Written Answers. - Tax Reliefs.

Róisín Shortall

Question:

104 Ms Shortall asked the Minister for Finance if his attention has been drawn to the absence of tax relief for couples who are both disabled; if, in view of the tax provisions for parents who have a disabled child, he will give consideration to the introduction of similar relief where both members of a married couple are disabled in view of the substantial additional living costs which they incur; and if he will make a statement on the matter. [15180/02]

The incapacitated child tax credit of €500 per annum, to which I assume the Deputy refers in her question, is a long-standing relief under the income tax code which recognises the particular expenses involved for parents in taking care of a child who is permanently incapacitated by reason of mental or physical infirmity. I will outline a number of reliefs other than the incapacitated child tax credit which may be of benefit to married couples where both spouses are disabled.

Section 469 of the Taxes Consolidation Act, 1997, provides for tax relief at the marginal rate in respect a defined range of health expenses which are otherwise not reimbursed. Prior to the Finance Act, 2002, claims could only be made by an individual in respect of his-her own expenses, or expenses met for a dependent relative or child who is not a relative but is being maintained by the individual. In the Finance Act, 2002, I extended this relief to allow an individual to make a claim in respect of expenses met for a wider range of relatives and for other individuals, whether they are relatives or not, aged 65 or over or who are permanently incapacitated.

Section 468 of the Tax Consolidation Act, 1997, provides for a blind person's tax credit, which in the current tax year amounts to €800 in the case of a single person and €1,600 where a person and his or her spouse are both blind. The definition of a blind person for the purposes of the credit is set out in section 468 of the Act.

Under section 446 of the Taxes Consolidation Act, 1997, and subject to certain conditions as set out in that section, an individual may claim the dependent relative tax credit – currently €60 per annum – if he-she maintains at his-her own expense a relative of a claimant, or of the claimant's spouse, incapacitated by old age or infirmity from maintaining himself or herself, or the widowed father or widowed mother of the claimant or of the claimant's spouse, whether incapacitated or not, or a son or daughter of the claimant who resides with the claimant and on whose services the claimant, by reason of old age or infirmity, is compelled to depend.

Under section 467 of the Taxes Consolidation Act, 1997, a tax allowance may be claimed by an individual at his-her marginal rate for the cost of employing a person to care for a family member who is incapacitated. In this year's budget, I increased significantly the ceiling on the amount that may be claimed under this relief from €12,700 per annum to €30,000 per annum. The increase took effect from 1 January.
Tax relief is available for covenants to individuals in certain limited circumstances. Covenants to individuals aged over 65 qualify for tax relief to the extent that the amount covenanted does not exceed 5% of the total income of the payer. This restriction includes covenants by children in favour of their elderly parents. There is no limit on tax relief for covenants to adults, including elderly parents, who are permanently incapacitated by reason of mental or physical infirmity.
There are also two situations where a refund of DIRT paid is provided. Couples where one spouse is over 65 are entitled to a refund of DIRT if their income is below the income tax exemption thresholds. Couples of any age, where one spouse is incapacitated due to permanent ill health, are entitled to a refund of DIRT paid if their income is below the income tax exemption thresholds. In this year's budget, I increased the exemption limits for over 65s to €13,000 single or €26,000 married: any income up to this limit is free from tax.
The disabled drivers' scheme, details of which are set out in the Disabled Drivers and Disabled Passenger (Tax Concessions) Regulations, 1994, provides valuable benefits to those severely and permanently disabled persons who qualify under its terms. Under the scheme, a new car may be purchased every two years free of VAT and vehicle registration tax, subject to certain monetary and engine size limits. In addition, the annual road tax is not charged and the qualifying person is eligible for the provision per annum of 2,728 litres of motor fuel free of excise duty.
The Value-Added Tax Act, 1972, provides for the application of a zero rate of VAT on a limited range of medical equipment and appliances, such as hearing aids. Certain disabled persons may be entitled to a refund of VAT for certain equipment under the VAT (Refund of Tax) Order (No. 15) 1981. Income arising from the investment of compensation payments made by the courts to those who are permanently incapacitated is free from income tax. There is a special exemption from income tax in respect of income derived from leases for incapacitated farmers who by reason of mental or physical infirmity are unable to carry on a trade of farming.
Having regard to the foregoing, I have no plans at present to extend the range of reliefs available to include a specific relief for married couples where both spouses are disabled. As the Deputy will appreciate, I receive numerous requests, many from very worthwhile causes, for the introduction of new reliefs or the extension of existing ones. Tax reliefs by their very nature reduce the tax base and make general reform of the tax system much more difficult. Government policy in recent years has resulted in significant reductions in the burden of taxation which has benefited all taxpayers.