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Tax Credits

Dáil Éireann Debate, Thursday - 8 May 2014

Thursday, 8 May 2014

Questions (44)

Brendan Griffin

Question:

44. Deputy Brendan Griffin asked the Minister for Finance if the changes to one parent family tax credit in budget 2014 will be eased in budget 2015; if not, if he will consider other ways of assisting the persons affected by the change; and if he will make a statement on the matter. [20631/14]

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Written answers

As you are aware the One-Parent Family Tax Credit has been replaced with a new Single Person Child Carer Credit from 1 January 2014.   However, the credit is more targeted in that it is, in the first instance, only 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 is unsustainable. The new credit is designed to be an activation measure, which was the original intention behind the One Parent Family Tax Credit, which it replaced.  It is designed to be an in-work benefit to support a principal carer to take up, or remain in, employment.

Notwithstanding the above, as a result of an amendment which I brought forward at Committee Stage of the Finance Bill, a principal 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. I have no plans to review this reform at this early stage although, as is part of normal practice in the preparation of the annual Budget, my officials monitor all tax measures to ensure that they are operating effectively.

In addition to the credit, the One-Parent Family Payment (OFP) is a payment provided by the Department of Social Protection to both men and women aged under 66 years who are bringing up a child or children without the support of a partner. In order to get this payment, a person must first meet certain qualifying conditions and satisfy a means test. The number of OFP recipients stood at 77,714 in March, 2014. A key decision for Budget 2014 was to maintain the basic rates of social welfare income support payments. As such, no change was made to the OFP payment. The maximum personal rate for the parent remains at €188 per week with a further €29.80 per week for each additional qualified child.

In recent years, reforms have been made to the OFP scheme. These reforms are aimed at tackling the high rate of poverty and social exclusion experienced by one-parent families which can be caused by long-term welfare dependency.  They aim to provide the necessary supports to lone parents to help them to escape poverty and social exclusion, participate in education and training, enter the workforce and, ultimately, attain financial independence and social well-being for both themselves and their families. They also aim to bring Ireland's support for lone parents in line with international provisions where there is a general movement away from long-term and passive income support.

The Social Welfare and Pensions Act, 2012, introduced several changes to the OFP scheme including the phased reduction of the age limit of the youngest child at which a recipient's payment ceases to seven years from 2014 for new entrants and from 2015 for existing recipients. Transitional arrangements will apply during the period between 2013 and 2015 depending on the date that a recipient first claimed the OFP payment. By 2015, the maximum age limit of the youngest child will be seven years for all OFP recipients. Special provisions exist for lone parents who are in receipt of the Domiciliary Care Allowance (DCA) or who are recently bereaved.

As a result of the reforms to the OFP scheme, once an OFP recipient's youngest child reaches the relevant maximum age limit threshold, they will no longer be entitled to the OFP payment. Should they still have an income support need, they will be required to apply for another social welfare income support payment. Persons who are working 19 hours or more per week may be entitled to apply for the tax-free Family Income Supplement (FIS) or to have their existing FIS claim re-rated as appropriate. Others may be eligible for the Carer's Allowance.

Former OFP recipients can also apply for either the Jobseeker's Allowance (JA) or the Jobseeker's Allowance (JA) transitional arrangement. They will then have access to the Department's full range of work activation supports to enable them to improve their employability and to subsequently find work. If a person is unable to meet either the JA or FIS scheme rules, and if they continue to have an income support need after their entitlement to the OFP payment ceases, they may have recourse to the Supplementary Welfare Allowance (SWA) scheme.

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