be a child, or even a relative. Nor indeed must the fees be paid to an Irish college. Many universities and institutions in other EU countries and in the UK are approved for the purposes of tax relief.
On the downside, other expensive aspects of college — accommodation, subsistence, transport, and academic materials — are not eligible for any tax relief. Exam fees and registration and capitation fees don’t qualify either.
Making a claim for the tax relief is relatively straightforward. Claims can be made in the traditional way by sending a written claim form to your tax office. It is more efficient, however, to go online using the Revenue’s MyAccount service and enter the details. For PAYE taxpayers, the tax relief should flow through to payslips very quickly. Claims shouldn’t be made until after the fees have been paid and receipted. Claims can be made up to four years in arrears, but beyond that, any tax relief which might have been due is permanently lost.
Businesses frequently sponsor third-level education for their employees. The tax relief position for businesses purchasing education for their staff is not as restrictive as for individuals and costs are often tax-deductible in full. Any employer running up costs providing training for their employees should get a deduction from their own taxable income for the cost of the course, provided the training is relevant to the work the employee is doing.
For this week at least, though, the focus on Irish education should be for all the positive reasons as the results and offers come in. Take the help from the exchequer to avail of third-level opportunities.
- Brian Keegan is director of public policy at Chartered Accountants Ireland
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