Dáil Éireann Debate, Tuesday - 14 February 2012
175 Deputy Michael Healy-Rae asked the Minister for Finance his views on the belief that there are 270,000 persons awaiting mortgage relief as announced in budget 2012; and if he will make a statement on the matter. [8237/12]
View answerAs announced in the Budget, the proposed new 30% rate of tax relief in respect of interest paid on qualifying homes for first time buyers who took out their first qualifying home loan in the period between 2004 and 2008, both dates inclusive, comes into effect as regards the 2012 tax year and subsequent tax years. As with many of the reliefs announced in the Budget this comes into effect when the Finance Bill, which was published last week, is enacted. I should point out that mortgage interest tax relief, including the proposed new 30% rate of relief, in respect of interest paid on qualifying home loans is given by qualifying lending agencies, including local authorities, through the tax relief at source (TRS) system. This requires the various lending agencies to make the adjustments in their computer systems.
In advance of the passing of the Finance Act, I am informed by the Revenue Commissioners that they have been in ongoing contact with all qualifying lenders, some 132 in total, to ensure that the necessary software changes to the lenders' tax relief at source (TRS) systems are made to cater for the new 30% rate of tax relief so that, when the Finance Bill is passed into law, the relief, which will be retrospective to 1 January 2012, can be passed onto the borrowers by qualifying lenders without undue delay. The speed with which the software changes can be developed and implemented by lenders may vary from lender to lender. Revenue is currently engaging with all of the lenders in arranging to have the new rate tested and implemented as soon as possible.
It should be noted that approximately 189,000 mortgage accounts are entitled to the new higher 30% rate. The Deputy will be aware that a mortgage account may have one or more individuals associated with it and in total there are approximately 270,000 individuals associated with these 189,000 accounts.
As an interim relieving measure Revenue has already informed lenders that they may grant tax relief at an existing rate of 25% to those who will be entitled to the 30% rate of relief. When the necessary software necessary to implement the 30% rate of tax relief is in place, the lenders will grant the additional 5% relief retrospectively. The reason the 25% rate can apply now is simply because that rate is already in the software systems as part of the existing first time buyer tax relief regime.
176 Deputy Paschal Donohoe asked the Minister for Finance the rate of deemed disposal tax and when it is due; the persons liable for this tax on investments or managed funds; and if he will make a statement on the matter. [8249/12]
View answerThe Finance Act 2006 introduced a new chargeable event for investment undertakings and life office investment products, which are subject to the "gross roll-up" regime introduced in Finance Act 2000. This chargeable event occurs at the end of an eight year period commencing on the date of the initial investment, and at the end of each subsequent period of eight years commencing when the previous eight year period ends. Deemed disposal tax arises in respect of Irish resident investors and is at a rate of 33% of the gain on the deemed disposal for such chargeable events occurring on or after 1 January 2012. Certain tax exempt Irish resident investors, such as pension funds and charities, are exempt from the deemed disposal tax.
Investment undertakings and life offices remit the deemed disposal tax to Revenue in January and July in each year. They appropriate or cancel part of the investment holdings of the investors concerned by such amounts as are required to meet the tax liabilities arising.
Irish resident investors who invest in offshore funds or in foreign life policies, which come within the taxation regime introduced in Finance Act 2001 for such investments, are responsible for paying tax on deemed disposals under the self-assessment system.
