Written Answers Nos. 213-232
213. Deputy Tony McLoughlin asked the Minister for Finance the reason a person (details supplied) in County Sligo has not received a response from the Revenue Commissioners regarding the local property tax to attempts to have the band 3 on their property adjusted to band 2; and if he will make a statement on the matter. [46811/13]
View answerI am advised by Revenue that a valuation band adjustment was not made to the property to which the Deputy refers because the original correspondence sent to Revenue in relation to the issue was not received. As a consequence, Revenue based the 2014 liability on the 2013 LPT declaration, which confirmed that the value of the property in question was within Band 3 (€150,000 to
€200,000) and as such was correctly liable to a €315 charge for the full year.
From discussions between LPT Branch and the Deputy’s office it appears that the email address used to submit the correspondence to Revenue contained an incorrect character and was not delivered to the LPT email address. Revenue has confirmed to me that the Deputy’s office has now provided copies of all the relevant correspondence. Revenue has also confirmed that a member of the LPT Branch has contacted the person in question directly and confirmed to him that the valuation has now been amended from Band 3 to Band 2 and that he is liable to a €225 charge for 2014 rather than €315.
Questions Nos. 214 to 216, inclusive, answered with Question No. 143.
217. Deputy Pearse Doherty asked the Minister for Finance his views on whether it is acceptable that the National Asset Management Agency will make available the names of developers not in NAMA, but will not state who is in NAMA, for the purposes of tenants wishing to establish if their landlords are in NAMA and therefore if they may be eligible for NAMA's assistance in rental contract negotiations. [46896/13]
View answerNAMA is subject to similar legal requirements as other lenders that preclude it from disclosing details relating to its debtors or their properties. As the Deputy is aware, NAMA operates a specific Guidance Note to facilitate tenants in making an application through their landlord for a reduction in rent on upward-only commercial leases relating to business premises that secure its loans. The Guidance Note is published on NAMA’s website, www.nama.ie. 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, and NAMA will seek to ensure that appropriate engagement takes place in those cases where the property concerned acts as security for NAMA loans. Clearly, in cases where the property does not secure NAMA loans, NAMA has no role to play and will make that clean to the tenant. NAMA’s record is borne out by its approval to date of rent abatements with an aggregate annual value in excess of €17m, which is enabling small and medium businesses to continue trading and to maintain employment in difficult trading conditions.
218. Deputy Pearse Doherty asked the Minister for Finance the number of persons that will be affected by the decision to reduce the standard fund threshold from €2.3 million to €2 million; and the amount on average he expects these persons to lose from their annual pension contribution tax reliefs. [46906/13]
View answer219. Deputy Pearse Doherty asked the Minister for Finance the way contributions to pensions above the standard fund threshold will be treated for tax purposes, where the person has applied for or claimed a personal fund threshold from the Revenue Commissioners. [46907/13]
View answer220. Deputy Pearse Doherty asked the Minister for Finance if he will respond to statements from those within the pension industry and others that changes to the standard fund threshold will result in an effective tax rate of 70% being paid on pension draw down in excess of €60,000 per annum. [46908/13]
View answerI propose to take Questions Nos. 218 to 220, inclusive, together.
It is difficult to be definitive about the number of individuals that may be affected by the changes to the Standard Fund Threshold (SFT) regime. Among other reasons, this is because the changes are likely to have both direct impacts and indirect behavioural impacts. The direct impacts will be on individuals whose pension savings or entitlements will be in excess of the reduced SFT on 1 January 2014 (and who may seek a Personal Fund Threshold (PFT)) and those whose pension savings or entitlements may be below the threshold on that date but, with future contributions or accruals, may exceed the threshold in time. For both of these groups where the SFT or PFT is exceeded at the point of retirement, chargeable excess tax will arise. However, the changes are also likely to mean that individuals (generally in the private sector) who may otherwise be affected by the amendments to the SFT, and who have the flexibility to do so, may change behaviour and opt out of additional pension saving or pension accrual, in circumstances where they can obtain compensatory payments from their employer, in order to avoid breaching the SFT or their PFT. Overall, the changes could potentially impact, both directly and indirectly, on up to 10,000 individuals in the short to medium term.
The estimated yield from the changes to the SFT regime is €120 million and is expected to arise in two main ways. Firstly, from the cessation of tax-relieved contributions to pension saving from those employees and individuals in the private sector affected in the short to medium term by the changes and secondly by the conversion, to some degree, of employer pension contributions and pension promises in respect of those employed individuals into compensatory current taxable remuneration. In addition, some of the yield will also arise from affected individuals who remain in pension arrangements and continue to contribute to them or accrue benefits under them, and will take the form of chargeable excess tax payable at retirement where their SFT or Personal Fund Threshold (PFT), as appropriate, is exceeded. This increased tax will effectively claw back any tax subsidy which helped fund the excess over the SFT or PFT.
An individual who has pension savings or pension rights on 1 January 2014 in excess of the new lower SFT limit of €2 million may 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 (i.e. the value of the current SFT). For such an individual, any further pension contributions or pension accrual will give rise to a chargeable excess in due course. If the value of an individual’s pension arrangements is below the SFT on 1 January 2014, they can continue to accumulate up to €2 million through further tax-relieved pension contributions and/or pension accrual (subject to the various annual pension contribution and earnings limits that apply) without any risk of a chargeable excess arising.
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. 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 of 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 also 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. In this way, the SFT regime addresses the problem of pension overfunding and excessive pension accrual by imposing a penal effective tax charge on the value of retirement benefits above set limits when they are drawn down, thus discouraging the building up of large pension funds in the first place or unwinding the tax advantage of such overfunding.
221. Deputy Pearse Doherty asked the Minister for Finance the number of persons that will be affected by the abolition of the one-parent family tax credit. [46912/13]
View answerI am advised by the Revenue Commissioners that based on the most up to date data it is estimated that up to 15,400 individuals may be affected by the restriction of the restructured credit to the principal carer. However, ultimately it will depend on the circumstances of each individual carer and the allocation of childcare responsibilities, which is primarily for parents to agree.
222. Deputy Pearse Doherty asked the Minister for Finance his views regarding the leaked publication of the Irish Bank Resolution Corporation statement of affairs; if this statement is accurate; and if he has been alerted to any concerns around advanced billing of IBRC because of knowledge of the pending liquidation. [46914/13]
View answerThe Statement of Affairs was submitted by the former directors of the Irish Bank Resolution Corporation (now in Special Liquidation) on the 30th September and was then made available to any creditor of the bank who requested a copy. The Department is aware that the Statement was leaked and published on-line.
The Special Liquidators confirm that they have seen no evidence that there was advanced billing prior to the Special Liquidation of Irish Bank Resolution Corporation Limited.
223. Deputy Pearse Doherty asked the Minister for Finance if any measures were contained in the budget 2014 document that were not included in the draft that was submitted to the troika; and if so, which measures. [46915/13]
View answerI want to be absolutely clear. The Troika did not receive any advance draft of the Budget.
Officials from my Department and the Department of Public Expenditure & Reform did however travel to Brussels to meet with the Troika in advance on the Budget where the broad parameters of Budget 2014 were discussed. As is wholly appropriate, members of the Dáil are the first to view the budgetary measures.
Question No. 224 answered with Question No. 201.
225. Deputy Pearse Doherty asked the Minister for Finance if he will list the measures included in the finance section of budget 2014 and the subsequent Finance Bill that were proposed to him by tax advisers from outside his Department; and if he will provide details of those advisers. [46917/13]
View answerPrior to Budget 2014 I received in excess of 500 pre-Budget submissions from many sources. This would have included a variety of organisations, representative groups and individual members of the public. Many of the submissions would also have covered a wide range of issues that would already have been under consideration in the Budget process. Submissions would have been recorded and distributed to relevant officials. Due regard would have been taken of the views expressed in the context of Budget and Finance Bill measures. Where such views accorded with policy intentions, they may have been reflected in measures introduced in the Budget. However, it would not be possible in the time available to identify specific proposals, or parts thereof, which would have been reflected in this way.
226. Deputy Pearse Doherty asked the Minister for Finance the reason the Betting (Amendment) Bill 2012 was withdrawn and replaced by the Betting (Amendment) Bill 2013; the timeframe for when this 2013 Bill will be passed; and its relationship to the measures on the taxation on betting in the Finance Bill and Budget 2104. [46936/13]
View answerThe Betting (Amendment) Bill 2012 was designed to ensure a fair and equal treatment of all bookmakers and betting exchanges (betting intermediaries) offering services in Ireland and to bring into the licensing regime, for the first time, all remote bookmakers and betting intermediaries. The introduction of a licensing regime for remote bookmakers and betting intermediaries which, in the majority of cases, are based outside the jurisdiction poses significant challenges in terms of enforcement and compliance. Some significant changes were needed, therefore, to the Bill as published in July 2012 to strengthen controls as far as possible to ensure compliance with the new regulatory regime.
Officials from my Department worked closely with the Office of Parliamentary Counsel, the Office of the Attorney General, the Revenue Commissioners and the Department of Justice and Equality in this regard and this resulted in the publication of the Betting (Amendment) Bill 2013 in July last. This new Bill supersedes the Betting (Amendment) Bill 2012 hence the motion to withdraw that Bill.
The new licensing system for remote operators will serve the important public interest in preventing crime and protecting consumers against fraud and will ensure that all businesses offering betting services from Ireland or to persons in Ireland are regulated appropriately. The Betting (Amendment) Bill 2013 amends, for that purpose, the Betting Act of 1931 which contains the existing provision governing licensing of bookmakers.
Under the Technical Standards Directive, the EU Commission had to be consulted about the Bill following its publication and this led to a standstill period of a minimum of 3 months. Scheduling of the Bill through the Dáil is a matter for the Whips. Subject to this, it is my intention to progress the Bill in the current session.
Provision was made in the Finance Act 2011 for the taxation of remote bookmakers and betting exchanges, subject to a Ministerial Commencement Order. This order cannot be commenced until the Betting (Amendment) Bill 2013 has been enacted. Changes contained in Finance Bill (No. 2) 2013 are technical changes required to bring definitions and licensing periods in line with those contained in the Betting (Amendment) Bill 2013.
227. Deputy Ciarán Lynch asked the Minister for Finance if he will provide the specification of the type of works and materials covered by the home renovation tax relief system; the works and materials that are excluded; and if he will make a statement on the matter. [46955/13]
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. Works carried out between 25 October 2013 and 31 December 2013 will be considered to have taken place in 2014 for the purposes of awarding the tax credit.
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 type of work covered includes extensions, garages, attic conversions, supply and fitting of kitchens, bathrooms and built in wardrobes, water treatment units, window fitting, plumbing, tiling, rewiring and plastering.
Items such as furniture, white goods and carpets are not covered as well as work which is subject to VAT at 23%.
228. Deputy Finian McGrath asked the Minister for Finance the position regarding property tax in respect of a person (details supplied) in Dublin 5. [46956/13]
View answerI am advised by the Revenue Commissioners that the amount of Local Property Tax (LPT) due in 2014 is based on the valuation band declared by property owners in their 2013 LPT Returns.
On the specific case referred to by the Deputy, I am advised that an LPT1 return was filed for 2013, declaring that the value of the property fell within Band 03 (€150,000 to €200,000). The annual liability for this valuation band is €315. The amount of tax due for 2013 was €157 which is the correct six monthly rate for a property valued in band 03. A payment to the value of €157 was also made. The 2014 payment notice recently issued by Revenue indicated an amount of €315 due, based on the declaration filed in 2013.
Question No. 229 answered with Question No. 143.
230. Deputy Thomas P. Broughan asked the Minister for Finance if he will report on the work of the special liquidator of the Irish Bank Resolution Corporation; and if he will indicate if a discount above 4.5% will be applied to any of the IBRC loan books which is scheduled to be sold off before the end of this year to encourage further sales of the loan book before any remaining loans are transferred to the National Asset Management Agency. [47016/13]
View answerIt is important to clarify that a “discount of 4.5%” is not being applied to the IBRC loan books. The Special Liquidators have been tasked with obtaining an independent valuation of the loan assets of IBRC. The Special liquidators have appointed independent professional advisors who have employed standard valuation methodologies appropriate to each class of asset of IBRC to determine a valuation price. In arriving at the valuation the independent advisers have been advised to apply a discount rate of 4.5% in determining the present value of future cash flows of the asset in the case where a discounted cash flow valuation methodology is employed. Further, a discount of 2.32% will be applied to all loan asset valuations to take into account security and title issues associated with loan assets, to arrive at the Valuation Price.
Following that independent valuation process, the Special Liquidators will sell the assets of IBRC (which are subject to the floating charge) in an open and transparent process at or above their independent valuation and failing that, the Special Liquidators will sell the assets to NAMA at their valuation price.
I do not intend on providing any further instructions or directions to the Special Liquidators in relation to the valuation of the assets of IBRC.
231. Deputy Pearse Doherty asked the Minister for Finance the steps that are open to persons who believe their property was overvalued for the purpose of the local property tax in 2013 and who now wish to change the value for 2014. [47040/13]
View answerAs I told the House previously in my replies to Questions No. 65 (35714/13) on 17 July 2013, No. 77 (44072/13) on 17 October 2013 and No. 131 (44138/13) on 22 October 2013, Local Property Tax (LPT) is a self-assessed tax so it is a matter for the property owner to calculate the tax due based on his or her assessment of the market value of the property as at 1 May 2013. I also informed the House that the Revenue Commissioners had confirmed that if a liable person had genuinely overpaid the tax through an error or mistake, then the person should write to LPT Branch, Government Buildings, Ennis, Co Clare, clearly setting out how the overpayment arose and providing the relevant supporting documentation.
I am further advised by the Commissioners that once the relevant documentation is received LPT Branch will make direct contact with the person. Should it transpire that the person did in fact overpay the 2013 liability then it will be possible to offset some or all of the overpayment to the 2014 liability, or to make a repayment.
Question No. 232 answered with Question No. 143.
