A survey has revealed that just three in 10 college students are aware of tuition-free tax relief.
Thousands of people who pay for third-level tuition fees in Ireland are unaware of significant tax refunds potentially worth thousands of euro, according to a new survey by Taxback.com.
Latest figures from the Revenue show that 29,300 people applied for third-level tuition fee relief in 2015, but in that year there were 159,945 Irish students enrolled in full-time education.
While not every fee payer will be entitled to relief, Taxback.com believe it is worth investigating if you qualify as you may be due a significant refund on tuition fees for full-time and part-time third-level courses.
To demonstrate the level of tax relief potentially available to third-level students or those who pay fees on their behalf, Taxback.com provided the following examples.
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.
The most common type of claim for relief is from parents who have more than one child studying at third-level simultaneously.
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.
Explaining how the tax relief works, Barry Flanagan, Senior Tax Manager with Taxback.com, said: “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.
“And if you are paying for more than one child to go to college this September, the good news is that there is no limit on the number of individuals for whom you can claim. In fact, the majority of claims for this type of relief come from parents with more than one child in college at the same time.
“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.”
Explaining the ‘disregard’ amount, Flanagan added: “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 (2017, 2016 & 2015) 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.”
The vast majority of third-level courses in Ireland and in EU member states are eligible for tax relief.
For more information, check out the Citizens Information website.