Theresa Ahearn
Question:31 Mrs. T. Ahearn asked the Minister for Finance if he has reviewed the impact of retention tax as it affects family doctors operating within the General Medical Service; and if he will make a statement on the matter.
Ceisteanna — Questions. Written Answers. - Retention Tax Regime for General Practitioners.
Paul McGrath
Question:58 Mr. McGrath asked the Minister for Finance the plans, if any, he has to alter the present retention tax regime for general practitioners; and his views on whether the operation of this system, which is in effect collecting tax in advance, poses hardship on general practitioners and their families, who have a high proportion of medical card patients.
I propose to take Questions Nos. 31 and 58 together.
In the context of the review of the General Medical Services Contract being conducted by my colleague the Minister for Health, I have, at his request, had the operation of the withholding tax as it relates to doctors examined by my Department. Following that examination, I remain convinced that there is no need to revise the withholding tax as it currently operates.
The Withholding Tax applies to the medical profession in exactly the same fashion as to other professionals. It does not impose any additional tax liability on doctors or on the other professional to which it applies. It involves no more than the withholding, on account of an amount against tax due. Full credit for the amount withheld is given in computing the final tax liability.
There are also safeguards to ensure that no adverse effects arise from its operation. Principal among such safeguards is the provision for the payment of interim refunds. The availability of interim refunds puts a limit on the amount of the withholding tax that can be retained on account by the Revenue Commissioners. That limit is the equivalent of the income tax liability for the previous year. Once the withholding tax exceeds the doctor's tax liability for the previous year he or she may apply immediately for a refund of the difference.