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Tuesday, 12 Nov 2013

Written Answers Nos. 95-111

Tax Collection

Questions (95)

Michael McGrath

Question:

95. Deputy Michael McGrath asked the Minister for Finance if he will set out the different payment options open to a person to settle their capital acquisitions tax liability with the Revenue Commissioners; and if he will make a statement on the matter. [48032/13]

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Written answers

Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. I am informed by the Revenue Commissioners that CAT is a self assessment tax ordinarily payable electronically through Revenue’s Online System (ROS). Where the valuation date for a gift or an inheritance is in the period 1 January to 31 August, a CAT return and payment of CAT due must be made by 31 October in that year. Where the valuation date for a gift or an inheritance arises between 1 September and 31 December, a CAT return and payment of CAT due must be made by 31 October in the following year.

A person may opt to pay CAT that arises on gifts or inheritances of real property (e.g. lands and buildings) by monthly instalments over a maximum of a 5 year period. Where this option is chosen, interest is payable at the rate of 8% per annum on the outstanding CAT in accordance with section 51 of the Capital Acquisitions Tax Consolidation Act 2003 and is payable with each instalment.

The legislation governing CAT provides that the Revenue Commissioners can allow payment to be postponed for such period, to such extent and on such terms (including the waiver of interest) as they think fit in cases where it is shown to their satisfaction that payment of CAT cannot be made when due without excessive hardship.

The Revenue Commissioners may also allow payment of CAT by non-statutory instalments on a concessionary basis in exceptional circumstances where the taxpayer can show that payment of CAT liability by the due date would present significant difficulty. Interest would be chargeable on any late instalments. Each such case would be considered on its merits, taking into account both the financial circumstances of the beneficiary and the nature of the gift or inheritance involved.

A beneficiary experiencing difficulty in paying CAT should contact the local Revenue office, as early as possible before the CAT becomes due, to outline his or her circumstances and to explore the options available on paying the tax.

Banking Sector Issues

Questions (96)

Lucinda Creighton

Question:

96. Deputy Lucinda Creighton asked the Minister for Finance if he will confirm if Bank of Ireland, Allied Irish Banks or Permanent TSB have within their systems the knowledge of a single euro figure that represents the cumulative difference between the total value of their entire owner occupier mortgage debt outstanding versus the cumulative total current market value of all the owner occupier mortgage collateral on its balance sheet; if he will confirm if Bank of Ireland, Allied Irish Banks or Permanent TSB are able within their system to detail the total difference in euro between current market value of the underlying collateral of those owner occupier mortgages in arrears and the total owner occupier mortgage arrears debt outstanding; if he will confirm if the Central Bank of Ireland has this cumulative data for each of the domestic banks; if he will provide the cumulative figure; and if he will make a statement on the matter. [48069/13]

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Written answers

The covered institutions have provided me with the following details regarding their mortgage books. As the Deputy will be aware the Central Bank of Ireland is currently undertaking an asset quality review and the question of loan to value and underlying collateral value is being looked at as part of this exercise.

Bank of Ireland

Bank of Ireland’s annual report for the year to 31 December 2012 gives comprehensive disclosures on its residential Irish mortgage portfolios (particularly pages 321-333), its accounting policies (particularly pages 148-169), its credit risk management and asset quality (particularly pages 55-77) and capital position (particularly pages 26-28 and 96-97). Bank of Ireland also provides detailed disclosure on its Irish mortgage book on pages 114 through to 125 of the Group’s interim financial statements for the six month period ended 30 June 2013. In particular, the disclosure on page 118 and 119 relating to “Loan to value (LTV) ratio of total Retail Ireland mortgage loan book”.

AIB

I have been informed by AIB that all disclosures in relation to AIB’s loan to value ratios and collateral values of residential mortgages can be found on pages 71 and 97 to 99 of AIB’s 2012 Annual Financial Report. This report, published on 27th March 2013, is available on the AIB website at www.aibgroup.com/investorrelations.

PTSB

I have been informed that the disclosures in relation to PTSB’s loan to value can be found on page 161 of the 2012 annual report. It should also be noted that as the positive equity on one loan is of no benefit to the Bank as against the negative equity on another loan. The Bank can’t get or offset the benefit of one customer’s positive equity as against another customer’s negative equity.

The Central Bank of Ireland has also informed me that the Loan-To-Value (LTV) measures the value of the loan outstanding as a percentage of the value of the property collateral. This is an important consideration in the underwriting of mortgages and in the on-going monitoring of credit risk. Each of the banks referenced calculates on a periodic basis the LTV of the mortgages in their portfolio (generally based on indexing valuations to current values using the CSO HPI).

In making provision for loans in arrears the banks use the indexed value of property collateral in addition to including other costs of recovery of the outstanding loan.

Banking Sector Issues

Questions (97)

Lucinda Creighton

Question:

97. Deputy Lucinda Creighton asked the Minister for Finance if he will provide in tabular form, for each year since 2003, the total cumulative amount in euro paid by his Department for non-audit services to companies (details supplied); if he will further provide in tabular form, for each year since 2003, the total cumulative amount in euro paid by the Central Bank of Ireland for non-audit services to these companies; if he will provide in tabular form, for each year since its creation, the total cumulative amounts in euro paid by the National Asset Management Agency for non-audit services to these companies; if he will provide in tabular form, for each year since its creation, the total cumulative amount in euro paid by Anglo Irish Bank or Irish Nationwide since they became nationalised for non-audit services to the companies; if he will provide in tabular form, for each year since its creation, the total cumulative amount in euro paid by Allied Irish Banks since they became majority State owned for non-audit services to the companies; if he will provide in tabular form, for each year since its creation, the total cumulative amount in euro paid by a bank since they became majority State owned for non-audit services to the companies; and if he will make a statement on the matter. [48070/13]

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Written answers

Unfortunately my Department has been unable to obtain the information requested by the Deputy in the time available. I will write to the Deputy directly with the information as soon as it becomes available.

Tax Reliefs Availability

Questions (98)

Lucinda Creighton

Question:

98. Deputy Lucinda Creighton asked the Minister for Finance if any advance discussions took place with the pillar banks or Permanent TSB regarding the home renovation tax incentive; if AIB or Permanent TSB are considering introducing similar lending schemes like Bank of Ireland to help homeowners looking to avail of this relief; and if he will make a statement on the matter. [48073/13]

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Written answers

I have been informed that no discussions took place between lending institutions and officials from the tax side of the Department in advance of the introduction of the Home Renovation Incentive. In relation to the introduction of lending schemes in this area, I received the following information from the institutions mentioned:

AIB

AIB responded that they already support customers who wish to refurbish, renovate or upgrade their property and, to underpin their commitment in this area, they intend to introduce a lending initiative in response to the introduction of the Home Renovation Incentive Scheme and this will be announced shortly.

PTSB

PTSB have announced a lending scheme in this area as covered in the statement carried in the media as follows: "On November 1st, Permanent tsb announced the allocation of up to €100 million for customers undertaking home improvements and availing of the Government’s budget initiative in this area."

Budget Measures

Questions (99)

Lucinda Creighton

Question:

99. Deputy Lucinda Creighton asked the Minister for Finance if he or his Department met with or received any representations regarding proposed budgetary measures from Danske Bank or ACC in advance of budget 2014; his views that announcements on a bank levy and increased dirt tax may have incentivised their exit from the Irish market; if he is concerned about these banks exit from the Irish market; and if he will make a statement on the matter. [48074/13]

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Written answers

I can confirm that I did not receive any representations from Danske Bank or ACC in the run up to the Budget, and neither I nor officials of my Department met with personnel from those Banks with regard to any Budget measures. I do not believe that measures announced in Budget 2014, including the increase in Deposit Interest Retention Tax and the levy on financial institutions, had any bearing on the decisions by either bank to curtail their operations in the Irish market. Such decisions would have presumably have been under consideration for some time and based on wider factors than these two measures. Danske Bank will still continue to take deposits from corporate customers.

There is no doubt that the loss of ACC Bank and Danske Bank will have an effect on the level of competition in the Irish financial sector. However, the banks are independent commercial entities and have the right to conduct their business as they consider appropriate. The recent commitment by RBS to the Irish market is a welcome step in the other direction, and KBC Bank has been expanding its network. I think that it is fair to say that it is not all bad news and that the Irish financial market does offer opportunities to certain institutions.

This Government has also take steps to ensure that the Irish financial market is accessible to any financial institution considering establishing in Ireland. Section 149 of the Consumer Credit Act, which provides for the regulation of bank fees and charges, has been dis-applied for three years in the case of new financial service providers setting up in Ireland.

Banking Sector

Questions (100)

Lucinda Creighton

Question:

100. Deputy Lucinda Creighton asked the Minister for Finance if he will provide in tabular form for each year since 2003, the total cumulative amount in euro paid by his Department to companies (details supplied); if he will further provide in tabular form for each year since 2003, the total cumulative amount in euro paid by the Central Bank of Ireland to these companies; if he will provide in tabular form for each year since its creation, the total cumulative amount in euro paid by the National Asset Management Agency to these companies; if he will provide in tabular form for each year since its creation, the total cumulative amount in euro paid by Anglo Irish Bank or Irish Nationwide since they became nationalised to these companies; if he will provide in tabular form for each year since its creation, the total cumulative amount in euro paid by Allied Irish Banks since it became majority State owned to these companies; and if he will make a statement on the matter. [48081/13]

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Written answers

Unfortunately my Department has been unable to obtain the information requested by the Deputy in the time available. I will write to the Deputy directly with the information as soon as it becomes available.

Banking Sector

Questions (101)

Lucinda Creighton

Question:

101. Deputy Lucinda Creighton asked the Minister for Finance if he will provide in tabular form for each year since 2003, the total cumulative amount in euro paid by his Department to senior counsel; if he will further provide in tabular form for each year since 2003, the total cumulative amount in euro paid by the Central Bank of Ireland to senior counsel; if he will detail in tabular form for each year since its creation, the total cumulative amount in euro paid by the National Asset Management Agency to senior counsel; if he will provide in tabular form for each year since its creation, the total cumulative amount in euro paid by Anglo Irish Bank or Irish Nationwide since they became nationalised to senior counsel; if he will provide in tabular form for each year since its creation, the total cumulative amount in euro paid by Allied Irish Banks since it became majority State owned to senior counsel; and if he will make a statement on the matter. [48084/13]

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Written answers

Unfortunately my Department has been unable to obtain the information requested by the Deputy in the time available. I will write to the Deputy directly with the information as soon as it becomes available.

Banking Sector Issues

Questions (102)

Finian McGrath

Question:

102. Deputy Finian McGrath asked the Minister for Finance the support given in assisting banks with their bad bank assets to enable these banks to continue to service their customers and business in order that the economy can make a rapid recovery from the economic crisis. [48095/13]

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Written answers

The Government remains committed to ensuring a sound sustainable and innovative banking system capable of driving economic growth and job creation while providing banking services to the population at large in a way that is fair and just. Working closely with the Central Bank of Ireland, we aim to secure both financial stability and an effective banking sector, while safeguarding the interests of customers and promoting the development of financial services. The banking system must be the enabler of economic recovery by restoring public and market confidence in its financial health, management competence and ethical integrity.

A comprehensive restructuring of the banking system has been undertaken to build a new core system that is fit for purpose for the economy, businesses and households by providing new lending into the economy. Major steps have been taken to address the challenges in the banking system in order to create a robust, smaller, and better capitalised banking system that will effectively serve the needs of the Irish economy and can operate on a viable basis without recourse to the State. The State completed the recapitalisations in 2011 following a credible and fully transparent stress testing exercise at an overall cost of c.41% of Irish GDP (€64bn).

Furthermore, significant progress has been made in relation to deleveraging the banking system. System wide deleveraging targets have been surpassed both in terms of amount deleveraged and impact on regulatory capital. For AIB, non-core deleveraging is now complete having achieved the Central Bank of Ireland’s year end 2013 €20.5bn target while Bank of Ireland has completed its disposal plan and the remaining deleveraging is on target and forecast to be achieved through rundown (rather than disposal) of non-core loan books. This deleveraging will greatly assist both AIB and Bank of Ireland to re-focus their operations to areas which will support our economic recovery. The restructuring of the Irish Banking system, including the recent liquidation of IBRC, will serve to provide a secure financial system for deposits and ensure the flow of credit to Irish consumers and businesses.

As part of a wider set of measures taken to address the liquidity and solvency issues of systemically important Irish Banks, NAMA was established in late 2009 to remove from participating banks’ balance sheets problem loans secured by property and development land, the value of which had fallen steeply. In all 5 banks (AIB, Bank of Ireland, Permanent TSB, Irish Nationwide, Anglo Irish) participated in the scheme.

NAMA acquired €74bn (nominal value) of loans for €32bn representing an overall discount of 57%. NAMA paid for the loans through the issue of Government Guaranteed Senior Debt (95% of the cost) and unguaranteed subordinated debt (5%). NAMA has redeemed €7bn, to date, in Senior Debt and is on course to meet its bond redemption target of €7.5bn by the end of 2013.

Small and Medium Enterprises Supports

Questions (103)

Lucinda Creighton

Question:

103. Deputy Lucinda Creighton asked the Minister for Finance if he will provide the total amount of investments by the small and medium enterprises equity fund, SME turnaround fund and SME credit fund, respectively, since their establishment; if he will detail the total number of companies that have received investments from these funds; if he will provide the total additional number of jobs that have been created from these investments; if he will further provide the total additional millions of euro in exports that have been made by companies who have received and investment from these funds since their establishment; the total amount of loans in euro that have been acquired by the SME credit fund since its establishment and if any transactions have taken place with the domestic Irish financial institutions; and if he will make a statement on the matter. [48124/13]

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Written answers

In anticipation of the passing of legislation establishing the Ireland Strategic Investment Fund (ISIF) with a mandate to invest on a long-term commercial basis to support economic activity and employment in Ireland, the National Pensions Reserve Fund (NPRF), within the constraints of its existing mandate, has committed to a number of investments dedicated to providing equity and debt capital to Irish SMEs. These investments include Better Capital Ireland Fund (total fund size €100 million, transaction signed Q1 2013), Carlyle Cardinal Ireland Fund (total fund size €300 million plus, transaction signed Q1 2013) and BlueBay Ireland Corporate Credit (total fund size €450 million, transaction signed Q3 2013) as well as a transaction entered into with Silicon Valley Bank (transaction signed Q2 2012) whereby SVB committed to lending $100 million to the Irish technology sector. Since the respective transactions were signed with NPRF, each manager has set up a Dublin office, recruited senior team members, integrated the Irish platform within their wider international business and begun to develop local market awareness of their platform and investment offering. These activities have positioned the managers as important new players in the Irish market and as alternative sources of funding to Irish businesses.

By its nature, establishment of a new business activity and capability takes some time. However the managers’ activities have generated significant dealflow to date. Across the four different managers over 200 investment opportunities have been reviewed and this has resulted to date in the funding of 6 transactions. A large number of potential transactions are at various stages of underwriting and the NTMA is pleased with the high quality and scale of dealflow generated by the managers. None of these funds has acquired any loans from or transacted with the domestic Irish Financial institutions.

The NTMA intends to publish a report each year regarding investments made by the ISIF, including an assessment of economic impact.

The NTMA is currently working on further commercial investment opportunities in the SME sector that will meet the strategic objectives and investment strategy of the ISIF.

Property Taxation Assessments

Questions (104)

Pearse Doherty

Question:

104. Deputy Pearse Doherty asked the Minister for Finance the reason correspondence was sent from the Revenue Commissioners to a person (details supplied) in County Donegal requesting payment for band 2 with regard to the local property tax when this person made a self declaration on their property which they believe falls under band 1 and they paid accordingly last year; and if he will make a statement on the matter. [48192/13]

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Written answers

I am advised by Revenue that the development of the Local Property Tax (LPT) Register required it to extract and consolidate data from multiple sources including various Government and non-Government agencies. The process involved consolidating data for approximately two million records, some of which were difficult to match because of variations in addresses and names held by different agencies. This was particularly prevalent in rural locations, which resulted in data capture and duplication errors in a relatively small number of cases. Revenue has confirmed to me that the 2014 LPT liability of €180 quoted for the case to which the Deputy refers in fact relates to two Band 1 properties rather than a single Band 2 property.

On foot of the Deputy’s representation Revenue has confirmed that the second property is a duplicate, which was associated with the person in error. The Property Register has now been amended to reflect that the person only owns a single property. Revenue has also assured me that the correct amount of LPT due for 2014, based on the person’s self-assessment of the valuation of the property, is €90.

Revenue will immediately contact the person to confirm his correct LPT liability for 2014 to him.

VAT Rate Reductions

Questions (105)

Aodhán Ó Ríordáin

Question:

105. Deputy Aodhán Ó Ríordáin asked the Minister for Finance if he has considered lowering the VAT rate on dog grooming to bring it in line with vets' practices; if not, if he will do so; and if he will make a statement on the matter. [48198/13]

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Written answers

I am advised by the Revenue Commissioners that the supply of dog grooming services is liable to VAT at the standard rate, currently 23%. Paragraph 21(3) of Schedule 3 to the Value-Added Tax Consolidated Act 2010 provides that the supply of services “of a kind supplied in the course of their profession by veterinary surgeons” is liable at the 13.5% reduced VAT rate. If veterinary surgeons provide dog grooming services other than in the course of their profession the services are liable to VAT at the standard rate. The 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 provides for the possibility of applying a reduced of VAT to the supply of certain goods and services, this possibility does not generally extend to the supply of dog grooming services.

Tax Code

Questions (106)

Michael McGrath

Question:

106. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 286 of 16 April 2013, if he will provide an update on same; and if he will make a statement on the matter. [48235/13]

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Written answers

The Inter-departmental group, chaired by Dr Don Thornhill, to consider the design of a property tax (the “Thornhill Group”) recommended that the Local Property Tax (LPT) paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates. The Government accepted the recommendation of the Thornhill Group in principle on this matter, but has not considered the manner or the timing in which this will happen.

Property Taxation Collection

Questions (107)

Brian Walsh

Question:

107. Deputy Brian Walsh asked the Minister for Finance if an over-estimation on the value of a property in respect of the local property tax may be rectified and payment refunded in respect of a person (details supplied) in County Galway; and if he will make a statement on the matter. [48249/13]

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Written answers

I am advised by Revenue that Section 26 of the Finance (Local Property Tax) Act 2012 (as amended) provides that if a liable person has overpaid Local Property Tax (LPT) through a genuine error or mistake, then s/he is entitled to a repayment. In such circumstances the liable person should write to LPT Branch, PO Box 1, Ennis, Co Clare, clearly setting out how the overpayment arose. The person should include relevant supporting documentation such as, a copy of a professional valuation as at 1 May 2013, or documented information on property sales for comparable properties in the local area around 1 May 2013, or documented information on any house price survey in the local area reflecting values around 1 May 2013. On the specific case to which the Deputy refers, Revenue has confirmed that it received an incomplete LPT 1 Return for 2013 that did not indicate either a liable person or a property valuation. Revenue did however receive payments in respect of both 2013 (€157 Band 3 – Half Year) and 2014 (€315 Band 3 – Full Year), which were based on the estimated LPT liability.

The Deputy will be aware that LPT is a self-assessed tax and the onus is on the liable person to calculate the tax due based on the market value of the property and that the estimate should only come into play in circumstances where Revenue seeks to collect the tax due in the absence of a return being filed.

In regard to the question of over valuation, Revenue has confirmed to me that it has no record of any correspondence from the person in relation to the issue. However, I am advised that Revenue has now made direct contact with the person in question to explain the process in regard to refunds of LPT. I am assured that once the required documentation is received and verified the Valuation Band of the property will be adjusted and any overpayment refunded.

Tax Credits

Questions (108)

Michael Healy-Rae

Question:

108. Deputy Michael Healy-Rae asked the Minister for Finance the position regarding a tax refund in respect of a person (details supplied); the reason for the delay; and if he will make a statement on the matter. [48267/13]

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Written answers

I am advised by the Revenue Commissioners that there has been no delay in this case. I am advised that the taxpayer in question commenced employment on 17th June 2013 and they were notified of this by the employer on 24th June 2013. A Form 12A was issued to the person on 3rd July 2013 for completion to enable the issue of a Tax Credit Certificate and resolve the application of the emergency tax basis in respect of that employment. This completed form was received by the Revenue Commissioners on 24th September 2013. However as the employment had already ceased on 16th August 2013 a Tax Credit Certificate could not be issued at that stage.

The Revenue Commissioners have no record of receipt of a claim for repayment of tax deducted in respect of that employment. Revenue has now written to the taxpayer enclosing an application form for completion and setting out the information required to process any repayment that may arise.

IBRC Mortgage Loan Book

Questions (109)

Billy Kelleher

Question:

109. Deputy Billy Kelleher asked the Minister for Finance with regard to the Irish Bank Resolution Corporation mortgage holders, if he will take all necessary action to address their concerns on a number of issues that have arisen with the sale of the loan book (details supplied); and if he will make a statement on the matter. [48268/13]

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Written answers

The Special Liquidators have confirmed that the residential mortgage customers of IBRC Limited (in Special Liquidation) continue to enjoy the protection of the Central Bank Code of Conduct on mortgage arrears and other protections in Irish consumer law. I am advised that the contractual terms and conditions of customer mortgages and other borrowings will not change as a result of the appointment of the Special Liquidators or the ultimate sale of the obligations to a third party. The continued applicability of the Central Bank Code of Conduct on Mortgage Arrears and Mortgage Arrears Targets Programme will depend on the regulatory status of the ultimate acquirer of the portfolio which we will not know until the sales process has concluded. In the event that NAMA ultimately acquires this portfolio, the NAMA Board will determine its strategy at that stage and will, in doing so, be mindful of its legal obligations.

The Special Liquidators have given significant consideration to and have sought independent advice from PWC in relation to how the residential mortgage portfolio and other loans in IBRC are to be dealt with. Following that independent advice, the Special Liquidators have decided to sell these loans as part of a portfolio as it represents the most efficient method of disposal and the one which is most likely to maximise ultimate sales realisations for the Special Liquidators having regard to the public interest.

The Special Liquidators have confirmed that all Borrowers are permitted to buy-out their mortgage at par value and that there are no legislative barriers for such Borrowers to do so.

The decision concerning how the loans will be packaged for sale and what bidders constitute qualifying bidders for the purposes of the sales process is to be made by the Special Liquidators and I will not intervene in this matter.

Tax Reliefs Availability

Questions (110)

Olivia Mitchell

Question:

110. Deputy Olivia Mitchell asked the Minister for Finance if the installation of a rainwater harvesting system qualifies for the home renovation incentive; and if he will make a statement on the matter. [48274/13]

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Written answers

As 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 a rainwater harvesting system will be included for the purposes of this scheme.

Tax Reliefs Eligibility

Questions (111)

Lucinda Creighton

Question:

111. Deputy Lucinda Creighton asked the Minister for Finance if any impact assessment was conducted to assess the number of additional private health insurance policy holders who may no longer maintain their private health insurance policy as a consequence of the tax relief changes for private health insurance announced in budget 2014; and if he will make a statement on the matter. [48290/13]

View answer

Written answers

Firstly, I should point out that it is the standard practice for the Minister for Finance to review all tax expenditures and reliefs in the run up to the annual Budget.

As the Deputy may be aware, the cost of Income Tax relief in respect of medical insurance has increased significantly in recent years (estimated at €404 million in 2011, €448 million in 2012 and €500 million in 2013).

It would be extremely difficult to estimate the number of individuals who may no longer maintain their private health insurance policy as a consequence of the Budget day announcement restricting tax relief in respect of medical insurance premiums.

The cost of medical insurance increased by 86% between December 2008 and June 2012 according to the Consumer Price Index. Despite the increasing cost of the relief, the number of policy holders subscribing for medical insurance is estimated to have reduced from 2,297,000 to 2,123,000 over the same period; a reduction of 174,000 persons, or 7.5%. Hence, demand for private medical insurance has been relatively resilient in the face of sharp cost increases.

Individuals can of course opt for less expensive policies and therefore avoid the impact of this measure entirely, which adds further complexity to any attempt to calculate or estimate the numbers that might forego medical insurance cover going forward.

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