New tax changes for registered civil partners and qualified cohabitants were announced recently following publication of the Finance (No 3) Bill 2011.
A civil partnership is defined as a relationship similar to marriage for two people of the same sex who enter into a legal agreement governed by the ’Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010′.
Qualified Co-habitants are broadly defined as a same or opposite sex adult couple who are not married nor in a civil partnership, unrelated, living together in an intimate relationship and have lived together for 5 years (or 2 years if they have had a child together)
The tax changes involve income tax, capital gains tax, capital acquistion tax and stamp duty and they seek to give similar taxation rights to ‘civil partners’ and ‘qualified co-habitants’ as follows:
1. Civil partners can choose how they are assessed, either singly, jointly, separately in the same way as married couples.
This will bring a tax benefit as tax credits may be pooled between them, whereas before the changes they may have been lost.
Qualified co-habitants cannot choose to be jointly or separately assessed and will continue to be taxed as single individuals
2. In the year of registration of civil partnership the individuals are taxed as single persons but with a provision to refund tax should this result in a higher liability than if being taxed as civil partners
3. Civil partners can transfer the family home to their partner without any liability to capital gains tax or capital acquisition tax
For qualified co-habitants CGT exemption via principle private residence relief may apply to the transferor
For qualified co-habitants capital acquisition tax will apply on the excess over € 16604 at 25%
There are many other provisons in the Finance (No 3) Bill 2011 and if you would like an opinion on your own situation please contact us at the following link
Subscribe in a Reader
