Generally speaking, the tax system treats members of cohabiting couples as separate and unconnected individuals. Each partner is a separate entity for tax purposes and credits, and bands and reliefs cannot be transferred from one partner to the other. There are no special favourable tax arrangements for cohabiting couples with dependent children.
The working group examining the treatment of married, cohabiting and one-parent families under the tax and social welfare codes, which reported in August 1999, 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. However, it acknowledged in regard to the tax treatment of cohabiting couples that a key issue is whether tax law should proceed ahead of changes in the general law.
The Law Reform Commission published a consultation paper on the rights and duties of cohabitees in April 2004. That paper indicated that in the light of the current policy with regard to individualisation of the tax bands, the commission was not recommending any change to the income tax treatment of cohabiting couples.
As a matter of policy, child benefit is the main instrument through which support is provided to parents with children and this is available to all parents whether single, cohabiting or married. The Government has substantially increased child benefit since coming into office in 1997. Overall expenditure on child benefit has increased by 279% from €506 million in 1997 to an estimated €1,916 million in 2005.
As I have indicated previously, I do not believe that changes to the tax code should set a headline in advance of developments in other relevant areas of public policy, for example, in the area of legal recognition of relationships other than married relationships. I remain of that view.