Written Answers Nos. 170-190
170. Deputy Brian Walsh asked the Minister for Finance if he will consider lowering the maximum quantity of tobacco products that persons are allowed to bring here from inside or outside the EU; his views on whether such a move would have a positive impact for the Exchequer in terms of excise duty and VAT; and if he will make a statement on the matter. [46052/13]
View answerI am advised by the Revenue Commissioners, who have responsibility for the collection of tobacco products tax, that, in accordance with section 104(2) of the Finance Act 2001, tobacco products tax is not chargeable on cigarettes that are bought tax-paid by a private individual in another member state of the European Union, provided that the cigarettes are for the individual's own personal use and not for commercial purposes. The cigarettes must be personally transported and accompanied into the State by that individual. This provision is in accordance with article 32 of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC. Applying a limit to the amount of cigarettes that can be brought in from another member state depends on whether the cigarettes are for an individual’s own private use or for commercial purposes and this falls to be determined in accordance with criteria set out in Part 4 of the Control of Excisable Products Regulations 2010. These include the reasons given by the person for having control or possession of the cigarettes and the quantity involved. In accordance with EU law, the indicative guide level as to what constitutes a quantity consistent with personal use is set at 800 cigarettes.
A maximum of 200 cigarettes may be brought into the State from outside the EU or from territories where EU rules on VAT and excise duties do not apply, such as the Canary Islands.
171. Deputy Michael McCarthy asked the Minister for Finance the position regarding his announcement during budget 2014 regarding his intention to abolish top slicing relief on all ex gratia lump sum payments made in respect of retirement or terminations of employment greater than €200,000 or over; if he will clarify this statement in view of the confusion surrounding this decision, outlining exactly if this relief has been abolished entirely and on what payments; and if he will make a statement on the matter. [46060/13]
View answerOn a point of clarification, Finance Act 2013 provided that Top Slicing Relief was abolished with effect from 1 January 2013 on all ex-gratia (discretionary) termination lump sum payments where the non-statutory element of the payment was €200,000 or over. I would also like to make clear that this measure will have no impact on retirement lump sums paid under Revenue approved occupational pension arrangements and under statutory schemes.
Ex-gratia payments can be given in addition to statutory redundancy payments on the termination of the holding of an office or employment, or alternatively on death or disablement grounds.
Statutory redundancy payments are exempt from income tax. Furthermore, there are additional exemption limits for ex-gratia redundancy payments or retirement gratuities in excess of the statutory redundancy amount, which apply to all employees and office holders in receipt of such ex-gratia payments. These are:
- a basic exemption of €10,160 plus €765 per complete year of actual service in excess of the statutory redundancy payment;
Or
- 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 relief is of most benefit.
The basic exemption from income tax as outlined above can be further increased by up to €10,000 if the person is not a member of an occupational pension scheme. (This can only be claimed if the person has not made any claims in respect of a lump sum retirement gratuity received in the previous 10 tax years.)
Any balance of the ex-gratia payment after the calculation of the exemptions and reliefs is liable to income tax. An additional relief called Top Slicing Relief, which ensures that an individual’s average tax rate for the previous three years applies to such lump sums rather than the marginal rate of tax, is available in relation to this taxable amount. Given the budgetary constraints, the Government has decided to abolish Top Slicing Relief in respect of all ex-gratia payments made on or after 1 January 2014.
172. Deputy Róisín Shortall asked the Minister for Finance the name, qualifications and current salary of each political staff member appointed by him. [46087/13]
View answerThe table below details the information requested in respect of each political staff member appointed by me.
|
Appointments |
Qualifications |
Amount |
|
Ms Mary Kenny – Special Adviser (appointed under section 11 of the Public Service Management Act 1997) |
Suitably qualified for the position |
€84,706 |
|
Mr Eoin Dorgan – Special Adviser (appointed under section 11 of the Public Service Management Act 1997). Mr Dorgan will revert back to his position as an established Civil Servant following cessation of his appointment as a Special Adviser. |
Suitably qualified for the position |
€84,706 |
|
Mr Alan Kavanagh – Personal Assistant Constituency Office |
Suitably qualified for the position |
€43,715 - €56,060 |
|
Mr Denis Dwyer Civilian Driver |
Suitably qualified for the position |
€32,965 |
|
Mr Gerry Rigney Civilian Driver |
Suitably qualified for the position |
€32,965 |
174. Deputy Pearse Doherty asked the Minister for Finance the amount that has been received by county councils to date from the property tax on a county basis. [46106/13]
View answerSection 157 of the Finance (Local Property Tax) Act 2012, as amended, provides that, in each financial year commencing with 2014, the Minister shall pay from the Central Fund or the growing produce thereof into the Local Government Fund an amount equivalent to the Local Property Tax, including any interest paid thereon, paid into the Central Fund during that year. Accordingly, receipts from the Local Property Tax received in 2013 will remain in the Exchequer and will be used to meet the many expenditure obligations faced by the State. The allocation to the Local Government Fund for 2013 had already been decided before the Local Property Tax commenced.
My colleague, the Minister for the Environment, Community and Local Government, has responsibility for the allocation of funding to local authorities.
175. Deputy Tom Fleming asked the Minister for Finance if he will review the budget 2014 proposal in respect of tax relief credits for single parents as it will mean a cut of €32 per week for the non-primary carer or €1,650 per year; if he will take into consideration that thousands of non-primary carers are care sharing two and three days every week and are paying maintenance; and if he will make a statement on the matter. [46111/13]
View answerAs the Deputy is aware, the One-Parent Family Tax Credit is being replaced with a new Single Person Child Carer Tax Credit from 1 January 2014. The Single Person Child Carer Tax Credit will be of the same value, i.e. €1,650, as the existing One-Parent Family Tax Credit and will also carry the same entitlement to the extended standard rate tax band of €36,800 per annum. The new credit will be targeted such that it is available only to the primary carer of the child. A maximum of one credit will be available per single carer/claimant, regardless of whether he or she cares for more than one child. This is the same condition that applies to the current One-Parent Family Tax Credit. Given the difficult fiscal environment it is essential to review all tax reliefs, credits and incentives in order to ensure that they are properly targeted and if necessary re-focused in order that they can achieve the socio-economic objectives that are set for them. A system that allows multiple claims in respect of the same child is unsustainable.
The Commission on Taxation acknowledged that the One-Parent Family Tax Credit plays a role in supporting and incentivising the labour market participation of single and widowed parents. However, in its recommendations it concluded that the credit should be retained but that it should be allocated to the principal carer only. The restructuring of the credit will achieve such an outcome.
Allocation of childcare responsibilities is primarily for parents to agree. Practical implementation issues are being considered as part of the Finance Bill process.
176. Deputy Seamus Kirk asked the Minister for Finance if he will provide a county breakdown of building land in possession of the National Asset Management Agency; and if he will make a statement on the matter. [46141/13]
View answerThe Agency’s Annual Report and Financial Statement 2012 give a geographical breakdown of the total portfolio albeit not by county. A county breakdown of property securing NAMA’s loans, by value, was provided in the Agency’s Annual Report and Financial Statements for 2011, which is available on the NAMA website, www.nama.ie. NAMA advises that the geographical distribution of building land is closely aligned with the overall portfolio breakdown as set out in the 2011 Report. NAMA has pointed out that in excess of 90% of all Irish properties securing its loans are located in Dublin, the wider Greater Dublin Area, Limerick, Cork and Galway.
177. Deputy Patrick Nulty asked the Minister for Finance when the next visit to Ireland by the troika will take place; and if he will make a statement on the matter. [46151/13]
View answerThe 12th review mission of the EU-IMF Programme of Financial Support is scheduled from 29 October to 7 November 2013.
178. Deputy Eoghan Murphy asked the Minister for Finance if his Department conducts modelling to forecast the way potential increases in a person's disposable income might be distributed within the economy in the present climate; for example if €4 billion was to be realised in the wider economy by way of abolition of the USC, the way this might impact upon the economy in terms of the percentage going into savings, debt repayments, the purchase of goods and services and so on; and the way this might translate in terms of additional VAT receipts, greater activity in the domestic economy and job creation in small and medium enterprises. [46153/13]
View answerIn analysing the economy and in producing economic forecasts, my Department models household disposable income in aggregate terms and projects how this income is allocated between spending and savings. The impact of these decisions on tax revenue and employment is also modelled. In relation to the specific example, when discussing the merits of such a measure it is important not to lose sight of the current fiscal position. Despite the considerable progress made in recent years, Ireland’s budget deficit remains one of the highest in Europe. In this context the opportunity cost of any large-scale revenue stimulus would be considerable. Moreover, any revenue shortfalls would have to be made up from alternative measures in order to continue to meet our deficit targets.
It should be recalled that Ireland is a small, open economy with imports accounting for over three quarters of GDP. It is therefore likely that a considerable amount of additional household expenditure would leak out through an increase in imports.
Finally I would say that while there is a clear need to address the fiscal imbalances of the State, this Government is cognizant of the pitfalls of excessively taxing labour. Reflecting this, the Programme for Government contained commitments to not increase the income tax rate and Budget 2014 included no increases in income tax or the Universal Social Charge. This, I feel, further demonstrates our commitment to encouraging labour supply and supporting employment growth into the future.
179. Deputy John McGuinness asked the Minister for Finance the reason a tax debt is registered against a person (details supplied) in County Kilkenny; and if records will be corrected. [46189/13]
View answerI am advised by Revenue that the person in question elected to be jointly assessed for tax with his wife in accordance with Section 1017 of the Taxes Consolidation Act 1997. Section 1017 (1)(a) clearly states that the ‘husband shall be assessed and charged to income tax, not only in respect of his total income (if any) for a specified year, but also in respect of his wife’s total income (if any) for any part of that year and for the purposes of the Income Tax Acts that income shall be deemed to be his income. Revenue has informed me that the person in question and his spouse were previously the subject of a tax audit, which resulted in the person being assessed for Income Tax liabilities for the years in question. Revenue has confirmed to me that the liabilities correctly relate to the person in question and his spouse and do not relate to the company mentioned by the Deputy in his representation. Revenue also confirmed to me that the person in question did not at any stage appeal against the tax assessments to the Appeal Commissioners and that the assessments are soundly based.
However, notwithstanding that the liability is correctly due, Revenue has taken the financial circumstances of the person in question into account and has suspended all collection/enforcement activity indefinitely. Revenue has confirmed its decision in this regard to the person in question both by telephone and in writing.
180. Deputy John McGuinness asked the Minister for Finance if payment of interest is due in respect of a person (details supplied) in County Kilkenny. [46194/13]
View answerI am advised by the Revenue Commissioners that there is no entitlement to a claim for payment of interest by Revenue in this case. The position is that in September 2011, as part of a Revenue Audit, income tax assessments of €27,633.46 and €28,295.28 were raised for years 2008 and 2009 respectively. These assessments were made in the absence of returns and following failure by the taxpayer to cooperate with the auditor or provide satisfactory explanations to queries raised. There was no response to these assessments or to the subsequent demands for payment nor was there any appeal made against these assessments. In the circumstances Notices of Attachment issued in January 2012 which resulted in the payment of €41,771.50. This amount was credited against Income Tax for the years under audit.
The Revenue audit was eventually concluded and a settlement formally agreed on 30th April 2013. The overall liabilities amounted to €16,199.08. Having regard to the "attachment" payment, this left a net overpayment of €25,572.42 which was repaid on 19th June 2013.
Under the provisions of section 865A(2), Taxes Consolidated Act 1997 (as amended) interest on repayment of tax arises only after 93 days from the day on which the claim to repayment of tax becomes a valid claim. This claim did not become a valid claim until 30th April 2013, the date on which the audit settlement was formally agreed with Revenue. As the repayment was made on 19th June 2013, which was less than 93 days after the claim became a valid claim, there is no entitlement to an interest payment under the legislation.
Revenue’s Complaint and Review Procedures provide customers with an open and transparent mechanism for making a complaint and seeking a review of Revenue’s handling of a case. This comprises of local review and independent Internal or External review. Full details can be found on Revenue website www.revenue.ie. This procedure is available in this case should the taxpayer choose to avail of it.
181. Deputy Róisín Shortall asked the Minister for Finance the sources of unearned income that are counted in the determination of whether a person exceeds the €3,174 threshold applied by Revenue for the purposes of defining a chargeable person; the way interest from savings is counted in this process; if interest from savings exceeding €3,174 in a year would mean that the person is considered a chargeable person; and where rental income and-or dividend payments in a year do not exceed €3,174 per year should interest from savings be added in determining whether or not a person is considered a chargeable person or is it exempt in these circumstances; and the way married couples are treated in these arrangements. [46215/13]
View answerUnder the Tax Acts, a chargeable person is a person who is chargeable to tax on income. However, in the case of income tax, an individual will not be regarded as a chargeable person where:
- the individual is in receipt of PAYE income only; or
- the individual is in receipt of PAYE income and has small amounts of other income that is being fully taxed through the PAYE system or has been fully taxed at source.
In all other cases, a person who is chargeable to tax on income is a chargeable person and must file a tax return through the self-assessment system.
Revenue has determined that the amount of non-PAYE income which can be taxed in this way is €3,174 per person chargeable to tax.
The €3,174 limit applies to all non-PAYE income from whatever source–for example, deposit interest, rental income and dividends–and refers to the total of such income. That is, all such income should be added together for the purposes of determining whether the non-PAYE income exceeds €3,174.
Therefore, where the total non-PAYE income on which a person is chargeable to tax:
(a) does not exceed €3,174, and
(b) has been subject to tax through the PAYE system (or has been fully taxed at source),
that person is not a chargeable person.
Married couples, who are jointly assessed, are entitled to earn €3,174 before the spouse on whom the income is assessed becomes a chargeable person. However, where a married couple opts for separate assessment or single treatment each person will have a limit of €3,174.
182. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding the pension levy and tax relief; and if he will make a statement on the matter. [46230/13]
View answerIn Budget 2013, I made a number of commitments in relation to the tax provisions affecting supplementary pension provision. I said that tax relief on pension contributions would continue at the marginal rate of tax. In addition, I gave an undertaking that the 0.6% pension fund levy would not be renewed after 2014. I considered that I was in a position to make these significant commitments on foot, among other things, of proposals in late 2012 from the pensions sector for changes to the Standard Fund Threshold (SFT) regime, as an alternative to standard rating of pension tax relief, which it was claimed would yield savings and tax revenues in the region of €400 million. Pending further analysis of this claim, I included a much lower figure of €250 million in the Budget 2013 arithmetic. That analysis has since revealed significant downside risks to the achievement of even this lower level of yield or savings. The estimate of the yield from the changes to the SFT regime which I announced in last week’s Budget is €120 million. These changes differ in some respects from those proposed by the pensions sector and reflect, on legal advice, the requirement to protect pension rights at the date of change. In addition, valuation factors to place a value on Defined Benefit pensions for SFT purposes will vary with the age at which the pensions are drawn down thereby improving equity within the regime.
I would not categorise my engagement with the pensions sector on this matter as a “bargain”, in the manner suggested by the details supplied with the Deputy’s question. However, the assessment that the changes to the SFT regime required to deliver on the Budget 2013 commitment to cap taxpayer subsidies to higher value pensions would have a considerably lower yield than originally put forward, meant that the achievement of the overall budgetary objectives (including the continuation of the reduced VAT rate for the tourism sector as part of the continued commitment to the Jobs Initiative) necessitated the imposition of the additional 0.15% pension fund levy for 2014 and 2015.
As regards the restriction of tax relief on health contributions, the position is as I stated in my Budget day speech, that from 16 October 2013, tax relief for medical insurance premiums will be restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings will no longer qualify for tax relief.
The cost of Income Tax relief in respect of medical insurance has increased significantly in recent years, at €404 million in 2011, €448 million in 2012 and is estimated to be €500 million in 2013. Despite the increasing cost of the relief, the numbers insured are estimated to have reduced by approximately 170,000 over the same period, while at the same time the level of medical cover has decreased on some policies. Against this background the increase in costs is unsustainable.
The Revenue Commissioners estimate, based on 2012 data, the most up to date data available, that up to 577,000 policy holders, which equates to just under 53% of all policies, may be affected by this measure. However, I should point out that many will only be affected marginally, depending on the cost of the policies that individuals purchase. In addition, individuals can of course opt for less expensive policies and therefore avoid the impact of this measure entirely.
The new ceilings will ensure some continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies.
It should be noted that the Commission on Taxation in its 2009 report recommended the retention of medical insurance relief but that it should be limited. The introduction of an upper ceiling on the amount of medical insurance premiums that will qualify for tax relief achieves this recommendation.
183. Deputy Pearse Doherty asked the Minister for Finance if the home renovation incentive announced in budget 2014 will include VAT relief for the installation of water treatment units necessary to improve drinking water standards. [46234/13]
View answerAs the Deputy is aware, I announced the Home Renovation Incentive in the recent Budget. This scheme will run from 25 October 2013 to 31 December 2015 and provides for tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out on a principal private residence. There is no VAT relief under this scheme. Qualifying expenditure is expenditure subject to the 13.5% VAT rate. The work must cost a minimum of €5,000 (exclusive of VAT) which would attract a credit of €675. Where the cost of the work exceeds €30,000 (exclusive of VAT) a maximum credit of €4,050 will apply. The credit is payable over the two years following the year in which the work is carried out. The work must commence on or after 1 January 2014 and be carried out during 2014 or 2015.
Homeowners must be Local Property Tax compliant in order to qualify under the Incentive, while building contractors must be tax compliant in order to carry out works. The scheme will be administered through Revenue’s online systems. Contractors will be required to inform Revenue in advance of details of works to be carried and will also be required to notify Revenue in relation to any payments received in respect of the works. Homeowners will be able to view the information provided to Revenue by the contractor through the Revenue electronic systems and will also claim the relief through those systems.
The installation of water treatment units will be included for the purposes of this scheme.
184. Deputy Róisín Shortall asked the Minister for Finance further to the arrangements announced in budget 2014 relating to pension pot size, pension contributions and so on, the way the proposed changes will impact on the pension tax relief regime currently applied to civil servants earning €125,000, €150,000 and €200,000 respectively. [46270/13]
View answer185. Deputy Róisín Shortall asked the Minister for Finance further to the arrangements announced in budget 2014 relating to pension pot size, pension contributions and so on, the way the proposed changes will impact on the pension tax relief regime currently applied to members of the Cabinet. [46271/13]
View answerI propose to take Questions Nos. 184 and 185 together.
As both questions 184 and 185 relate to the changes to the Standard Fund Threshold (SFT) regime announced in my 2014 Budget Statement and reflected in the recently published Finance (No.2) Bill 2013, I propose to deal with them together. I should state at the outset that there is insufficient detail in the questions to allow for anything other than a general response.
The primary purpose of the changes I am making to the SFT regime is to further restrict the capacity of higher earners to fund or accrue large pensions through tax-subsidised sources. The SFT regime addresses the problem of pension overfunding and excessive pension accrual by dealing with it at the point of pension drawdown in retirement rather than by applying restrictions to pension savings or accrual upfront. The regime achieves this by imposing a penal tax charge on the value of retirement benefits above set limits when they are drawn down. In this way it acts to discourage the building up of large pension funds in the first place or unwinds the tax advantage of such overfunding by clawing back, through the penal tax charge, the tax relief granted.
The changes I am making can be summarised as follows:
- firstly, the absolute value of the SFT is being reduced, with effect from 1 January 2014, from €2.3m to €2m;
- secondly, the valuation factor to be used for establishing the capital value of defined benefit (DB) pension rights at the point of retirement, where this takes place after 1 January 2014, is being changed from the current standard valuation factor of 20 to a range of higher age–related valuation factors that will vary with the individual’s age at the point at which the pension rights are drawn down;
- thirdly, in calculating the capital value of a DB pension at the point of retirement, transitional arrangements provide for a “split” calculation where part of the pension had already been accrued at 1 January 2014 so that the part accrued up to that date will be valued at a factor of 20 and the part accrued after that date valued at the appropriate higher age-related valuation factor;
- finally, the reimbursement options, introduced in Finance Act 2012, for public servants affected by chargeable excess tax are being amended and extended.
As occurred on the occasion of the introduction of the SFT regime in 2005, and again when the value of the SFT limit was reduced to €2.3m in 2010, the legislation contained in the Finance Bill provides for an individual who has pension rights on 1 January 2014 in excess of the new lower SFT limit of €2m, to claim a Personal Fund Threshold (PFT) from Revenue in order to protect or “grandfather” the value of those rights on that date. This is subject to a maximum PFT of €2.3m, and individuals with PFTs from 2005 or 2010 retain those PFTs.
As before, the “grandfathering” provisions contained in the legislation reflect legal advice from the Attorney General. However, unlike previous occasions, the grandfathering arrangements this time around had to take cognisance not just of the reduction in the absolute level of the SFT from 1 January 2014, but also of the increase, from that date, in the factors for converting DB pension rights into capital value equivalents. It is for that reason, lest there be any suggestion that the changes had retrospective application, that DB rights accrued up to 1 January 2014 are to be capitalised at the existing valuation factor of 20, both for the purposes of determining if there is a PFT and for the purposes of placing a capital value on those rights at the time of retirement, where that takes place after 1 January 2014.
The changes and grandfathering arrangements outlined above apply, as appropriate, to both DB and defined contribution (DC) pension arrangements in both the private and public sectors. As regards DB pension arrangements, it is irrelevant whether an individual is a higher paid civil servant, a Cabinet Minister or a highly paid member of a private sector DB scheme, the same SFT rules apply to all such arrangements.
Specifically, the new lower SFT limit will apply to both DC and DB arrangements. Those in DC pension arrangements can seek a PFT from Revenue if the capital value of their arrangements exceeds €2m on 1 January 2014, subject to a maximum PFT of €2.3m. If the value of their DC pension arrangements is below the SFT on 1 January 2014, their funds can continue to accumulate up to €2m through further tax-relieved pension contributions and fund growth, subject to the various annual contribution and earnings limits that apply, without any risk of a chargeable excess arising. Members of DB pension arrangements can equally aspire to a maximum “tax–relieved” fund of €2m. However, in the case of DB pension arrangements, members of such arrangements do not have individual “earmarked” funds (as is the case in DC arrangements) and this, coupled with the fact that pension benefits in such arrangements reflect a “benefit promise” based on salary and service, dictates that the capital value of pension rights arising under such arrangements has to be determined in some other way.
The SFT regime provides (and has always provided) a simple formula for this purpose. The formula essentially requires the annual amount of pension payable to an individual under the arrangement to be multiplied by a valuation or capitalisation factor in order to establish the capital value, both for PFT purposes and for the purposes of establishing the value of DB pension rights at the point of retirement. Up to now, a single valuation factor of 20 has been used for these purposes. In light, however, of the major criticism levelled at the existing SFT regime, that the fixed rate conversion factor of 20:1 was inequitable relative to DC pension arrangements given the higher market annuity rates that those with DC pension arrangements could face if they were to purchase annuities, I have moved to introduce higher age-related factors. This will substantially improve the equity between DC and DB arrangements and as between those who retire at younger ages and those who retire later in life. These are significant changes.
The value of DB pension rights accrued up to 1 January 2014 will, under the grandfathering requirements, be valued for the purposes of the SFT regime at the existing factor of 20. If the capital value so determined exceeds the new lower SFT limit of €2m, such individuals may seek a PFT from Revenue, subject to the overall limit of €2.3m referred to earlier. In such cases, additional pension benefits accrued after 1 January will be valued using the relevant higher age-related factor and will, as for DC arrangements, be fully exposed to chargeable excess tax. Where the capital value of DB rights is less than €2m on 1 January, such individuals may continue to accrue pension rights up to the SFT limit but those additional rights will be valued at the relevant higher age-related factor.
Whether DB or DC arrangements are involved, on each occasion that an individual becomes entitled to receive a benefit under a pension arrangement for the first time (called a “benefit crystallisation event” or BCE) they use up part of their SFT or PFT, as the case may be. At each BCE, a capital value has to be attributed to the benefits that crystallise and the value is then tested against the SFT or the individual’s PFT, as appropriate, by the pension scheme administrator. For DC pension arrangements, the capital value of pension rights when they are drawn down after 1 January 2014 is simply the value of the assets in the arrangement that represent the member’s accumulated rights on that date, in other words the value of the DC fund at the point of drawdown. In the case of DB pension arrangements, the default position is that the capital value of such rights drawn down after 1 January 2014 is determined by multiplying the gross annual pension that would be payable to the individual by the appropriate age-related valuation factor. If the DB arrangement provides for a separate lump sum entitlement (otherwise than by way of commutation of part of the pension) e.g. most public service schemes, the value of the lump sum is added to the capital value of the DB pension to arrive at the overall capital value.
However, reflecting the grandfathering requirements referred to earlier, where part of the DB pension has been accrued at 1 January 2014 and part after that date, the transitional arrangements provide for the part accrued at 1 January to be valued at the factor of 20 and the part accrued after that date at the appropriate higher age-related factor.
When the capital value of a BCE, either on its own or when aggregated with earlier BCEs, exceeds the SFT, or an individual’s PFT, the excess is subject to an immediate tax charge at 41%, which has to be paid upfront by the pension fund administrator and recovered from the individual. In addition, when the remainder of the excess is subsequently drawn down as a pension (or, for example, by way of a distribution from an Approved Retirement Fund or vested Personal Retirement Savings Account) it is subject to tax at the individual’s marginal rate, thus giving rise to an effective income tax rate on a chargeable excess of some 65%, excluding any liability to USC and PRSI.
The Finance Bill also amends and extends the reimbursement options, introduced in Finance Act 2012, for public servants affected by chargeable excess tax who are required to reimburse the public sector pension fund administrator for the upfront payment of the tax to Revenue. Unlike affected individuals in the private sector, public servants cannot minimise or prevent the breaching of the SFT or PFT by ceasing contributions or benefit accrual. The focus of the changes is to reduce the amount that can be recovered from the net retirement lump sum payable to the individual to a maximum of 20% of the net lump sum (from 50%) and to include the option of reimbursement of the pension fund administrator solely by way of a reduction in the gross pension payable over a period not exceeding 20 years.
186. Deputy Clare Daly asked the Minister for Finance the reason he has not responded to the Newbridge Credit Union action group's alternative proposals which would allow it to keep the credit union in Newbridge, while at the same time staff have received a notice that they will be transferring to Naas, County Kildare. [46288/13]
View answerAs agreed at the meeting with Newbridge Credit Union Action Group, on receipt of their alternative proposal, I forwarded it to Professor Honohan, Governor of the Central Bank, with a view to a meeting between the Central Bank and the Action Group. This is now a matter for the Central Bank and I understand that the meeting took place last week. A transfer under the Central Bank and Credit Institutions (Resolution) Act 2011 constitutes a relevant transfer under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003, which was the basis for the notification of staff.
187. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to debtors within the National Asset Management Agency applying pressure to commercial tenants with upward-only rent leases; and if NAMA has any policy which encourages debtors to engage with tenants on rents, rather than pursue them through expensive court battles and potentially close tenant businesses down. [46340/13]
View answerNAMA proactively encourages its debtors and receivers to engage with tenants in relation to rents and operates a specific Guidance Note to enable tenants to make an application through their landlord for a reduction in rent on upward-only commercial leases relating to business premises that secure its loans. Under the Guidance Note on Upwards Only Rent Reviews, which NAMA published in December 2011, and which is available on the Agency’s website, http://www.nama.ie/download/publications/NAMAGuidanceNoteUpwardOnlyRentReviews.pdf it has to date approved rent abatements proposed by its debtors and receivers with an aggregate annual value in excess of €17m. NAMA has refused only 10 of the 312 applications received to date. If any tenant considers that his or her landlord is not engaging with them as specified in the Guidance Note, he or she can contact NAMA directly through the email address, info@nama.ie.
188. Deputy Seán Crowe asked the Minister for Finance if he will establish an independent mechanism where the sale of property and outlets by the National Asset Management Agency is reviewed and a report given to Dáil Éireann, or a nominated Dáil Committee, outlining the original perceived value of the property or outlet; the perceived value at point of sale, the sale price and the value of the property or outlet now; if he will also include the person or company to whom it was sold; and for full accounting years to end 2013 and in future years. [46349/13]
View answerI do not intend to establish such a mechanism. NAMA does not sell property. Rather, property securing NAMA’s loans are sold by debtors and receivers. NAMA is subject to confidentiality obligations under sections 99 and 202 of the NAMA Act. It also has a commercial and statutory independent mandate and strategies applied in accordance with this mandate, including those relating to the sale of property, are a matter for the NAMA Board. As with the detailed business of other commercial State bodies, it would be inappropriate for members of the Oireachtas to become involved in the detail of individual transactions involving NAMA. It is my view also that the effect of the proposed mechanism would be to place NAMA and, by extension, Irish taxpayers, at a commercial disadvantage relative to banks and other competing deleveraging entities. There is also a risk that such a mechanism would discourage potential buyers from participating in NAMA-related sales.
189. Deputy Seán Crowe asked the Minister for Finance if a list of all properties handled and sold by the National Asset Management Agency is available; the total original value of the properties; the value for which they were sold; and if NAMA has made available to his Department the names of persons or companies that have bought properties from NAMA. [46350/13]
View answerI would remind the Deputy that, as Minister for Finance, I have no role in relation to strategies applied by the NAMA Board in fulfilling its commercial mandate and I do not intervene in the detail of NAMA’s business and I would consider it inappropriate to do so. More generally, the publication of information relating to individual NAMA sales, as suggested by the Deputy, would be in contravention of NAMA’s statutory duty of confidentiality; would place it and by extension Irish taxpayers at a commercial disadvantage relative to other deleveraging entities that would not be subject to similar requirements; and would ultimately reduce the expediency of NAMA’s sales and the value realised from these sales. The proposed measure would, therefore, have the effect of obstructing NAMA from achieving its statutory commercial mandate on behalf of Irish taxpayers.
190. Deputy Seán Crowe asked the Minister for Finance if there are any properties sold by the National Asset Management Agency where the full price for a property has not been received or discharged in full to NAMA by the buyer. [46351/13]
View answerI am advised by NAMA that there have been no cases to date where a purchaser’s contractual arrangements with NAMA have not been fulfilled.
