Tax Code

Thursday, 6 December 2012

Questions (4, 9)

Michael McNamara

Question:

4. Deputy Michael McNamara asked the Minister for Finance the saving to the Exchequer that would accrue from including child benefit as taxable income. [54999/12]

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9. Deputy Michael McNamara asked the Minister for Finance the saving to the Exchequer that would accrue from including child benefit as taxable income; if the Revenue Commissioners have the capabilities to do if so directed; and if he will make a statement on the matter. [54932/12]

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Written answers

Minister for Finance

I propose to take Questions Nos. 4 and 9 together.

I am informed by the Revenue Commissioners that the yield from taxing Child Benefit is fully dependent on resolving a number of significant and complex policy and legal issues before the question of implementing a charge to taxation on this payment can be considered. These policy issues include clearly determining who is the owner of the Child Benefit payment, whether by taxing the payment, there follows an entitlement to the PAYE tax credit, how the payment is treated for tax purposes in the hands of jointly assessed couples and legal issues surrounding the tax treatment of married couples and co-habiting couples. I understand that the Advisory Group on Tax and Social Welfare, established by the Minister for Social Protection, has considered these and other issues in relation to Child Benefit in the context of a report on child and family income supports which is being considered by the Minister.

In view of the considerable legal and policy issues involved, it is extremely difficult to estimate the likely yield as a result of taxing Child Benefit. I am advised that the estimated full year yield, based on projected 2013 incomes, could be of the order of €395 million on a 2012 basis, if the Child Benefit were fully taxable as the income of the assessable person in joint assessment cases, and that no new tax threshold, exemption, allowance or personal reliefs would be introduced to offset some of the tax.

Regarding the implementation of any decisions the Government might make, I am further informed that, were the legal and policy issues resolved and legislated for, there are very well established data exchange arrangements in place between Revenue and the Department of Social Protection that could be extended to facilitate the taxation of Child Benefit once there is a suitable lead-in time and resources to facilitate the ICT changes required by both the Department of Social Protection and Revenue.