Dáil Éireann Debate, Tuesday - 25 February 2014
220. Deputy Michael McGrath asked the Minister for Finance the reason persons (details supplied) in County Cork are paying a higher amount of income tax in 2014; if there has been a change in tax credits for the couple in 2014; and if he will make a statement on the matter. [9636/14]
View answerI am advised by the Revenue Commissioners that the couple's circumstances changed for 2014 resulting in reduced tax credits and hence a higher tax payment. The couple are jointly assessed and in receipt of both an occupational pension and taxable Department of Social Protection (DSP) payments. The tax in respect of the DSP payments is collected through reduction of the tax credits allocated to the occupational pension. In 2013 both spouses were individually in receipt of (DSP) payments. One spouse was in receipt of €230.30 per week up to 27/6/2013 while the other spouse was receiving €172.70 per week. The latter person's DSP payment ceased on 27/6/2013, and was replaced from 28/6/2013 onwards by an increase in the other spouse's pension to €436.60 per week. The change from two payments to one had an effect on the combined tax credits. When both had individual sources of income, they were each entitled to PAYE tax credits of €1,650 per spouse. In 2014, since only one spouse is in receipt of pension income, only one PAYE credit of €1,650 applies. In addition the aggregate amount of DSP income for 2014 will be €22,703.20 compared with the combined DSP payments in 2013 of €21,863.20. The effect of this is that tax credits available are further reduced by €168 (€840 @ 20%) in order to collect the additional tax due on this increased income. The total impact of the changes outlined is that tax credits for 2014 are reduced by €1,818 (being €1,650 in respect of the PAYE Credit and €168 in respect of the increased pension income).
