Thursday, 13 December 2012

Questions (58)

Finian McGrath


58. Deputy Finian McGrath asked the Minister for Finance if he will clarify issues raised in correspondence (details supplied) regarding the property tax. [56185/12]

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Written answers (Question to Finance)

I can confirm that, if the Finance (Local Property Tax) Bill 2012 is passed by the Oireachtas, the Household Charge of €100 will cease to be payable with effect from 1 January 2013. The Government has also decided that the Non-Principal Private Residence Charge will cease to be payable with effect from 1 January 2014. Residential properties rented by landlords will be subject to Local Property Tax from 1 July 2013, with the owners of the property – in those cases, the landlord – being the liable person for payment of the tax. However any arrears of Household Charge due in respect of the period up to 31 December 2012 must be discharged. Arrears outstanding on 1 July 2013 will be increased to €200 and will be treated as Local Property Tax payable to the Revenue Commissioners. Arrears of Non Principal Private Residence charge outstanding on 1 January 2014 will also have to be discharged.

With regard to PRSI on rental income, the position is as I stated in my Budget day speech on 6 December 2012. The Minister for Social Protection, Deputy Burton, is bringing forward legislation to change PRSI contributions as follows:

-Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI with effect from 1 January 2013.

-Unearned income for all employees will become subject to PRSI in 2014. This means that PRSI will be payable on all income generated from wealth such as rental income, investment income, dividends and interest on deposit and savings.

Prior to Budget 2013, modified contributors paid PRSI on earnings derived from their employment but did not pay PRSI on any other stream of income e.g. from a trade or profession, or on unearned income (dividends etc.)

As a result of Budget 2013, modified contributors who have income from a trade or profession will now be subject to PRSI (at a rate of 4%) on the profits from the trade or profession and also on any unearned income that they may have, which would include rental income. PRSI will apply at a rate of 4% on the profits from the rental income.

Modified contributors are generally permanent and pensionable civil and public servants recruited before 6 April 1995; for example, registered doctors and dentists employed in the civil service recruited prior to 6 April 1995.

The report of the Expert Group on the Design of a Local Property Tax, chaired by Dr Don Thornhill, recommended that Local Property Tax paid in respect of a rented property should be deductible for tax purposes, in the same way as commercial rates are deductible for tax purposes. It is the intention of the Government to introduce such a provision on a phased basis. However, it is not provided for in the Finance (Local Property Tax) Bill as initiated.