Revenue Note for Guidance

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Revenue Note for Guidance

1031J Maintenance of civil partners living apart

Summary

This section provides that payments made under a maintenance arrangement by one party in a civil partnership to the other civil partner of that civil partnership will —

  • be payable without deduction of tax,
  • be deductible in computing the total income of the payer, and
  • be chargeable to income tax in the hands of the recipient.

While civil partners living apart are treated for tax purposes as if they are not civil partners of each other, there is provision in section 1031K for the civil partners to jointly elect for joint assessment in which case maintenance payments are ignored for tax purposes and the foregoing paragraph will not apply.

Details

Definitions

(1) A “maintenance arrangement” means an order of a court under Part 5 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 giving rise to a legally enforceable obligation, or any legally enforceable arrangement under which payments are made by one person to another in consideration, or in consequence, of the annulment or dissolution of a civil partnership or of a separation of the kind referred to in section 1031A(2).

It is not intended that any regard be had for tax purposes to unenforceable payments.

A “payment” means a payment or part of a payment.

(1A) References to a child of a person includes a child in respect of which, before making the maintenance arrangement, the person concerned was entitled to relief under section 465 in respect of an incapacitated child.

Application

(2)(a) This section applies to payments made, directly or indirectly, by a party to a civil partnership, under or pursuant to a maintenance arrangement relating to the civil partnership, for the benefit of his or her child, or for the benefit of the other party to the civil partnership. The payments must be —

  • made at the time when the civil partners are not living together,
  • legally enforceable, and
  • annual or otherwise periodical.

(2)(b) Any payment which —

  • is made under a maintenance arrangement, and
  • is not for the benefit of a third party,

is treated as being for the recipient’s benefit.

This applies whether or not the payment is conditional. For example, if the payment is conditional on the recipient maintaining the child without specifying the amount that must be spent on the child, that payment is treated as the recipient’s income. While payments to third parties are excluded, payment of rent or school fees are treated as of benefit to the recipient civil partner or child and not the landlord or owner of the school.

(2)(c) Where an ascertainable sum is allocated under the maintenance arrangement for the benefit of the child, such sum is not considered to be income of the recipient civil partner, but is treated as income of the paying civil partner (under section 795 income settled on a minor is deemed to be the income of the settlor).

Tax treatment where payment is for benefit of the recipient civil partner

(3) Where the payment is for the benefit of the recipient civil partner, and the civil partners are assessed to tax as single persons —

  • the person making the payment is not entitled to deduct and retain income tax from the payment,
  • the person receiving the payment is chargeable to tax under Case IV of Schedule D, and
  • the person making the payment is entitled, on making due claim, to deduct the payment in computing his/her total income for tax purposes for the year in which the payment is made.

(3A) Where the payment is for the benefit of the recipient civil partner, and the civil partners are assessed to tax as single persons —

  • the person making the payment is not entitled to deduct and retain income tax from the payment,
  • the person receiving the payment is chargeable to tax under Case IV of Schedule D,
  • the person making the payment is entitled, on making due claim, to deduct the payment in computing his/her total income for tax purposes for the year in which the payment is made, and
  • for the purposes of a claim to the incapacitated child allowance, the payment is regarded as a contribution towards the child’s maintenance by the person making the payment, even though the payment may be made to that person’s spouse for the maintenance of the child. This, in effect, gives the payer a right to all or part of the incapacitated child allowance.

Application of general income tax provisions

(4) Where a civil partner is claiming a deduction of the amount of maintenance from total income, this section applies the general income tax provisions governing —

  • deductions allowed in ascertaining taxable income and provisions relating to reductions in tax (section 458),
  • general provisions relating to allowances, deductions and reliefs (section 459), and
  • the rate of tax at which repayments are to be made in respect of such a deduction (section 460).

Relevant Date: Finance Act 2020