National Home Sharing Network Notes on Tax Issues for Host Families
The information contained in this document is for information purposes only, and may not apply to your situation. The NHSN provide no guarantee about the content enclosed. Information provided is subjective. Keep this in mind when reviewing this guide.
Tax and Revenue matters are the personal responsibility of the host family. Host Families can seek advice/services from an accountant if they wish.
HOME SHARING (SHORT BREAKS) FAMILIES
Income up to €10,000 (€12,000 from 2015 onwards) from Home Sharing could be exempt under the Rent-a-room scheme. The agreements/contracts between the organisation and the host family should specify that the allowance paid is for the availability of the room to the home sharing guest. The additional responsibilities of hosting are part of the host family role but the allowance paid is for the availability of the room.
CONTRACT FAMILIES & SHARED LIVING FAMILIES
Income up to 10-12k (the retainer) may be offset against the rent-a-room scheme based on the same principle as above in section 1. If the Host family are doing a tax return, the rent-a-room portion of income should be declared on the tax return even though it is exempt from tax.
Any additional income over the €10-12k may need to be dealt with under a self-assessment tax return. The contract family may choose to use Section 192b of the Finance Act (see section 3 below) and file the return under that or they may choose to file a regular return and offset tax deductable expenses.
For e.g. If a contract family earns a total of €25k, €10k of which is a retainer, €10k could be declared under the Rent-a-room scheme. The additional €15k could be declared under self-assessment. The family could also endeavour to use the Finance Act to offset all of the €25k under Section 192B of the Finance Act.
HOST FAMILIES WHO WISH TO FILE A TAX RETURN
The allowances received by Host Families for home sharing could be interpreted as being no different to foster care income (which is treated as allowances) and is tax exempt. The definition of a ‘carer‘ under section 192B of the Finance Act 2005 is; a ‘carer’ means an individual who is or was a foster parent or relative or who takes care of an individual on behalf of the Health Service Executive. Host Families can try to use this definition if filing a tax return.
HOST FAMILIES CAN:
- Register for self-assessment and fill out tax return form (on-line or manual) with support from an accountant or someone with experience of completing self-assessment returns.
- Provide a breakdown of expenses for Home Sharing. Contact your Link Social Worker or Home Sharing Co-ordinator for a list of tax deductible items.
- There is an option to put ‘income’ down under ‘exempt income’ on the form.
- There is an option to fill in the ‘expression of doubt’ section. You could include here for example: “This is my interpretation and my accountant interpreted the above to be tax exempt under Section 192B”
If the host family declare on the tax return the ‘expression of doubt, it can be argued that is how they are interpreting the legislation and they should refer to the piece of legislation – the Finance Act 2005, Section 192B. In the future, families can’t be brought to pay arrears if you have ticked the ‘expression of doubt’ section on the tax return form. It can be a concern if families click the expression of doubt as it may be a red flag to revenue. This is for the family and your accountant to decide.
Payments of over €10,000 is usually the point where organisations providing Home Sharing require tax clearances from Host Families.
Work with the Department of Finance is ongoing. The NHSN are advocating that all allowances paid to host families are to be covered under the Finance Act. The NHSN are hopeful that the Finance Act will be amended. However, currently the NHSN are advising host families receiving allowances over €10,000 per annum to complete a self-assessment tax return.
The NHSN recommends the accountancy services of
Request the service of Patrick Donnellan as he has provided services to Host Families and information to the NHSN.