Brian O'Shea
Question:121 Mr. O'Shea asked the Minister for Finance his proposals to exempt the orphan's portion of widow and widower social welfare pensions from income tax; and if he will make a statement on the matter. [14377/02]
Written Answers. - Orphan Tax Exemption.
The position is that a widowed person is assessable for income tax in respect of the increases in the weekly rate of widow's-widower's contributory pension paid in respect of each qualifying child resident with that person. This position was endorsed by the Supreme Court as recently as 1998 when the court held on appeal in the case of O'Síocháin v Neenan that the total widow's pension paid by the Department of Social, Community and Family Affairs was the beneficial entitlement of the widow and that she was assessable to tax on the full amount.
I point out to the Deputy that widowed persons, particularly those with dependent children, receive favourable treatment under the income tax system.
In the year of bereavement, a widowed person may receive a personal tax credit of €3,040, which is equivalent in value to the married person's tax credit. Following the year of bereavement, a widowed parent with a qualifying child or children may qualify for the one-parent family tax credit of €1,520 in addition to the personal tax credit of €1,520. A further tax credit, the widowed parent tax credit, is available on a sliding scale for the first five tax years following the year of bereavement as follows:
|
€ |
|
|
Year 1 |
2,600 |
|
Year 2 |
2,100 |
|
Year 3 |
1,600 |
|
Year 4 |
1,100 |
|
Year 5 |
600 |
Therefore, in the first year following bereavement, a widowed parent is entitled to aggregate tax credits of €5,640, comprising a single personal credit of €1,520, a one-parent family credit of €1,520 and a widowed parent credit of €2,600. At the present standard rate of tax, this means that in that year a widowed person with a dependent child or children can have income of up to €28,200, or €31,500 if in receipt of the PAYE credit, without incurring any income tax liability.
In addition, it is the case that a person in receipt of a widow's or widower's contributory pension from the Department of Social and Family Affairs is exempt from liability for the health levy on any portion of his or her income.
Having regard to the foregoing favourable provisions, I have no plans at present to exempt the addition(s) to a widow's or widower's contributory pension for a dependent child or children from income tax.
Question No. 122 answered with Question No. 103.