When the typical PAYE worker pays an effective rate somewhere above the 20% standard rate of tax, how is it that the people earning even more pay proportionally so much less?

The government has provided a number of incentives and reliefs to taxpayers to encourage investment in certain key industries, such as film, technology and bloodstock, with an eye toward developing the local economy and providing vital employment, said accountant Patrick Lane, head of Patrick Lane & Co and fixmytax. com.

But the very rich have been able to use these incentives to effectively pay as little as possible. According to Fine Gael finance spokesman Richard Bruton, these relief schemes have allowed the top-400 earners to write off an average of 500,000 each per year. According to the Revenue, where the sum of reliefs and/or capital allowances are sufficient to cover their gross income then no income tax liability will arise. That means no tax for the smartest investors.

The main reliefs used by those with an effective rate of less than 30% were propertybased capital allowance incentives, including reliefs for multi-storey car parks, student accommodation, urban and rural renewal, and hotels, the Revenue told the Sunday Tribune.

Since January 1, though, new rules introduced in the Finance Act 2006 have made it harder for the super-rich to pay no tax. The rules restrict relief to 50% of income, so an person earning 600,000 could claim only up to 300,000, leaving half their income taxable.

"The objective is to ensure that a high-earning individual will not be able to achieve an effective tax rate of less than 20%, " said Michael Ryan, tax partner at Russell Brennan Keane, Ireland's largest regional accountancy firm.

Here are the top ten methods to avoid paying tax:

1. Pensions

The most widely-used tax shelter, pension contributions attract tax relief of up to 46.5% (the 41% top rate plus PRSI) . . . making it extremely attractive to the rich as well as the merely average earner. Contributions are capped at 15% for under-30s but rise incrementally to 40% for over-60s.

There is a ceiling of 254,000 on the earnings that may be taken into account, though, so the most anyone could exempt from income tax in one year would be just over 101,000 for a savings of about 47,000.

2. Business Expansion Scheme and Seed Capital Relief

BES allows a person to invest up to 150,000 in certain qualifying companies and secure immediate tax relief at 41%.

So an individual investing 50,000 in a BES company can expect a tax saving of 20,500.

"The BES limits were increased significantly in the last Finance Act and the minister for finance recently enacted the legislation, " said Michael Ryan, tax partner at Russell Brennan Keane. "It is likely that the increased limits will give rise to a renewed interest in BES investments as a means of reducing tax."

The seed capital relief allows an individual starting a new business to secure a tax refund of all tax paid in the previous five years.

3. Tax-based property investments

This is the one that has most benefited the super-earners.

Basically, an investor can write off the cost of a property against Irish rental income or, in some cases, total income.

Depending on which scheme, relief is granted either in the year the property is purchased or over a defined period.

Effectively, an investment in a Section 23 property could relieve the taxpayer of liability for years of rental income totalling hundreds of thousands of euro.

Such reliefs for residential property were, unsurprisingly, extremely popular among developers and investors between 2000 and 2005, according to Patrick Lane. But this relief hasn't been available since 2006.

4. Patent income

As part of its plan to encourage research and development, the government makes it possible to generate patent income from a company on a tax-free basis.

"If structured correctly, it is possible for an individual shareholder to secure tax free dividend income from the company, " said Ryan. "A key condition is that the company does incur a certain level of ongoing R&D expenditure.

5. Forestry and woodlands

Profits which come from commercially managed woodlands . . . a growing niche as more people search for angles on alternative fuels . . . can be exempt from income tax.

6. Artists income

This sometimes controversial tax relief, courtesy of that famous aesthete Charlie Haughey, covers income from original and creative work and covers every artist from Bono (above) to the Temple Bar busker. Artists must make a formal claim to the Revenue, though, which means Bono more than buskers. There used to be no limit on this exemption, but the department of finance now imposes a 250,000 income ceiling, which still shelters the income of the vast majority of artists in the State.

7. Charitable donations

One good turn deserves another, so the State allows taxpayers to write off approved donations subject to a minimum of 250.

8. Use of a limited liability company

The super-rich look to the richest of them all. If Microsoft can get away with paying 12.5% corporation tax, why not the rest of us?

"In the context of a sole trader earning substantial income, it may be appropriate for such a person to carry on their trading activity through a company. The objective is to access the company tax rate of 12.5%, " said Ryan. "This still compares well with a rate of up to 46.5% applying to a sole trader. In many instances, the use of the company merits serious consideration as it facilitates long term tax deferral and can also be used to enhance pension planning opportunities."

9. Stallion and greyhound stud fees Income earned from the sale of stallion and greyhound stud services can be received taxfree, although this favourable situation are set to change in the next year.

10. Film investment

Film investment relief covers up to 31,750 per annum in a film production at a rate of 80%. This can make savings of just over 10,000 a year. The low threshold puts this incentive within the orbit of economic mortals, too, so if you want to form a syndicate for Braveheart II. . .

YOU DON'T HAVE TO BE RICH BUT. . .

You don't have to be super-rich to avail of tax relief, but it helps. That's because relief comes as a result of spending money.

"In principle the average person isn't in a position to buy tax relief, " said Patrick Lane, head of accountants Patrick Lane & Co tax advisors fixmytax. com. "Beyond tax credits, relief only comes because you have spent money . . . it's the same with nearly all reliefs."

But according to accountants Russell Brennan Keane, 90% of taxpayers don't even take advantage of simple tax relief measures that are available to everyone. Chief among these are reliefs for local council service charges, medical expenses fees to recognised third-level institutions, charitable donations and health insurance premiums.

The list doesn't stop there, however. Even people on ordinary incomes can invest small amounts in "lm, property development and business expansion, according to Lane. In fact, seed capital relief is available under the BES scheme for someone who quits a job to set up their own business, he said.

Unfortunately for those with money to spend on property, many of the well-known reliefs for urban renewal, holiday home investment and student accommodation . . . which had been the biggest source of relief between 2000 and 2005 . . . came to an end by 2006.