Vol. 576 No. 6
56 Ms B. Moynihan-Cronin asked the Minister for Finance the progress which has been made by the Revenue Commissioners in their discussions with the Portuguese authorities with a view to closing off tax loopholes which allow those who sell off assets here to avoid tax by taking up residency in such countries as Portugal; and if he will make a statement on the matter. [30093/03]
In response to a parliamentary question on 6 November 2003, I stated that I had been informed by the Revenue Commissioners that a first round of negotiations for a protocol to amend certain provisions of the Ireland-Portugal Double Taxation Convention was held between the relevant Irish and Portuguese tax officials in Lisbon on 19-21 May 2003. I also indicated that the Revenue Commissioners had informed me that it was likely that a second round of negotiations would be held before the end of this year. However, it has not been possible to schedule a second round of negotiations in December but it is hoped that these negotiations will take place early in the New Year.
Section 69 of the Finance Act 2003 contains an amendment to Irish domestic law which imposes a charge to capital gains tax on an individual in respect of a deemed disposal of certain assets on the last day of the last year of assessment for which the individual is taxable in the State, prior to becoming taxable elsewhere, where the individual disposes of these assets while resident outside the State and returns to the State within five years. I announced this anti-avoidance measure in budget 2003 on 4 December 2002 with effect from that date.
57 Mr. Connolly asked the Minister for Finance if he will address the anomaly currently pertaining whereby a cohabiting couple are treated as a married couple for the purposes of qualifying for certain payments, and as two single individuals in their work for income tax purposes; and if he will make a statement on the matter. [28067/03]
There are no special income tax allowances for unmarried couples living together. In this context, tax law follows the general law relating to marriage. Generally speaking, the basis for the current taxation of married couples derives from the Supreme Court decision in Murphy vs the Attorney General (1980) which held that it was contrary to the Constitution for a married couple to pay more tax than two single people living together. The tax treatment of unmarried couples who cohabit was unaffected by the Murphy judgment. Each partner is taxed as a single person and each is entitled to the tax credits and standard rate band appropriate to single persons. The position of married couples in relation to income tax is accorded recognition through the married person's tax credit and the home carer's tax credit. I have no plans to change the arrangements in that regard.
I might point out that in budget 2000 I initiated the process of band widening with a view to establishing progressively a single standard rate income tax band for all individual taxpayers. When this process is complete the position of all couples will be the same with respect to the standard rate tax band.
As the Deputy will be aware, the issue of the tax treatment of cohabiting couples was examined comprehensively in the report of the working group examining the treatment of married, cohabiting and one-parent families under the tax and social welfare codes. The group, which was established by the Minister for Social Welfare in May 1997, reported in August 1999 and the report is available from the Government Publications Sale Office. The group was sympathetic, in principle, to changes in the tax legislation to address the issues raised relating to cohabiting couples and reported that the options that it set out should be considered further.
The working group acknowledged that a key issue in relation to the tax treatment of cohabiting couples is whether tax law should proceed ahead of changes in the general law on the matter. For that reason, and while I am cognisant of the issues faced by cohabiting couples, I have no plans to extend the married person's tax credit to such couples at the present time.
The treatment of married and cohabiting couples under the social welfare code is primarily a matter for the Minister for Social and Family Affairs.
