Written Answers Nos. 102-112
102. Deputy Sean Fleming asked the Minister for Finance the dates on which the increase in deposit interest retention tax became effective in respect of changes in the budget announced in December 2011 and December 2012; and if he will make a statement on the matter. [15453/13]
View answerThe increase in the rates of Deposit Interest Retention Tax (DIRT) arising from Budget changes announced in December 2011 and December 2012 took effect in respect of interest paid or credited on or after 1 January 2012 and 1 January 2013 respectively. Accordingly, the increase in the standard DIRT rate from 27% to 30% and in the higher DIRT rate from 30% to 33%, announced in December 2011, applied to deposit interest that was paid or credited to an account on or after 1 January 2012. Similarly, the increase in the standard DIRT rate from 30% to 33% and in the higher DIRT rates from 33% to 36%, which was announced in December 2012, applied to deposit interest that was paid or credited to an account on or after 1 January 2013.
I am advised by the Revenue Commissioners that the rate of DIRT that is applicable to a payment or crediting of deposit interest is the rate in operation on the date the deposit interest is paid or credited to the account, irrespective of the fact that part of that interest may have accrued before the date the rate was changed. This means there is no apportionment of the interest between the amount accrued before the date of the rate change and the amount due after that date. The new rate is applied to all of the interest paid on or after the date of the rate change.
There are two rates of DIRT. The most common rate is the standard rate, which is applied where the interest is payable annually or more frequently than annually. In the case of interest that is payable less frequently than annually or where the amount of the interest cannot be calculated until maturity of the investment, the rate to be applied is the standard rate plus 3 per cent, as shown above.
103. Deputy Sean Fleming asked the Minister for Finance if he will defer the introduction of the local property tax and amend it to include an ability to pay clause; and if he will make a statement on the matter. [15456/13]
View answerI do not propose to defer the introduction of the Local Property Tax (LPT). The introduction of a value based property tax is part of our obligation under the EU/IMF programme. Actions for the ninth Troika review, which was to be completed by the end of the 2012, included the introduction of a value based property tax for 2013.
These measures are deemed necessary in order to reduce further the deficit in the public finances and so as to ensure continued adherence to fiscal targets set as part of the EU/IMF Programme. While the Government has some scope within the Programme to use alternative methods to achieve Programme targets, the yield anticipated from the Local Property Tax could only have been achieved by other measures which would have significantly reduced overall expenditure on vital public services or increased taxation on incomes and spending. This Government did not want to add to the already necessary cuts in public expenditure or to place additional costs on job creation.
It should be noted that the arguments in favour of a property tax go beyond our obligations under the EU/IMF programme. The introduction of a property tax is part of a broader approach to the taxation of property. The aim is to replace some of the revenue from transaction based taxes, which have proven to be an unstable source of Government revenue, with an annual recurring property tax, which international experience has shown to be a stable source of funding.
The taxation of property through a recurring annual tax is less economically distortionary than the imposition of tax on either income or capital. This is supported by economic literature and recent OECD analysis. The OECD has highlighted that annual taxes on land and buildings have a relatively small adverse impact on economic performance.
As the Deputy is aware the Finance (Local Property Tax) Act 2012 (as amended by the Finance (Local Property Tax) (Amendment) Act 2013) was enacted into law, following its signature by the President on 26 December 2012 with the first liability date being the 1 May 2013. As I have previously outlined to this House, in designing the local property tax the Inter-Departmental Expert Group chaired by Dr Don Thornhill (the “Thornhill Group”) had due regard to issues such as ability to pay and considered the provision of waivers or deferrals for households unable to pay the tax or where a payment requirement would cause hardship. For individuals on low incomes, the Finance (Local Property Tax) Act 2012 provides for the possibility of deferring the charge to LPT in certain cases. To qualify for a deferral, the residential property must be occupied as a sole or main residence. The income thresholds for a full deferral will be €15,000 for a single person and €25,000 for a couple, whether married persons, civil partners or cohabitants. A person may claim a deferral if their income will not, “as can reasonably be foreseen at the liability date” exceed these thresholds in that year.
An increased income threshold applies in the case of properties occupied as a sole or main residence and subject to a mortgage. In such cases, the gross income thresholds may be increased by 80% of the mortgage interest payments. A deferral option in qualifying cases in this regard will apply until the end of 2017 and will assist individuals currently in mortgage distress.
A deferral of up to 50% of the LPT liability will be possible where the gross income of the liable person does not exceed €25,000 for a single person or €35,000 for married persons/civil partners/cohabitants. A deferral of 50% of the LPT will also be available where gross income does not exceed the above thresholds (€25,000 single, €35,000 couple) as increased by 80% of the gross mortgage interest payments that a liable person expects to make by the end of the year for which the gross income is being estimated. This type of deferral will also be available until 31 December 2017.
Where a liable person no longer satisfies the necessary conditions, amounts deferred prior to the date on which eligibility ceased may continue to be deferred. Interest of c. 4% per annum will apply to any amounts deferred. The deferred amount, including interest, will attach to the property and will have to be paid before the property is sold or transferred.
The thresholds were based on the recommendations of the Thornhill Group. The Government accepted the income thresholds for a full deferral and adapted the income thresholds for a partial deferral so that they are €10,000 rather than €5,000 above the thresholds for a full deferral. To determine whether deferral applies for 2013, a person is required to estimate on 1 May 2013 what his or her total gross income for 2013 will be. Gross income from all sources consists of total income before any deductions, allowances or reliefs that may be taken off for income tax purposes and includes income that is exempt from income tax and income from the Department of Social Protection but excludes Child Benefit.
I appreciate that some property owners may find themselves unable to pay Local Property Tax but do not qualify for a deferral under the existing legislation. For this reason, the Finance (Local Property Tax) (Amendment) Act 2013 provides that a person who has entered into an insolvency arrangement under the Personal Insolvency Act 2012 may apply for deferral of the LPT that is due during the period for which the insolvency arrangement is in effect. The 2013 Act also provides that a person who suffers both an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay their LPT without causing financial hardship, may apply for full or partial deferral. Claims for this type of deferral will require full disclosure of the person’s financial circumstances, supporting documentation and any other information required by Revenue and following an examination of the information provided, Revenue will determine whether deferral should be granted. The detail of how this type of deferral will operate and the criteria that will be used to determine eligibility will be set out in guidelines due to be published by the Revenue Commissioners shortly.
Details of the deferral arrangements are available on Revenue’s website www.revenue.ie, where the Commissioners have recently published a useful Guide to Local Property Tax.
104. Deputy Pat Deering asked the Minister for Finance if he intends to engage in further discussions with Irish Bank Resolution Corporation employees regarding redundancy payments. [15459/13]
View answer112. Deputy Stephen S. Donnelly asked the Minister for Finance further to Parliamentary Question No. 99 of 20 February 2013, if, in view of confirmation from the IBOA that the liquidator has told the union he can agree a solution to the severance terms issue provided the Minister instructs him to do so under section 9 of the IBRC Act 2013, he will instruct the liquidator to restore the value of the severance terms for Irish Bank Resolution Corporation employees; and if he will make a statement on the matter. [15562/13]
View answerI propose to take Questions Nos. 104 and 112 together.
The Special Liquidators have advised me that they are highly cognisant of the issues that the IBOA have been highlighting and that significant steps have already been taken to address those concerns, including the announcement on Tuesday 19 March by the Special Liquidators that contracts of staff would be extended out to 7 August with one month’s notice thereafter. This should provide significant reassurance to IBRC staff, relative to the common position in liquidations where staff contracts are terminated on liquidation.
As a result of the termination of the employment contracts, employees are entitled to apply for a statutory redundancy payment and a statutory notice payment, subject to the limits prescribed by statute. Any action taken by the Minister which might divert assets from IBRC creditors to employees could be challenged in the Courts.
I am advised that claim forms for statutory entitlements have now been distributed to all employees entitled to such claims.
105. Deputy Michael McGrath asked the Minister for Finance the total number of members of the board and management team of the National Asset Management Agency, with data separated between the Republic of Ireland and Northern Ireland who were previously employed by or acted as consultants to Ulster Bank, Bank of Ireland, Anglo Irish Bank, Permanent TSB or Irish Nationwide within the past ten years; and if he will make a statement on the matter. [15474/13]
View answerThe employment history of each NAMA Board member is provided on NAMA’s website, www.nama.ie, and in the Annual Report 2011 (pp.4-5). No member of the Board was employed by Ulster Bank, Bank of Ireland, Anglo-Irish Bank, Permanent TSB or Irish Nationwide within the past 10 years. One member of the NAMA senior management team was employed within the past ten years by Ulster Bank in Northern Ireland. No member of the NAMA senior management team has ever acted as a consultant to the financial institutions listed. The Deputy should note that members of the NAMA Board and officers of NAMA are subject to, and observe, a number of statutory and non-statutory obligations in relation to potential conflicts of interests.
106. Deputy Michael McGrath asked the Minister for Finance if his attention has been drawn to the practice of the National Asset Management Agency requiring the appointment of independent consultants or non-executive directors to the boards of companies with loans outstanding to NAMA; if he will outline the recruitment and selection process for such consultants or non-executive directors; if clear criteria is in place to govern their remit on appointment; and if he will make a statement on the matter. [15475/13]
View answer107. Deputy Michael McGrath asked the Minister for Finance if he will list those companies to which the National Asset Management Agency has recommended the appointment of independent consultants non-executive directors; if he will provide the identity of such individuals with numbers broken down between the Republic of Ireland and Northern Ireland; and if he will make a statement on the matter. [15476/13]
View answer108. Deputy Michael McGrath asked the Minister for Finance if the National Asset Management Agency agrees that any non-executive director appointed to the board of a company with loans outstanding to NAMA owes his or her fiduciary duty to the client company under the relevant company law of the Republic of Ireland or Northern Ireland as appropriate; and if he will make a statement on the matter. [15477/13]
View answerI propose to take Questions Nos. 106 to 108, inclusive, together.
In a recent response to a Parliamentary Question 13079/13 on 12th March, 2013, I advised that, to provide assurance on the financial information received from debtors and to enhance control over cash flows, particularly rental income, NAMA requires the appointment by certain significant debtors of independent monitors. The remit of these independent monitors is to ensure that financial information provided by debtors is consistent with the underlying books and records, particularly in terms of accounting for all rents receivable by the debtor from property held as security by NAMA and for the proper application of all approved expenses, working capital and capital expenditure and to evaluate and report to NAMA on the achievement of milestones agreed as part of the debtor’s commitment to repay amounts due to NAMA and in turn the taxpayer. These appointments are made by the debtors subject to NAMA’s satisfaction with the appointees and the debtor’s selection process, the level of proposed fees and the completion of a duty of care agreement with NAMA.
In a very limited number of cases, NAMA has also recommended and the debtor has agreed to the appointment of additional directors as a measure to enhance corporate governance. In such cases, NAMA may endorse a proposed board appointee by a debtor but the responsibilities of that appointee are as determined by company law.
NAMA is prohibited under Sections 99 and 202 of the NAMA Act from disclosing confidential information, which is specifically defined to include information relating to its debtors. Accordingly, the provision of information sought on debtor companies to which monitors and directors have been appointed by debtors would be in contravention of the NAMA Act.
109. Deputy Finian McGrath asked the Minister for Finance the reason a council tenant’s daughter (details supplied) in Dublin 17 has been sent the property tax form when they are not on the tenant agreement; the reason a council tenant is being charged a property tax when they do not own the property; and if he will make a statement on the matter. [15491/13]
View answerThe Finance (Local Property Tax) Act 2012 (as amended) sets out how the tax is to be administered and provides that a liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date which will be 1 May 2013 for the year 2013. Section 7 of the 2012 Act provides that local authorities will be liable to pay the LPT on their properties in the same way as any other residential property owner, unless the properties in question are used to accommodate people with special housing needs such as the elderly or people with disabilities. A key aspect of the work undertaken by Revenue was the development of a comprehensive Register of residential properties in the State. The Register was developed using data drawn from a range of sources including Revenue’s own databases, the Local Government Management Agency database and data from utility companies. Data from the various sources has been cross-checked to ensure that the Register is as accurate as possible. The Register is being used to issue correspondence to property owners and work is still in progress to refine it.
I am advised that in developing the Register, Revenue collaborated with all local authorities and social housing bodies to establish details of properties owned by these organisations in order that they could be excluded, in the first instance, from the general issue of returns, so as to ensure that tenants of local authority properties did not receive an LPT return. While every effort has been made to match local authority owned properties with the LPT Register, in a certain number of cases, that matching process has not been successful and some tenants of these properties will inadvertently receive the Return from Revenue.
I am further advised that this particular possibility is covered extensively in the letter and the information booklet that accompanies the LPT Return. The correspondence advises anyone who receives an LPT Return from Revenue, but who is not the liable person in respect of a property, what steps they should take. It is important that they should not ignore the Return.
This means that a tenant who receives a Return in error should advise Revenue that they are local authority tenants and this will allow Revenue to match the details to the local authority data and correct the LPT Register. I am advised by Revenue that local authority tenants who are receiving LPT Returns in error are advising the Revenue Commissioners, who are updating the Register accordingly.
I can confirm to the Deputy that in the circumstances outlined, the tenant is not liable to pay the LPT in these cases and that the local authority in question is the liable person. I can also confirm that Revenue has corrected the LPT Register in this case on the basis of the information supplied by the Deputy. It is essential, in any other similar cases, that local authority tenants contact Revenue to ensure the Register is corrected.
110. Deputy Noel Grealish asked the Minister for Finance if he will clarify a statement he made that the liability date for local property tax from 2014 will be 1 November in the preceding year; if that means persons who sell their property between 1 November 2013 and 31 December 2013 will be liable for the 2014 liability even though they will not own the property; and if he will make a statement on the matter. [15500/13]
View answerThe Finance (Local Property Tax) Act 2012 (as amended) sets out how the tax is to be administered and provides that a liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date. For the year 2013, the liability date is 1 May 2013, and for the year 2014 the liability date is 1 November 2013. This means that the owner of a residential property on 1 May 2013, is liable for LPT on that property for 2013 and, the owner of the property on 1 November 2013 is liable for the 2014 LPT charge. Therefore Deputy, in relation to the specific circumstances posed by you in your question, a liable person who sells his or her residential property between 1 November 2013 and 31 December 2013, provided that they owned the property on 1 November 2013, will be liable to pay LPT on that property for 2014. They will have no liability for LPT on that residential property beyond 2014.
I am informed that the LPT charge must be paid by the vendor to the Revenue Commissioners at the time of the sale of the property in question. I am informed by the Revenue Commissioners that they are developing detailed guidelines on LPT issues that arise in the context of the transfer of residential property. These guidelines will be subject to discussions with the Law Society under the auspices of the Tax Administration Liaison Committee.
111. Deputy Noel Grealish asked the Minister for Finance if his attention has been drawn to the fact that the liquidation of the Irish Bank Resolution Corporation has an apparently unintended consequence for up to five personal deposit account holders (details supplied); if his further attention has been drawn to the fact that some holders of IBRC deposit accounts received a letter in 2011 stating that their deposit accounts were moving to Allied Irish Banks but the affected accounts were not transferred and may therefore be outside the scope of the eligible liabilities guarantee scheme which covers amounts over €100,000; and if he will make a statement on the matter. [15501/13]
View answerI have been informed that there are a number of customer accounts that may not be entitled to full compensation under the deposit guarantee scheme, DGS, or the eligible liabilities guarantee scheme, ELG, due to the nature of the products or deposit options in which those account holders invested. The proceeds from the disposal of IBRC’s assets will be used to repay creditors in accordance with normal Companies Acts priorities and consequently, preferred creditors will be paid first and then debt purchased by NAMA from the Central Bank will be paid. If there are proceeds available after repayment in full of the NAMA debt, these proceeds will be applied to remaining unsecured creditors. This would include depositors to the extent that their deposits are unguaranteed. I am advised by the Central Bank of Ireland that certain tracker products, which were liabilities of IBRC at the time of the liquidation, have a structured deposit element which is covered by the DGS for that element of the product. As a result, the first €100,000 of any claim from these depositors is covered under the DGS. However I am advised that these products may not be eligible liabilities for the purposes of the ELG scheme. Those affected have been advised to deal with the special liquidator regarding this matter.
