It would seem that the odds are stacked against you if you're a farmer applying for the third-level maintenance grant. Mary Phelan reports.
The income level used for determining whether third-level students are eligible for the maintenance grant, or what level of maintenance they receive, is very strictly controlled for farmers and the self-employed. The income figure that farmers submit for income tax purposes cannot also be submitted as the income figure when applying for the maintenance grant. Instead, there are a number of expenses disallowed. For example, capital expenditure, interest on capital expenditure, leasing expenditure and interest on leasing expenditure are all disallowed for inclusion when calculating the reckonable income, yet are permitted for inclusion when calculating income for tax purposes.
There doesn't seem to be any valid justification for this. The Department of Education guidelines, which spell out the criteria, reveal a skewed rationale: ''As we do not allow any deduction for capital expenditure, or interest on borrowings for capital expenditure purposes, consistency requires that we also disallow finance lease payments.''
Consistency? What kind of justification is that?
There is no deduction allowed for depreciation either, and it was announced in July 2010 that the income tax adjustment for stock relief was to be disallowed from last September onwards.
''The interest on capital expenditure and leasing is a huge issue,'' says Michael McNamara, an IFAC accountant in Portlaoise. ''Lots of people miss out on the grant because of it. The sum of the interest payments is very often a figure which, if included, would be the difference between a farmer's income exceeding the limit set by the Department or not.
''Another issue is that farmers are means-tested based on their income from the previous year,'' says Michael. ''This is a problem because, in 2009, farm incomes plummeted. However, the income used to determine eligibility for the maintenance grant that year was the 2008 figure.
''There is an option to apply for a change of circumstances, but in our experience, this application rarely succeeds'' continues Michael.
''PAYE employees, however, don't have such difficulty when applying for the change of circumstances facility, because they can easily prove that their income has gone down. As farmers supposedly can't easily demonstrate that their income has deteriorated, they often don't qualify for the grant.''
Furthermore, Karen Duane, an IFAC accountant in Athenry, notes: ''When a PAYE worker's income rises due to payment for overtime, it is not mandatory for this increase to be included in their accounts.''
This means they may still qualify for the grant, despite the fact that their overall income now exceeds the income limit. Yet another problem encountered in IFAC offices around the country is that expenditure on wages is disallowed if a farmer doesn't have a P35 for employees who have worked on the farm.
''The nature of farming is that, sporadically, you may have to pay casual labour,'' says Michael.
''You can't register every casual labourer you hire. Sons come home from college for the Christmas and Easter holidays and might get paid for two weeks of work, but you're not going to get them a P35 for that. It's too cumbersome,'' says Michael.
''The Revenue's attitude, however, is that, if they're not on the P35, how can they know farmers actually paid these labourers?''
Having documentation to support figures in accounts is a hassle for everybody, but when applying for the maintenance grant, dividends pose a particular problem. A farmer's income may come well under the threshold for eligibility for the third-level grant, but if he has received dividends, there may be a delay in payment of the grant until these dividends have been verified.
For example, if you are under the reckonable income limit by €10,000, and have received Glanbia dividends of €150, then you have to provide proof of this in the form of a dividend voucher before being eligible.
''It's just wrapping up the whole process in red tape and delays the giving of the grant,'' contends Michael.
But that's not all. Karen Duane stresses that: ''The forms that have to be filled in when applying for the grant are so complicated, that you'd nearly need to hire the services of an accountant to help. That's an expensive thing to do.
''I think that a lot of people who are eligible for the grant are not applying because it's so much hassle. For every person who gets a grant, there are four or five missing out,'' Karen says.
Budget 2011 made a few changes to the third-level maintenance grant.
The amount received in the grant was cut by 4%, and included the second and third instalments of the grant for this year. Furthermore, in order to qualify for the higher rate of grant (the non-adjacent rate), students must now live more than 45km from the college, instead of 24km previously. This applies to students already in receipt of the grant and takes effect from next year. The principle behind the non-adjacent rate was that students entitled to the grant who lived at least 24km away from college deserved some extra help with their transport costs or rent expenses at a location nearer college. Now, however, you must live at least 45km from college in order to be deserving of such assistance.