Dáil Éireann Debate, Tuesday - 28 January 2014
173. Deputy Brendan Griffin asked the Minister for Finance his views on correspondence (details supplied) regarding single payment tax credits; if he can justify the changes introduced by his Department; and if he will make a statement on the matter. [3943/14]
View answerAs the Deputy is aware, the One-Parent Family Tax Credit (OPFTC) has been replaced with a new Single Person Child Carer Tax Credit from 1 January 2014. The restructured credit will be of the same value i.e. €1,650 per annum as the one-parent family tax credit and it will also carry the same entitlement to the additional €4,000 extended standard rate band, which increases it to €36,800 per annum, before liability to the higher rate of income tax arises. However, the credit will be more targeted, in that it will in the first instance, only be available to the principal carer of the child.
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 or children is unsustainable. The new credit is designed to be an in-work benefit to support the primary carer to take up, or remain in, employment. It should not be considered as a supplementary source of income, on which the financial support of a parent depends.
The Commission on Taxation acknowledged that the One-Parent Family Tax Credit played 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. Ultimately, maintenance payments are a matter for parents and if necessary, the courts to decide. It is not possible, and indeed would not be appropriate, for the tax code to take account of every possible variable.
Notwithstanding the above, as a result of an amendment which I brought forward at Committee Stage of the Finance Bill, a primary carer who is entitled to the credit and who does not wish to avail of it can choose to surrender it. A secondary carer may then make a claim for the credit, provided that the qualifying child resides with him or her for not less than 100 days in the tax year. It should be noted that where a primary carer is married, in a civil partnership or cohabiting they would not be entitled to the new credit (or indeed the former one). In such circumstances the primary carer cannot relinquish the credit to a secondary carer. In addition, a secondary carer who is married, in a civil partnership or cohabiting, would not be entitled to the new credit (or indeed the former one) regardless of the marital status of the primary carer.
