Thousands of students are thought to be missing out on tuition fee tax relief and only 30% of people are aware of student tax relief
Refunds worth thousands are currently being left behind by Irish students.
Taxback.com are reporting that analysis of Revenue figures shows that tens of thousands of third level fee-payers could be missing out on significant tax refunds.
They say that lack of awareness could be a primary contributor to the low uptake – with just 30% of people they surveyed saying they knew about tuition relief.
They say that while not everyone would be eligible for the relief, there does seem to be a big void between the numbers in college and the numbers claiming the relief.
They are advising people that if they are paying for tuition fees for a full or part-time third level course, be it for themselves or someone else like a son or daughter, then they may well be entitled to tax relief on the cost.
Barry Flanagan, Senior Tax Manager with Taxback.com explained;
“If you are paying for tuition fees for a full or part-time third level course, be it for yourself or for your child, then you may well be entitled to tax relief on the cost. Third level fee payers can claim tax relief on tuition fees (including the student contribution) that are paid for eligible education courses. The relief is available to whoever is paying the cost of the fees."
Tax relief is granted at 20% - the standard rate of tax. However, the relief is only applicable on any amount above €3,000 and there is a limit of fees, at €7,000 per course, on which you can claim relief.”
He continued: “We recently surveyed 800 of our customers and asked them if they were aware of the relief. Only 30% said that they were. This lack of awareness could certainly result in missed refunds. Granted, not every student will qualify – but a large number will. And it is definitely worth investigating if you are eligible as potentially your refund could reach into the thousands. Before calculating the tax relief, you must factor in the ‘disregard’ amount."
There are different disregard amounts for each year, and for full-time or part-time courses. For the last three years, the disregard amounts have been €3,000 for full-time courses and €1,500 for part-time courses.
The disregard amount is subtracted from your qualifying fees when you are calculating your tax relief. One disregard amount is applied to each claim for every tax year. In other words, you can't receive relief on the relevant disregard amount of the fees.
So, for example, Ryan will be starting college this September. Kevin, his father, will be paying for his tuition. Ryan's tuition fees are €4,500 and his student contribution is €3,500. Qualifying fees for tax relief are capped at €7,000. So, when the disregard amount is taken away, this leaves a total of €4,000. Kevin is entitled to tax relief at 20% of this amount – which is €800.
Many parents have more than one child studying at third level simultaneously and this is the most common type of claim for relief. It’s important to note that, if you are paying fees for more than one course or student, you only have to subtract the disregard amount once.
For example, David pays college tuition fees for his two children, Sean and Sharon. Sean is starting a full-time course. The tuition fees amount to €5,500 plus a student contribution of €3,000. Sharon is also starting third level education. She has enrolled in a part-time course, where tuition fees amount to €2,500 plus the student contribution of €1,500.
The qualifying tuition fees are €7,000 (full-time course fees of €8,500 are restricted to €7,000) and €4,000, for a total of €11,000.
When David subtracts the disregard amount of €3,000 from €11,000, his total is €8,000. David is entitled to tax relief of 20% on this amount, which amounts to €1,600.
Furthermore, if a student is studying more than one third level course at the same time, qualifying fees are restricted to €7,000 per course but you only need to apply one disregard amount to the claim (if one of those courses is full-time then you must use the full-time disregard amount).
Mr Flanagan concluded,
“There’s no doubt the college can be an exciting but financially challenging time, so we believe creating greater awareness about the reliefs available might bring a welcome financial reprieve to those who must foot the bill”.