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Rules for determining the applicant's gross income

Employment/pension

Documentary evidence must be provided to support the amount of income obtained from employment/pension to include any one of the following documents. Where a payslip covers a cumulative (Year To Date) period of more than twelve weeks, it is the preferred option:

Payslip: The income details are taken from the payslip, which must be up to date and within the assessment period, and not from the details supplied on the application form. A pay slip should provide the following information:-

  • gross income year to date;
  • number of weeks worked year to date;
  • tax paid year to date;
  • PRSI paid year to date;
  • USC paid year to date; and
  • PRD paid year to date.

While a payslip shows the basic wage, when the gross pay to date is divided by the number of weeks worked the figure may be greater/lesser than the basic wage, due, for example, to an increase in wages since start of tax year; the person not working in this employment for all of current tax year; overtime; or shift allowance.

Statement of earnings: This is required where an applicant does not provide a formal pay slip, or where the pay slip does not provide the information specified above. The statement should give details of the person’s earnings for the previous six months if possible.

P60: This may be required where a pay slip or a statement of earnings is not adequate for the purpose of calculating income. It may also be used as a basis for calculating an applicant’s income for the previous twelve months. In January and February, it may be preferable to seek a Form P60 rather than a payslip in order to fully establish the person’s annual income. If necessary the views of Legal Services may be sought.

Persons who are employed for less than 52 weeks a year or due to cease employment during the assessment period

If a person is due to cease employment during the assessment period, their income from employment should only be included up to the date that they are due to cease employment. For example, if a person is employed as of the date on the application form, eg, 1st June 2013, but they are due to cease employment on 1st July 2013, only the income they would receive during June should be taken into account, as opposed to a full 52 weeks.

The same situation applies to a person who works for less than 52 weeks a year for other reasons – e.g. a person employed in the civil or public service who avails of the Shorter Working Year scheme. However, it only applies if the applicant is not paid during the period they do not work – for example in the case of a civil servant availing of the Shorter Working Year scheme, they do not avail of the option not to have their reduced pay spread over the entire year.

If using a payslip to calculate a person’s annual income, the reduction should be affected by multiplying by the reduced number of weeks instead of 52. è See the section “Obtaining information from a PAYE payslip” later in this Chapter.

Social welfare income

An applicant must indicate the type and amount of the payment.

The law centre can ascertain the rate of any Department of Employment Affairs and Social Protection payment by visiting www.welfare.ie and browsing to the page for the relevant payment. The rates typically change annually and are set by the Minister for Finance when the annual Budget is presented to Dáil Éireann.

The following payments/allowances/benefits are included as “income” in the determination of an applicant’s financial eligibility for legal services:-

  • Family Income Supplement;
  • Fuel Allowance (This allowance is payable only for part of the year – at present 26 weeks in each year);
  • Supplementary Welfare Allowance (regular payments);
  • Rent Supplement;
  • Housing Assistance Payment;
  • Mortgage Interest Supplement; and
  • Rent Allowance

Note: Rent allowance and rent supplement are not the same payment.

  • Rent Supplement was paid to people living in private rented accommodation who cannot provide for the cost of their accommodation from their own resources.
  • It is part of the supplementary welfare allowances scheme and (with some exceptions) is largely being replaced by Housing Assistance Payment.
    Rent Allowance is payable to tenants of certain dwellings affected by the de-control of rents on 26 July 1982. 

Foreign social security payments

Where an applicant for legal services is in receipt of social security benefits, which are payable in another jurisdiction and are of a similar nature to those payments/allowances/ benefits referred to above, the payments received must be treated in the same way as similar payments made in this jurisdiction.

Social welfare payments that are not treated as income for financial assessments
The following payments/allowances/benefits are excluded from “income” in the determination of an applicant’s financial eligibility for legal services:-

  • Domiciliary Care Allowance
  • Child Benefit
  • Money received from charitable organisations
  • Guardian’s Payment (Contributory)
  • Foster Care Allowance
    While the amount of a foster care allowance received by an applicant is not treated as income for the purpose of determining financial eligibility for legal services, an applicant is not given the dependent child allowance in respect of a foster child.
  • Supplementary Welfare Allowance/ Exceptional Needs Payments (SWA)
    Single payments of SWA on an exceptional needs basis are not treated as income in determining the financial eligibility of an applicant for legal services.
  • Carer’s Allowance
  • Carer’s Benefit 

Maintenance received

The applicant must state on the Application for Legal Services Form the amount of maintenance received. All maintenance received, whether it is on foot of a court order, separation agreement, maintenance agreement, or on a voluntary basis is treated as income irrespective of whether it is for the benefit of the applicant or for a child.

A distinction should be made between voluntary maintenance and what is commonly referred to as housekeeping.  Housekeeping is regarded as monies paid to the applicant as a contribution towards living expenses where the parties are living under the same roof.  Voluntary maintenance is regarded as a regular payment to the applicant by their spouse or parent of their child where the parties are living separate and apart. It is recognised that payments may be made by a spouse / parent to an applicant on a less than regular basis.

If that is the case regard should be had to the total payments made to the applicant in the three months immediately preceding the date of application and an average worked out. If it is the case however that no payment has been made in the six weeks immediately preceding the date of application it should be assumed that the applicant is not receiving voluntary maintenance unless there is evidence that a payment or payments are likely to be made.

Where there is a maintenance order established, but there is a clear and sustained pattern of non-compliance (as opposed to an occasional missed payment) by the maintenance debtor, a sympathetic approach should be taken to the assessment of the applicant’s income from maintenance i.e only income actually received in the previous twelve months should be taken into account.

Business

In general, persons who fall into this category will be assessed on a preceding year basis by reference to their taxable income for the last accounting period. An applicant must produce the following documentary evidence of income, in order of preference, having regard to the period covered by the documentation:-

  • the most recent Notice of Assessment from Revenue. The notice should be for the period ending 31 December in the year immediately prior to the application for legal services. Some leeway is, of course, necessary where the application is made in January/March of a particular year;
  • and/or the most recent set of accounts, preferably audited accounts.
     

Any person who is self-employed or employed in a position where they pay income tax by means other than the pay-as-you-earn system – e.g. self-assessment – is regarded as a being in this category. This includes, but is not limited to:-

  • Person who owns a company
  • Sole Trader/Person in partnership
  • Contractors/Sub-contractors
  • Self-employed persons
  • Farmers

Self-employed persons who have a relatively low income generally do not produce accounts e.g. persons doing housework on a regular basis/child minding etc. A statement of earnings is acceptable, unless staff consider that formal documentary evidence should be sought.

Other income sources

This heading refers to any source of income not covered above. It could include:-

Interests/dividends

The applicant may receive interest from investments, savings certificates, deposit accounts, etc.

Rents received

Where the source of income is rent from a second (or further) property, the income should be taken into account in the same manner as if it was income from a business. Payments of interest on a mortgage may be offset against the income received. It should be noted that there is no provision in the Regulations that permits the Board to offset mortgage payments on the principal sum made by an applicant on a rental property against the income received. The applicant should be asked to provide a copy of their most recent tax return which should identify the income and the amount paid in mortgage interest payments.

The amount of rent received annually should be calculated and the amount of mortgage interest payments made in the previous 12 months should be deducted.

Example:

Person receives rent of €1,000 per month. = €12,000 per annum

Mortgage payment is €800 per month.

This comprises payment of €200 per month off the principal and €600 per month off interest.

The payment off the principal is not relevant for the assessment purposes.

The payment off the interest is €7,200 per annum which is deducted from the rent received.

€12,000 - €7,200 = €4,800. This figure is entered as Other Income on the Income Assessment Form.

On EOS, divide this figure by 52 and enter it under “Business/Other Occupation” Under the “Type of Income” enter “Rents Received”.

The above applies only to persons who receive income from rented property in their personal/private capacity. Where the property is owned by a business, the income from that business (including the income received from renting property) should be treated in the same way as business income above.

Benefits in kind

This includes any benefits, other than salary or wages, which are made available to, and availed of by, an applicant in connection with his/her employment and is taken to be the amount which the applicant would need to earn in order to secure the particular benefit. Typical benefits-in-kind include a car and accommodation.

Car

Details of the make and specific model of the car (i.e. exact specifications) are required. In addition, the applicant should also specify if the employer provides/meets the cost of:-

fuel for private transport;
car repairs; and
car insurance.

 

The amount to be taken into account as benefit-in-kind is calculated as follows:-
 25% of the current retail price of a new car of the same type
 this figure is increased by 20% in the case of fuel, 20% in the case of repairs, and by 10% in the case of insurance.

Example:

Retail Price: (€16,000 x 25%)                  4,000

Fuel      (€4,000 x 20%)                             800

Repairs (€4,000 x 20%)                             800

Insurance (€4,000 x 10% )                         400

Amount to be taken into account as income                   6,000

Accommodation

The income value is taken to be the market value of similar accommodation in the same area.

Where an applicant contributes towards the cost of the benefit-in-kind, the amount of the contribution should be deducted from the income value of the benefit.

Other

Grants for further and higher education, pay from SOLAS schemes, Community Employment Schemes etc also constitute income in the hands of the applicant and must be taken into account for the purposes of financial assessment.

Any other source includes also, for example, contributions by any child towards household expenses. The first €20 per week is disregarded as an “ex gratia” payment.