Q&A: Dominic Coyle answers your questions

My query is regarding my son who will be undertaking a one-year postgraduate MSc course in Britain beginning this September.

The costs involved will include his tuition fees, accommodation fees and living costs.

My wife and I will be paying for these so we would like to know if any of these costs can be claimed against tax ? Also, in an aside, will he be liable for tax on the money we give towards his living costs ?

Mr DH, Cork

There is no relief of which I am aware for accommodation or living costs unless your son qualifies for a grant – and that will not apply given that he is studying in Britain.

However, relief is available for tuition fees. As always, however, there are rules. As stated in the relevant Revenue leaflet (IT31), qualifying fees mean tuition fees, but not examination fees, registration fees or administration fees.

Since 2011, tuition fees do include the quaintly named ‘student contribution’ in Irish colleges, which is currently €3,000 per year. However, in the way that only the Government can, there is a ‘disregard’ – ie, an amount that must be exceeded before you can claim tax relief – and this is also set at €3,000 for the 2015 tax year.

Thus, effectively, you cannot claim relief on the Irish student contribution unless you have two or more students in third-level at the same time.

The other limit is that the tuition fees must have been incurred for study on an “approved course” at an “approved college”.

And this is where it becomes relevant for you.

There are several different types of approved college and one of those is “publicly funded or duly accredited universities and institutions of higher education in another EU member state”.

The university where you say your son will be taking his course is one of those, so it qualifies.

In relation to approved courses, there are different rules governing undergraduate and postgraduate courses. For your purposes, the rules on which postgraduate courses are “approved” state that such courses should be for at least one academic year in duration (and no more than four) and should lead to a postgraduate award “based on either a thesis or an examination”. Your son’s hoped-for MSc would qualify on this basis.

Finally, the person taking the course must already have a primary degree or equivalent qualification, which I assume he has.

So, while your son will not be paying the student contribution, you will be able to claim relief on his fees (as long as they exceed €3,000).

So what about the rest – the money you will be paying for his accommodation and living expenses. Can you claim relief? No.

Will he face a tax bill for being in receipt of those monies? No. There has been a sharp tightening recently by Revenue of the rules governing support payments made by parents on behalf of their adult children – and a postgraduate student is certainly an adult.

However, Revenue’s concern has been about what it sees as flagrant abuse of the relief by a small number of people.

Essentially, it accepts what it sees as “normal” expenditure. In its Guide to the CAT Treatment of Receipts by Children from their Parents for their Support, Maintenance or Education, it states: “For example, payment of fees and accommodation costs for a dependent child attending college would be normal and would be exempt from gift tax.

“On the other hand, the purchase of a house for a child would not be considered part of the ‘normal’ expenditure of a disponer, regardless of the financial means of the disponer and would not be exempt from gift tax.”

As a result of its concerns, Section 81 Finance Act 2014 was introduced to amend section 82 (2) of the Capital Acquisitions Tax Consolidation Act 2003.

Among other details, it states that a child of the disponer (you in this case) who is more than 18 years of age but not more than 25 years of age and who is receiving full-time education or instruction at any university, college, school or other educational establishment will not face a tax bill for your provision to him of money to cover his normal living expenses at college in Britain.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara St, D2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.