asked the Minister for Finance whether it is the practice of the Revenue Commissioners to include in their calculations for income tax purposes compound arrears of rent for more than one year as income, and whether in view of the fact that income tax is deducted from these compound arrears by the Land Commission before they are paid he will direct that this practice should be discontinued.
WRITTEN ANSWERS. - INCOME TAX AND COMPOUNDED ARREARS OF RENT.
In accordance with Section 187 of the Income Tax Act, 1918, the income arising from a landlord's interest in lands is charged to income tax under Schedule A by reference to the poor rate valuation (or the yearly rental if less than the poor rate valuation).
The character of the charge and the amount of the legal liability for the years of assessment involved are not affected by the Land Act, 1923, under which compounded arrears of rent are paid. Nevertheless, in cases in which the total receipts from tenanted lands (including rent and compounded arrears of rent) for the period or periods to which such receipts are appropriate are less than the amount on which tax is charged under Schedule A, the Revenue Commissioners by an extra statutory concession are prepared to adjust the liability by reference to the amount that will ultimately be received from the lands in question for the years of assessment affected. The result in such cases is that tax is ultimately paid by the landowner only on the actual receipts, whether the same come wholly or partly to him in the form of rent or compounded arrears of rent. In effecting adjustments of liability on this basis credit is given for any tax deducted by the Land Commission from compounded arrears of rent.
The alternative to the concession would be the collection of the full tax charged in the Schedule A assessments.