Written Answers Nos. 134-146
134. Deputy Pearse Doherty asked the Minister for Finance the number of times the European Commission has brought recommendations for actions under the Excessive Deficit Procedure to the European Council; the way Ireland voted in each instance and if there was no vote if Ireland objected in any way to any of the recommendations. [27106/13]
View answer149. Deputy Pearse Doherty asked the Minister for Finance the number of times the European Commission has brought recommendations for actions under the Excessive Deficit Procedure to ECOFIN; the way Ireland voted in each instance; and if there was no vote, if Ireland objected in any way to any of the recommendations. [27188/13]
View answerI propose to take Questions Nos. 134 and 149 together.
All European Commission recommendations to Council relating to implementation of the Excessive Deficit Procedure can be found at the following link: http://ec.europa.eu/economy_finance/economic_governance/sgp/corrective_arm/index_en.htm.
The Commission’s recommendations are discussed at Council. Typically decisions are reached by consensus rather than by formal vote.
135. Deputy Mattie McGrath asked the Minister for Finance if voluntary housing organisations such as Foscadh are entitled to pass on the local property tax charge to their tenants through an increase in their rent; and if he will make a statement on the matter. [26696/13]
View answerI am advised that approved housing bodies (as well as local authorities) will be liable to pay the Local Property Tax (LPT) on their properties in the same way as any other residential property owner, unless the properties in question are used to provide special needs accommodation. This refers to people who require support to enable them to live in the community, such as sheltered accommodation for the elderly or the disabled. The Revenue Commissioners have published guidelines to assist local authorities in identifying special needs accommodation. Where an LPT liability arises, the Finance (Local Property Tax) Act 2012, as amended, deems all voluntary housing body and local authority residential properties to be in the lowest valuation band for the initial valuation period (2013 to 2016), and also allows such bodies to defer their 2013 LPT liability until 2014. This is to allow such bodies to put in place arrangements for the payment of the tax and for the valuation of their properties.
I am advised by the Department of the Environment, Community and Local Government that, in accordance with section 58 Housing Act 1966, housing authorities are responsible for determining the rents of their dwellings, subject to complying with broad principles laid down by that Department, notably that the rent payable should be related to income and that low-income households should pay a lower proportion of income in rent. Within these parameters, it is a matter for housing authorities, as an integral part of their housing management functions, to ensure that their rental income reflects, as far as practicable, the cost of managing and maintaining their housing stock.
I am further advised that the current arrangements for determining local authority rents will be substantially replaced on the coming into force of section 31 of the Housing (Miscellaneous Provisions) Act 2009, which predates, and does not refer to, the Local Property Tax legislation. On enactment of the Housing (Amendment) Bill 2013 I am informed that the Minister for the Environment, Community and Local Government will be arranging to make regulations under section 31 re-affirming the principle that rents should be related to household income and composition, and reflecting the requirement that housing authorities should set rent levels that take account, as far as practicable, of the cost of providing works and services to, and managing and maintaining, their rented accommodation. The Minister also intends to ask the Housing Agency to provide the relevant guidance to housing authorities to assist them in making their rent schemes to ensure that they comply with the these Regulations.
136. Deputy Brendan Griffin asked the Minister for Finance if he will provide details of complaints mechanisms available to persons who have been subject to intimidation and heavy handed tactics by persons working on behalf of Revenue sheriffs; and if he will make a statement on the matter. [26687/13]
View answerI am informed by Revenue that Sheriffs are officers of the Court, holding office under Section 12 of the Court Officers Act, 1945. Their debt collection activities are generally covered by the Enforcement of Court Orders Act, 1926, as amended and the execution of Revenue certificates is specifically provided for in Section 962 of the Taxes Consolidated Act 1997, as amended. When acting in execution of tax certificates, sheriffs are governed by the general law, which applies to the collection of civil debts of all kinds, and not by the provisions of the Tax Acts. They are not accountable to Revenue as regards the methods and techniques of enforcement but are answerable before the courts for any breach of the civil debt collection law.
However, notwithstanding the above, the Sheriffs do operate an agreed Code of Practice in order to provide a non-judicial complaints procedure for taxpayers. The Code is designed to provide an opportunity to resolve disputes without the necessity for the complainant to initiate Court proceedings. The Code also ensures that a taxpayer receives a written response from the relevant Sheriff to any complaint.
Details of the Code of Practice which are available from the Sheriffs and on Revenue’s website www.revenue.ie are set out below.
Sheriff’s Code of Practice
1. The Sheriff will treat every taxpayer with courtesy; where practicable, notify the taxpayer in writing of the lodgment of a certificate in the Sheriff’s Office; where requested, explain to the taxpayer the purpose of the visit of the Sheriff, Bailiff or other staff; when goods are seized, issue as soon as possible, a written inventory to the taxpayer; furnish the taxpayer with a receipt for monies paid; furnish the taxpayer with an account of the proceeds of the sale of any goods seized.
2. In return the Sheriff expects that the Taxpayer will pay liabilities to the Sheriff on demand; be prompt in his/her dealings with the Sheriff’s office; treat the Sheriff and his staff with courtesy.
3. Complaints Procedure. If a taxpayer feels aggrieved at the way in which his/her case was handled, then he/she can complain in writing to the Sheriff’s office; the Sheriff will investigate any such complaint and respond as promptly as is practicable depending on the specific circumstances of the case; should the taxpayer remain aggrieved after the Sheriff’s response, he/she may refer the complaint in writing to the Revenue Commissioners at Enforcement Management Unit, Office of Collector General, Sarsfield House, Limerick. The Revenue Commissioners will examine any such complaint and may request that the Sheriff undertake a further review; should the taxpayer still remain aggrieved at the outcome of the Sheriff review, the complainant may at his/her request be referred to a Joint Standing Committee (JSC) of the Revenue Commissioners and the Sheriffs Association, which is chaired by a neutral Chairman. The JSC will review the issue(s) by means of an examination of all the relevant correspondence and documentation; Where a complaint involves an allegation of criminal behaviour against a sheriff, his agents, or staff, then the Joint Standing Committee shall decline to deal with the case and will inform the person in question in this regard.
Finally, referral of any matter to the JSC should not in any way to be taken as a diminution or a substitution for a taxpayer’s common law rights, which are not impacted on by availing of the process.
137. Deputy Robert Dowds asked the Minister for Finance if he will provide an update on tobacco seizures in the four Dublin local authority areas for the years 2009 to 2012. [26815/13]
View answerI am advised by the Revenue Commissioners that data on seizures of tobacco products are not compiled on the basis of local authority areas and that it would not be possible, therefore, to provide the Deputy with separate figures in respect of each of the four local authority areas in Dublin. Information can be provided, however, for the overall seizures made in the Revenue Commissioners’ Dublin Region, which encompasses the administrative areas of the four Dublin local authorities, and is set out in the following table. The majority of the seizures listed in the table took place at Dublin Port and Dublin Airport.
|
Year |
Cigarettes (millions) |
Other Tobacco Products (Kilograms) |
|
2009 |
81.9 |
9,452 |
|
2010 |
98.5 |
1,398 |
|
2011 |
78.4 |
7,069 |
|
2012 |
82.7 |
3,617 |
138. Deputy Andrew Doyle asked the Minister for Finance his views on the receivership of a hotel group (details supplied) in County Wicklow having regard to the fact that other hotels in the group are being profitably run; and if he will make a statement on the matter. [26850/13]
View answer163. Deputy Andrew Doyle asked the Minister for Finance his views on the receivership of a hotel group (details supplied) in County Wicklow; his views on the practices set out by the bank on the handling of the receivership having regard to the fact that other hotels in the group are being profitably run; and if he will make a statement on the matter. [26851/13]
View answerI propose to take Questions Nos. 138 and 163 together.
I have been informed by the bank that due to data protection rules and customer confidentiality the bank is not in a position to discuss details of individual customer circumstances. Each customer case is unique and the bank makes every effort to support and work with its business customers in a collaborative manner where economically feasible.
139. Deputy Finian McGrath asked the Minister for Finance since the tax exemption for earnings from stallions was abolished, the revenue that has accrued to the State from the taxing of the earnings from stallions. [27413/13]
View answerThe Revenue Commissioners have provided me with the following information. Statistics on income tax and corporation tax receipts do not generally distinguish between the yields from different sources of income, the figures of tax yields from stallion stud profits are not separately identifiable. Figures of the profits earned from the provision of stallion stud services were required to be returned in income tax and corporation tax returns from the year 2009 onwards. The figures thus entered are as set out in the following table for the tax years 2009 to 2011, the latest available. However, it is not possible to infer from these figures the amount of tax that would be generated as they would be subject to deductions such as capital allowances and losses.
Profits earned from the provision of stallion stud services
|
Tax Year |
Income Tax Returns |
Corporation Tax Returns |
|
= |
€m |
€m |
|
2009 |
0.5 |
0.5 |
|
2010 |
0.7 |
2.3 |
|
2011 |
0.7 |
2.2 |
140. Deputy Simon Harris asked the Minister for Finance the measures in place to address the black economy; the consequences for involvement from procurement to purchase; and if he will make a statement on the matter. [28014/13]
View answerI am informed by the Revenue Commissioners that they are very mindful of the unfair competitive advantage to be gained by those businesses that do not fulfil their tax obligations. Their audit and tax compliance programmes are under constant review to ensure that they are focused on the areas of greatest risk, including risks from a possible upsurge in the shadow economy, particularly in times of recession.
Tackling shadow economy activity is an on-going corporate priority for Revenue and a number of national and regional projects are in progress. Measures undertaken by Revenue include: a prioritised focus on those sectors that traditionally have been susceptible to shadow activity specifically cash business, such as the hospitality sector, including bars, nightclubs, fast-food/restaurants and entertainment, and white collar cash, such as doctors, dentists, solicitors, accountants, engineers etc; a focus on other sectors including the construction and rental sectors, and streetscape activities including covert surveillance, cold calls to businesses and venues often on a joint or multi-agency basis with the Department of Social Protection (DSP) and the National Employment Rights Agency (NERA); specifically, in relation Revenue compliance activity on the shadow economy in the sectors set out above, a total of 2,804 audits and 31,638 other interventions were completed in 2012 yielding in excess of €104m. and close consultation and co-operation with the Department of Social Protection. The primary objective of these activities is to uncover either non-declaration or under declaration of income and/or fraudulent DSP claims. A High Level Steering Group with representatives from both Revenue and the Department of Social Protection meet regularly and oversee information exchanges and other areas of co-operation between the departments; multi-agency construction site visits (Revenue, DSP and NERA) are now a feature and the site information provided by the Department of Education and Skills at procurement stage, on their capital expenditure on new and extended school premises, facilitates multi-agency site visits throughout the projects to ensure full compliance with all appropriate legislation and regulation; and Revenue chairs the Hidden Economy Monitoring Group (HEMG) that provides a forum for the exchange of views on the effectiveness of measures introduced in combating the hidden economy. This group includes representatives from employer and business organisations, trade unions and other Government Departments and agencies. Regional hidden economy liaison groups have been established to facilitate greater local interaction and more immediate responses to insights and issues that may be highlighted.
Aside from the HEMG, Revenue meets regularly with other representative bodies that have concerns over shadow economy activities in their particular sectors. A comprehensive package of measures has been introduced in relation to Excise (Oils) including, requirement for separate licences for auto-fuel traders and marked fuel traders, requirement to have a separate licence for every premises or place at which the fuel concerned is dealt in, and a requirement that a licence must be clearly displayed at the premises or place. A new return form was introduced for the oil industry providing detailed information on oil movements, thereby facilitating supply chain analysis. Data from the initial monthly returns are currently being examined and plans to optimise the use of the data are in progress. In 2012, there were 86 illicit mineral oil and 11 oil laundries seizures resulting in the recovery of a total of 1.1m litres of illicit oil.
Revenue’s tobacco strategy, “Strategy On Combating the Illicit Tobacco Trade (2011- 2013)”, was published on the Revenue website in June 2011. This three-year strategy is underpinned by annual action plans. During 2012 Revenue’s Customs Service seized a total of 95.6m cigarettes in 8,108 seizures and 5,277kg of tobacco in 1,395 seizures. Revenue regularly proposes legislative measures aimed at curbing shadow activities. Two recent examples are, firstly, the introduction of on-the spot fines for employers who breach the PAYE Regulations was introduced in 2011 and a comprehensive revamp of the Relevant Contracts Tax system was implemented in 2012. On the tax collection side, as the Deputy will be aware, Revenue takes action to enforce debt recovery in appropriate cases, including through the use of Sheriff or solicitor enforcement and liquidation of companies. These interventions have a very strong level playing field dimension.
In relation to procurement issues, where the value of a State contract is greater than €10,000, there are procedures in place under Department of Finance Circular 43/2006 that require the successful tenderer to produce a valid Tax Clearance Certificate. All other payments in excess of €1,000 made by State bodies must also be reported to Revenue annually.
On the purchasing side, I presume that the Deputy is referring to consumer protection which is a matter for my colleague the Minister for Jobs, Enterprise and Innovation. However, the Revenue Commissioners regularly advise consumers of the dangers involved in the purchase and consumption of illegal and counterfeit goods, and the use of laundered diesel for example.
I am satisfied that the Revenue Commissioners commit significant resources annually to tackling the shadow economy and take the matter very seriously. I am also satisfied that the approach being taken by the Commissioners consisting of high-profile and multiple interventions in the riskiest sectors, in addition to regular dialogue with the legitimate trade and other Government agencies, has been effective in minimising the impact on the Exchequer.
141. Deputy Simon Harris asked the Minister for Finance if he has given consideration to putting in place a creditworthiness database or measure of similar constitution; and if he will make a statement on the matter. [28015/13]
View answerThe Credit Reporting Bill, which was published in September 2012, will enable the establishment of the Central Register which will be owned by the Central Bank. The Register will contain credit information pertaining to both consumers and businesses. The Bill also provides that credit providers must access the Register when a consumer or business makes an application for a loan in excess of €2,000, in order to ascertain their creditworthiness. When the Register is operational it will act as a support to the financial services industry and will support responsible lending and borrowing. It will also aid the supervisory functions of the Central Bank and will enhance consumer protection measures in respect of lending.
Second stage of the Bill was completed on 18 April 2013 and the Committee stage date and remaining stages have yet to be confirmed. In anticipation of the enactment of the Bill, the Central Bank is engaged in preparatory work which will facilitate the coming into operation of the Register.
142. Deputy Finian McGrath asked the Minister for Finance if he will consider classifying personal alarms for the elderly as a medical device for purposes of VAT and applying zero VAT rating to these products; and if he will make a statement on the matter. [28082/13]
View answerThe VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. While the EU VAT Directive and Irish VAT law provide for the possibility of applying a reduced rate of VAT to the supply of certain medical equipment this possibility does not extend to the supply of personal alarms. Nor is there any provision in VAT law that would make it possible to apply an exemption or the zero rate to the supply of such products. In the circumstances, the supply of personal alarms is liable to VAT at the standard rate, currently 23%. The supply of parts and accessories is also liable to VAT at the standard rate. I would point out that Value-Added Tax (Refund of Tax) (No. 15) Order 1981 enables VAT paid on qualifying goods to be refunded where the goods are purchased for the exclusive use of disabled persons suffering a specified degree of disablement. The Order applies to goods which are aids or appliances, including parts and accessories, which might reasonably be treated as constructed or adapted having regard to the particular disablement of the person. A personal alarm for a disabled person may qualify for relief under the Order if it may be considered an aid or appliance constructed or adapted for use by a disabled person having regard to the particular disablement of that person. A Claim Form VAT 61A is available on the Revenue website (www.revenue.ie).
In addition, the Deputy may be aware of the Seniors Alert Scheme operated by the Department of the Environment, Community and Local Government, which provides grant support for the supply of equipment to enable older people without sufficient means to continue to live securely in their homes. The scheme replaced the Scheme of Community Support for Older People in May 2010. The grant assistance is made available through community and voluntary groups registered with the Department. Grant support is available towards the cost of purchasing and installing monitored personal alarms, as well as additional or replacement pendants.
Persons wishing to apply for the grant support should contact the group registered to operate the scheme in their area. A list of these groups is available from the Department of the Environment, Community and Local Government.
143. Deputy Robert Dowds asked the Minister for Finance if he will provide consideration to revising the exemptions and rebates on corporation tax, such as the facility to carry forward losses and to move losses between trades; and if he will make a statement on the matter. [27117/13]
View answerCompanies are chargeable to corporation tax on the profits generated from their economic activities after taking account of allowable deductions and reliefs under the Taxes Consolidation Act 1997 (TCA). Ireland has a transparent corporation tax regime that applies a competitive 12.5% rate on a broad base, with limited provision for reliefs or exemptions. There are certain reliefs available to companies, such as loss relief and double taxation relief, which are standard features of corporate tax systems in EU and OECD countries. There are also a small number of targeted reliefs that are aimed at promoting investment, innovation and employment in the economy, including a 25% tax credit for expenditure on research and development and a 3-year tax relief for start-up companies creating new jobs. Regarding losses, Ireland follows the international norm whereby losses incurred in the course of a business are taken into account in arriving at the appropriate amount of tax that a company should bear. The availability of relief for losses incurred in a business is in recognition of the fact that a business cycle runs over several years and that it would be unbalanced and unreasonable to tax profits in one year and not allow losses in another. The TCA provides that unrelieved trading losses of a company for an accounting period may be carried forward for offset against trading income of the same trade in future accounting periods. Trading losses carried forward by a company may only be offset against trading income of the same trade and not against any other trading income or profits of the company.
The Deputy may wish to note that the TCA contains a number of measures to counter the transfer of losses from one company to another for tax avoidance purposes, often referred to as “loss buying”. For example, Section 400 of the TCA provides that, where a loss-making trade is transferred from one company to another company in a group situation, the transferred trade is treated as a separate trade distinct from any other trading activities carried on by the company acquiring the trade. Any unused losses forward of the transferred trade are only allowable against profits attributable to that separate trade. This ensures that trading losses of the transferred trade are ring-fenced to that trade and may not be offset against other trading income or profits of the acquiring company.
In addition, Section 401 of the TCA provides that where, within a period of 3 years, there is both a change of ownership of a company and a major change in the nature or conduct of the trade carried on by the company (e.g. major change in products, services, customers or markets), trading losses incurred by the company before the change of ownership are not allowable against trading income of the company after the change of ownership.
The effect of these provisions to counter “loss buying” is to restrict the scope for utilising losses for tax avoidance purposes by combining loss-making and profitable business activities. These provisions are kept under review and, if any loopholes or weaknesses that pose a tax risk are identified, I will not hesitate to introduce appropriate legislative amendments.
144. Deputy Robert Dowds asked the Minister for Finance the rules governing the amount each director of a company may take out of a company's reserves as a lump sum at retirement, without attracting capital gains tax, income tax or universal social charge; and if he will consider amending the legislation which covers same. [27118/13]
View answerI assume the Deputy is referring to a gratuitous or ex-gratia lump sum which might be awarded out of company funds to a director on ending employment with a company and not a pension lump sum paid out of the director’s pension fund. In the first instance, ex-gratia payments made by an employer to an employee or office holder at the date of cessation or retirement are not subject to Capital Gains Tax.
Section 123 of the Taxes Consolidation Act 1997 imposes (subject to a number of exemptions and reliefs provided under section 201 and Schedule 3 of that Act) a charge to income tax in respect of ex-gratia or gratuitous payments made by employers on the termination of an employment, where the payment would not otherwise be chargeable to income tax under general income tax law.
Statutory redundancy payments are exempt from income tax. In addition, ex-gratia redundancy payments or retirement gratuities in excess of the statutory redundancy amount are exempt from income tax up to certain limits as set out: (i) a basic exemption of €10,160 plus €765 per complete year of actual service; (ii) a further exemption of up to €10,000 where the individual is not a member of an occupational pension scheme or irrevocably gives up the right to receive a lump sum from that scheme. If a lump sum is paid from such an occupational pension scheme then the exemption of €10,000 is reduced by the amount of that sum. This additional exemption is only available where 10 years have elapsed since any previous claim for this exemption was made; or (iii) Standard Capital Superannuation Benefit i.e. 1/15th of the person’s annual income (average of the last three years) for each year of employment less any tax-free lump sum which is received or receivable under any approved or statutory pension scheme.
It is open to the taxpayer to choose whichever tax treatment is most beneficial. In addition to the exemptions at (i) and (ii), or (iii) above, where an individual is liable to tax on any part of his or her ex-gratia payment, Top Slicing Relief (TSR) may also be claimed. This effectively applies the average effective rate of tax which applied for the previous 3 years of assessment in place of the marginal rate of tax on the taxable element of any ex-gratia payment. Finance Act 2013 abolished TSR from 1 January 2013 where the gross ex-gratia payment made is €200,000 or more.
A Commission on Taxation recommendation that a limit of €200,000 be placed on the maximum tax-free element of an ex-gratia payment made in respect of termination or change in conditions of an employment or office was implemented in Finance Act 2011. This limit is a lifetime cap and applies to all exemptions or reliefs claimed in respect of termination payments. This cap however, did not apply to ex-gratia payments made on death or disability which are provided for separately. As regards such payments a maximum lifetime tax-free limit of €200,000 where the payment is made solely on account of disability of, or injury to an employee or director, was implemented in Finance Act 2013.
The amount that can be paid as a tax-free ex-gratia payment is affected by a number of different factors including length of service, remuneration levels in the 36 months prior to the cessation date and the recipient’s entitlements under the terms of their approved pension scheme. Since 2011, the overall maximum of tax-free entitlements is capped at €200,000.
As demonstrated, there have been a number of changes to the tax code in this area in recent years. As with all tax reliefs and exemptions, they will continue to be subject to review as part of the annual Budget and Finance Bill process.
145. Deputy Michael McCarthy asked the Minister for Finance if there have been any changes made to the disabled drivers scheme which may affect the status of an individual applicant (details supplied) in County Cork; and if he will make a statement on the matter. [27097/13]
View answerI am informed by the Revenue Commissioners that Section 134(3) of the Finance Act 1992 (as amended) and Statutory Instrument No: 353 of 1994 (Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations, 1994 (as amended) provide for permanent relief from the payment of specified maximum amounts of VAT and VRT for persons registered under the scheme. The legislation specifies that where a person satisfies the Revenue Commissioners that s/he is a Disabled Driver who complies with all the conditions of the Disabled Drivers Scheme, that person shall be entitled to relief in respect of a vehicle with an engine capacity of up to but not greater than 2,000 cc. A higher limit of 4,000 cc applies in the case of disabled passengers who cannot drive themselves and who purchase a vehicle for their use as a passenger.
The administration of the Scheme was reviewed during 2011 in line with a review of the overall practices in the Central Repayments Office. This review was held to ensure that the provisions of Section 134 (3) of the Finance Act 1992 (as amended) and SI 353/1994 are being adhered to correctly and to ensure that all applications are dealt with as provided for in the legislation. There were no actual changes to the legislation. Revenue met with representatives of the Irish Wheelchair Association and the Disabled Drivers Association of Ireland in November 2011 and briefed both organisations on the review. All literature on the scheme (particularly information leaflet VRT 7 which is available on the Revenue website www.revenue.ie) clearly specifies the engine capacity limits which must be met for vehicles to qualify under the Scheme.
146. Deputy Robert Dowds asked the Minister for Finance if additional staff have been assigned to audit, investigation and compliance tasks in the Revenue Commissioners since the commissioners' comprehensive expenditure review in 2011, which stated that additional staffing in these areas could yield up to €100 million per year in additional income. [27119/13]
View answerThe Revenue Commissioners have advised me that no additional staff have been assigned to audit, investigation and compliance tasks since 2011. The Revenue Commissioners are subject to the Employment Control Framework staffing reductions imposed since 2009. Revenue’s overall staffing levels have reduced from a total of 6,581 full time equivalents (FTE) at the end of 2008, to 5,962 (FTE) at the end of 2011, to its current level of 5,767 (FTE). Notwithstanding this reduction of 814 (FTE), Revenue staff resources assigned to audit, investigation and compliance activities have been maintained at around 2,000. The Revenue Commissioners have accorded a very high priority to compliance activity. They are committed to ensuring that, despite the staff reductions, this work will continue to be resourced to the maximum extent possible.
