This document discusses taxation issues related to married couples, civil partnerships, cohabiting couples, separation, and divorce in Ireland. It covers income tax treatment, capital gains tax, capital acquisitions tax, and stamp duty for these different relationship types and situations. The document also compares the tax treatment of married couples that become legally separated versus informally separated versus divorced.

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2. Taxation of Married Couples Separation Divorce Civil Partnership Q&A Format of this presentation Brendan Brady

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4. Marriage Opposite Sex Civil Partnership Same Sex Qualifying co-habitants 5 years Brendan Brady Civil Partnership and Certain Rights and Obligations Act 2010 From 1 st January 2011 there are three recognised types of relationships

5. Civil Partnership and Certain Rights and Obligations Act 2010 Marriage Civil Partnership Treated the same for all taxes Co-habitants Single persons Strangers CGT, CAT, SD So what’s the difference? Brendan Brady

6. THE REDRESS SCHEME CO-HABITING COUPLES Financially dependent co-habitant Activated at the end of a relationship Property adjustment orders s172 bill Pension orders s185-190 bill Maintenance orders s173 bill Brendan Brady

7. Brendan Brady TAXATION OF CO HABITING COUPLES INCOME TAX Single Assessment No option joint assessment Single Bands Single Credits CGT Normal CGT Rules STAMP DUTY Ad valorem CAT Group C “ Free use” s40 CATCA S.59 CATCA Hardship may apply

8. Co-Habiting Couples Taxation v Social Welfare TAXATION SOCIAL WELFARE Single Assessment Means tested as Co habitants Living apart 4/5 years Living apart 2/3 years

9. Brendan Brady CIVIL PARTNERSHIP & SOCIAL WELFARE UNEMPLOYMENT BENEFIT Previously: 2 personal rates of €188 Currently: 1 personal rate plus one dependent Rent Supplement If one spouse is in FT employment One Parent Family Payment No longer entitled if: Survivors Benefit Civil Partners : Co-habiting Civil Partnership Both are excluded Death Benefit Widows pension Bereavement Grant

10. GENERAL RULE Brendan Brady TAXATION OF SOCIAL WELFARE PAYMENTS Benefit = Taxable Allowance = Non Taxable

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13. Brendan Brady No of Marriages: Ireland Per 1000

14. Brendan Brady No of Marriages: EU and Ireland Per 1000

15. Why Marriage ? Live longer Have higher incomes Engage less in risky behaviour Eat healthier Have fewer psychological problems Brendan Brady

16. Brendan Brady TAX ADVANTAGES OF MARRIAGE INCOME TAX Credits Bands Carers Credit Trading losses CGT No gain No loss Transfer Losses STAMP DUTY Exempt CAT Exempt

17. YEAR OF MARRIAGE Tax payable separate assessment Tax payable on joint assessment Overpayment is time apportioned Formula AxB/12 A=Additional Tax payable Brendan Brady B= No. of months married

18. INCOME TAX:YEAR OF DEATH Brendan Brady Tax treatment is determined by Method of Assessment Who dies

19. SEPARATE ASSESSMENT Deceased spouse Cessation rules apply Surviving spouse Assessed as single person Can elect for joint assessment Brendan Brady YEAR OF DEATH

20. Brendan Brady YEAR OF DEATH JOINT ASSESSMENT Who dies? Assessable spouse Both spouses pre-death Married credit and bands Surviving spouse from date of death Single credit , bands & widows credit Non-assessable spouse Surviving spouse: assessed full year Married credits and bands Not entitled to widows credit

21. Disposals from estate of deceased spouse Not consider disposal for CGT s573 Surviving spouse acquires asset at MV Eliminates any gains accrued Compare with no gain/no loss Brendan Brady

22. RESTRICTION OF SPECIFIED RELIEFS FOR HIGH EARNERS AND TAXATION OF MARRIED COUPLES Restriction applies to each spouse in isolation, even if jointly assessed Income is aggregated after restriction is applied to each spouse separately S 485 TCA 97

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24. SEPARATED SPOUSES LEGALLY SEPARATED Court order or deed of separation Opt to be jointly assessed s.1026 FACTUALLY SEPARATED A separation that is “likely to be permanent” s.1015 No definition of “likely to be permanent” Cannot opt for joint assessment Brendan Brady

25. YEAR OF SEPARATION Assessable spouse Joint income until date of separation Own income until 31st December Full married credits Full married bands Non assessable spouse Own income from date to 31st December Single credits Single bands Brendan Brady

26. SEPARATED SPOUSES AND MAINTENANCE PAYMENTS Brendan Brady Tax treatment is determined by Who benefits? Legal agreement or voluntary?

27. Who is the B E NEFICIARY? EX-SPOUSE Legally enforceable Tax deductible Taxable Case IV for recipient 1025(3) If couple elect for joint assessment , payments are ignored S.1026(2)(b) Voluntary No deduction for payment Married credit 461 (9)(I )( II) Single bands No tax implications for recipient CHILD Ignore 1025 (4) Brendan Brady

28. Separated Spouses: Joint V Separate Assessment Separate Assessment Increased single parent band Single parent tax credit Deduction for maintenance Joint Assessment Married bands Married credits S381 offset trading losses Brendan Brady

29. Transfer of properties subject to tax incentives between spouses on separation Concession where property transferred between spouses under maintenance agreement (s1025) Clawback can be offset as income of one spouse against expenses of the other spouse Avoids creating an disproportionate tax advantage for one spouse and a disadvantage for other spouse

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31. Divorce V Dissolution Divorce Dissolution Married Couples Civil Partnership Living apart 4/5 years Living apart 2/3 years

32. Brendan Brady TAX TREATMENT DIVORCED COUPLES INCOME TAX Single assessment s1016 Maintenance payments Elect for joint assessment Joint V Separate Assessment CGT Decree of Divorce Transfer of assets no gain no loss s1031(2) Otherwise normal CGT rules apply STAMP DUTY Decree of Divorce Exempt under s97(2) SDCA 1999 CAT Decree of Divorce Exempt under s88 CATCA 2003 Otherwise group C threshold No transfer of losses

33. Brendan Brady CONTRAST & COMPARE Married Legal Separation Informal Separation Divorce Income Tax Joint Assessment Single V Joint Assessment Single Assessment Single V Joint Assessment CGT CAT Decree Exempt Exempt Stamp Duty Decree No Gain No Loss Normal CGT rules apply No Gain No Loss No Gain No Loss Exempt Exempt Exempt Exempt Exempt Decree Exempt

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