Tax relief on rent

I rent accommodation and claim tax relief on that rental. I read an article in The Irish Times some time ago saying that, if the owner lived abroad, the tenant was responsible for the tax. The Revenue has confirmed this is the case. I then contacted the agency from which I originally secured the accommodation but they said not to bother about it. Who is correct?

Ms A.N., Dublin

I can see why you would be concerned. After all, if you are responsible for collecting tax and don't, the Revenue may well come after you and they certainly know you are renting as you are claiming tax relief in consequence of it.

As you say, in the case of tenants of landlords who live outside the jurisdiction of the State, there is an obligation to deduct tax at the standard rate from the rent due and return it to the Revenue Commissioners. This is because rental income on property in the State is deemed to be income taxable in the State regardless of the official tax residence of the owner.

However, there is a however; there always is. In this case, you rent the property from the landlord through an agent. As such, and assuming you pay your rent to the agency rather than sending it directly to any landlord, it is the agent who is responsible for deducting the income tax element. The argument is that the agent assumes the legal duty, as it is they who are remitting the income to the absent landlord.

To be sure that this is the case in your situation, you would need to check carefully again the wording of your contract to ensure that you do not have any liabilities which may return to pester you.

On the subject of relief for tenants paying rent in the private sector, the relief allowed currently is £500 (€634.87) for a single person, £750 for a widowed tenant and £1,000 for a married couple. In the case of those over the age of 55, the reliefs are £1,000 for a single person and double that for a married couple, with widowed tenants able to claim relief of £1,500.

Charges for euro exchange

We are an organisation that runs Irish courses for adults. During the autumn/winter period, we attract groups from North America and Europe. The resulting banking experience has left me mystified.

We were paid about 10,000 deutschmarks by a German group. When I lodged this in our bank account, the charge was £50. I was told there was a standard charge for exchange dealings by this bank for currencies within the euro zone of 3.5 per cent up to a maximum of £50. If I lodge a US dollar cheque, the charge is a maximum of £5. There seems to be a huge discrepancy here despite our move towards a common European currency. Did the banks have to seek approval for this 3.5 per cent charge or has it been put in place with Government agreement?

Mr L.O C., Donegal

As you say, the divergence in charges does little to increase consumer confidence in the fledgling currency of the 11 members of the euro zone, including the Republic.

In the old days the banks made money in two ways from foreign exchange transactions. First they charged a commission, which was supposed to cover the administrative costs of providing the service. Then they made money on the currency spread - the difference in the rates at which they bought or sold a particular currency.

With the arrival of the euro, of course, we are all in one happy large currency zone - albeit one in which the old nominal currencies continue to be legal tender. This means that while we use pounds and pence in our stores, the German use deutschmarks and pfennigs. However, these are simply denominations of the new euro currency in strict legal terms.

For the banks, the change meant they could no longer charge a spread to cover the risks they took in the money market in buying and selling currencies. To compensate, they ratcheted up the commission charge. They claimed the old commission charge did not cover much of the administration, which in itself raised questions about the way banks structure their charges to customers.

More importantly, they did receive the approval of the Director of Consumer Affairs for the charges they impose. The nonsense of the situation you found yourself in - paying £50 for an intra-EMU exchange compared to £5 for a US/pound exchange - has not yet sunk in in official quarters.

Of course, it is true that the exchange rate you received on your dollar transaction included an element of a charge by the banks. This is the difference between the rate you received and the official Central Bank exchange rate for the dollar on the day, but you'd still be going some to face a total cost of £50 on a dollar transaction.

You may be pleased to learn that the Director of Consumer Affairs has conducted spot checks on financial institutions and their approach to exchange commissions. Sadly, the director's only concern appeared to be a paucity of information and training. The office still maintains there is competition in foreign exchange, highlighting how a couple of institutions no longer provide the service.

That may be okay in Dublin or other cities and large towns where options are available. In smaller towns and rural areas, customers may have only one bank and may have to accept the commission on offer. The European Commission is currently looking at the whole situation visa-vis euro bank charges amid concern that they are hindering acceptance of the new currency. As part of this investigation, the Commission has visited the offices of AIB and Bank of Ireland. Who knows? There might yet be changes.

P/E ratios of Irish stocks

I am trying to track down the price/earnings ratios for all the stocks listed on the Irish Stock Exchange apart from the banks. Can you help?

Ms A.H., e-mail

The material you are looking for appears every Monday in The Irish Times at the bottom of the second business page in the tables giving the previous week's performance of every share on the official Irish list with a couple of exceptions - predominantly those shares which are listed in Dublin for various reasons but in which trade occurs almost exclusively elsewhere, such as Norwich Union.

Of course, these price/earnings ratios are correct as of the close of business on the previous Friday night. Given that the ratio of each share will be affected by every move in the price of the share, what the ratio is depends on the time you are looking at the stock price.

If you really want, you can work it out by dividing the company earnings by the number of shares in issue and then dividing the result into the share price of the day.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier Street, Dublin 2, or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.