Brian O'Shea
Question:213 Mr. O’Shea asked the Minister for Finance his proposals to extend tax relief for home carers to widows and widowers or lone parents; and if he will make a statement on the matter. [29422/04]
View answerWednesday, 17 November 2004
Questions (173)
Written answers
As the Deputy will be aware, the home carer tax credit, formerly an allowance, was introduced in the Finance Act 2000 and is designed to cover situations where a spouse working in the home has forfeited a second income to care for dependants in the home. It is available only to married couples who are jointly assessed for tax.
While the home carer credit is generally not available to married two earner couples, there is an income disregard whereby the home carer may have some income in their own right without affecting their spouse's eligibility for the tax credit. In addition, there is a taper system, which means the tax credit is not lost at once when income exceeds the amount of the disregard.
Special treatment within the tax system is afforded to widows, widowers and lone parents. In the case of widowed persons, 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 |
|
|
€ |
|
|
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. For widowed persons with no dependent children, a tax credit of €300, which is additional to the basic personal tax credit, is available after the year of bereavement. Such widowed persons would therefore receive aggregate basic tax credits of €1,820, comprising €300 plus the personal tax credit of €1,520, in addition to the employee credit, if applicable.
In the case of lone parents, as well as the single personal credit of €1,520, a lone parent also receives the one parent family credit of €1,520 giving total personal credits equivalent to the married credit of €3,040. The standard rate band for a lone-widowed parent is extended to €32,000 which is €4,000 more than the standard rate band for a single person. Finally, as the Deputy will be aware, it has been the practice of successive Ministers for Finance not to comment on what may or may not be contained in upcoming budgets. I do not intend to depart from that approach.