Written Answers. - Tax Code.

John Cregan

Question:

146 Mr. Cregan asked the Minister for Finance the position on the taxation of child maintenance payments of a separated person; the person who should pay tax; if there is an option for either spouse doing so; if maintenance for children is taxable since children have no other income; and if the fact that a couple were co-habiting for some years and not legally married changes the situation. [10901/03]

The position is that legally enforceable maintenance payments for the benefit of a child following separation, annulment or dissolution of a marriage do not qualify for tax relief for the person making them and likewise they are not regarded for income tax purposes as the income of the other parent or of the child.

Voluntary maintenance payments, that is, payments which are not made under a legally enforceable maintenance arrangement, for the benefit of a child are similarly ignored for tax purposes. The parent who makes the payment does not receive a tax deduction in respect of the payment and the payment is not treated as taxable income in the hands of the other parent or the child. This treatment applies regardless of whether the couple were married.

The maintenance payments are made by the parent out of after tax income. Because the income has already been taxed, the subsequent payments for the benefit of the child are not taxable. This is in line with the tax treatment of other non-separated parents, where the cost of maintaining their children is not tax deductible.

I would point out to the Deputy also that, subject to certain conditions, where a parent, whether formerly married or not, has the care of a dependant child, i.e. the child is resident with the parent for the whole or part of the tax year, he or she is entitled, in addition to the basic personal credit of €1,520, to a one-parent family tax credit of €1,520. The combined value of these credits is equal to the married persons tax credit of €3,040.

I am satisfied generally with the current arrangements regarding the taxation of child maintenance payments.