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School Management

Dáil Éireann Debate, Tuesday - 3 July 2012

Tuesday, 3 July 2012

Questions (195, 196, 197, 198)

Michael McGrath

Question:

200 Deputy Michael McGrath asked the Minister for Finance the reason for the changes in section 20 of the Finance Act 2011 relating specifically to school principals and boards of management of schools now acting as principal contractor on school building projects; and if he will make a statement on the matter. [32220/12]

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Michael McGrath

Question:

201 Deputy Michael McGrath asked the Minister for Finance the additional supports and or resources that are being made available to school principals and school boards of management in relation to section 20 of the Finance Act 2011, which has added an administrative burden as school principals and school boards of management now need to contact the Revenue Commissioners in relation to any school building projects, schools now need to register for VAT with the Revenue Commissioners and schools now need to liaise on a constant basis with the Revenue Commissioners on school building projects; and if he will make a statement on the matter. [32221/12]

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Seán Kyne

Question:

209 Deputy Seán Kyne asked the Minister for Finance if he will outline the rationale for the changes in section 20 of the Finance Act 2011 relating specifically to school principals and boards of management of schools now acting as principal contractor on school building projects; and if he will make a statement on the matter. [32500/12]

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Seán Kyne

Question:

210 Deputy Seán Kyne asked the Minister for Finance if any, additional supports and or resources are being made available to school principals and school boards of management in relation to section 20 of the Finance Act 2011 which has added an administrative burden as school principals and school boards of management now need to contact revenue in relation to any school building projects, schools now need to register for VAT with revenue, and schools now need to liaise on a constant basis with revenue on school building projects; and if he will make a statement on the matter. [32501/12]

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Written answers

I propose to take Questions Nos. 200, 201, 209 and 210 together.

I am informed by the Revenue Commissioners that Relevant Contracts Tax (RCT) is a withholding tax system that operates in the construction, forestry and meat processing sectors. Principal contractors are defined in the legislation (section 530A of the Taxes Consolidation Act 1997) as including "any board or body established by or under statute and funded wholly or mainly out of funds provided by the Oireachtas". As such, school Boards of Management are principal contractors for the purposes of RCT.

I am also informed that Finance Act 2011 did not introduce any change in terms of the obligations of Boards of Management to operate RCT. Principal contractors, including school Boards of Management are, and always were, required to deduct tax from the payments made to subcontractors and pay it over to Revenue. As it is recognised that it would be undesirable to deduct tax from compliant subcontractors, provision is made for compliant subcontractors to receive payments without deduction of tax. The need to ensure tax compliance by subcontractors is particularly important where the Exchequer is the ultimate source of the funds being paid out by school Boards of Management and other principal contractors. RCT plays an important role in ensuring tax compliance by subcontractors in these sectors.

From 1 January 2012, the Revenue Commissioners have substantially modernised the operation of RCT following the introduction of a dedicated online facility which offers principal contractors a fast, efficient and paper free system. This has streamlined the process for the submission of information and payments to Revenue and has had the effect of significantly reducing the administrative burden associated with RCT.

I am further informed by the Revenue Commissioners that they are aware of the difficulty some school Boards of Management may be having in fulfilling their obligations under the RCT system. Revenue has met with the Department of Education and Skills regarding the obligations of Boards of Management under the RCT system and has also met with representatives of some Boards of Management. In addition, local Revenue offices have been contacting Boards of Management who are likely to be in receipt of State funding for construction projects with a view to assisting them with their RCT responsibilities. Detailed guidance notes regarding the operation of RCT by school Boards of Management are being prepared and will soon be made available on the Revenue website and also made available to the Department of Education and Skills.

Finally, having regard to the pressures on the public finances, it is important that the RCT system is implemented correctly in order to minimise tax evasion in the construction sector particularly where the project involves substantial State funding. The new online system introduced by Revenue has significantly simplified the RCT process for principal contractors, including school Boards of Management.

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