BUDGET increases in income exemption limits will remove about 10,000 people from the tax net and 30,000 pensioners will also pay less tax.
Exemption limits mean that anyone whose income is at or below the amount applicable to their age group and marital status is not liable for any income tax.
The adjoining table shows the new income exemption limits announced by Mr Quinn for the 1997/1998 tax year and the limits that apply in the 1996/97 tax year.
Exemption limits vary depending on age, marital status and the number of qualifying dependant children. They increase with age allowing people over 65 years to earn more without falling into the tax net.
To determine if you are liable for income tax, you will first have to work out your total income. Income from all sources must be added together - from a job, interest from savings, dividends from shares and any other income earned or unearned.
But the Revenue Commissioners allow: certain deductions in determining total income. As well as allowable mortgage interest, employees can also deduct any pension contributions and any work related expenses, agreed with the Revenue, from their income figure. Self employed people can deduct retirement annuity payments and capital allowances from their income figure.
When you have calculated your total income for income exemption limit purposes, examine the limits again in the light of your family circumstances. The income limit increases with the number of qualifying dependant children.
In the 1997/1998 tax year, as in the current tax year, you can add £450 to your income exemption limit for each of the first two dependant children £650 for each subsequent dependant child.
If your total income (when the allowable deductions are made and dependants allowances are added) is below the income exemption threshold relevant to your age, you are not liable to pay any income tax. If your income is only slightly above the limits you may still qualify for reliefs.
The Revenue Commissioners allow marginal relief in such cases. However, tax must be paid and the taxpayer must claim the marginal relief from the Revenue.