Dáil Éireann Debate, Tuesday - 17 October 2006
284 Mr. Kehoe asked the Minister for Finance the reason parents are unable to gain tax free allowances for rents paid on behalf of their student children; the further reason it is the student themselves who must claim the allowance even though they often have no income and are not paying tax to benefit from the allowance; and if he will make a statement on the matter. [32992/06]
View answerSection 473 Taxes Consolidated Act 1997 is the legislative provision which provides for relief from income tax, up to certain limits, to an individual paying for private rented accommodation used as a sole or main residence. Student accommodation is likely to be temporary in nature, rather than the person's principal private residence. Accordingly, there is no provision granting relief from income tax to an individual paying for private rented accommodation in respect of the individual's student or other children where such accommodation is not the individual's sole or main residence. I would point out that the Government allocated €228 million to student support for 2006, a 6% increase on the figure for 2005. The largest component of this spending is maintenance grants. In addition, there are no tuition fees at undergraduate level, which is an effective subsidy to students who would otherwise have had to pay some or all of this cost.
286 Mr. Gilmore asked the Minister for Finance if his attention has been drawn to the possibility that student accommodation problems are likely to be created in 2009 due to the end of the tax-relief period of dwellings built under the Section 50 of the Finance Act 1999 student housing; his views of the warnings from student leaders that the creation of student shanty towns is a likely scenario; if he has plans for the provision of low-rent student accommodation in preparation for the end of Section 50 tax-relief measures; and if he will make a statement on the matter. [32994/06]
View answerSection 50 of the Finance Act 1999 provided for a scheme of tax relief for rented residential accommodation for third level students. The relief provides for a deduction of 100% of the construction, conversion or refurbishment expenditure, which may be off-set against all Irish rental income – whether derived from the premises in question or from other lettings. The purpose of the relief was to increase the supply of quality accommodation for third level students and the scheme has been very successful in this respect. Indeed, according to the Indecon report on tax relief for student accommodation published by my Department in February 2006 as part of Volume 1 of the Review of Tax Schemes, concerns now exist about over supply of accommodation in the student accommodation sector. There is, therefore, no shortage of quality accommodation for third level students. Under the scheme there is a 10 year period when the property must be operated as student accommodation. This 10 year holding period applies from the date of the first qualifying lease, which lease cannot be executed until the accommodation is completed and ready for occupation. Provision exists for a clawback of the tax relief where the qualifying student accommodation is sold within 10 years. In many cases, the student accommodation is built on campus or otherwise involves the college or university in the development of accommodation for students in the vicinity of the campus. In these instances, the student accommodation may be purchased back by the college/university after the 10 year holding period has lapsed. The earliest date for the ending of this 10 year period for a particular Section 50 project will not arise until around 2010 or 2011 and for many projects it will be considerably later. In all of the circumstances, I think that talk of an accommodation crisis for students is not appropriate.
