Written Answers Nos. 262-280
262. Deputy Michelle Mulherin asked the Minister for Finance the income tax paid or earnings declared for income tax purposes during the 1966-1967 tax year in respect of a person (details supplied) in County Mayo. [33237/15]
View answerI am advised by the Revenue Commissioners that due to the passage of time, data for the year in question is not available.
263. Deputy Thomas Pringle asked the Minister for Finance when persons retire, the point at which their self-employment status ends; and if he will make a statement on the matter. [33240/15]
View answerI am advised by the Revenue Commissioners that where a self-employed individual ceases his or her trade or profession then for the purposes of the Tax Acts that individual is chargeable to tax on any profits or gains up to that date of cessation. In the year in which the cessation occurs the individual, in general, will be a chargeable person for the purpose of the Taxes Acts and will be required to submit a return by the relevant due date. In addition, notwithstanding the cessation, such an individual is also required to maintain the books and records of the trade or profession for a period of six years from the date of a transaction which arose in the trade or profession.
264. Deputy Thomas Pringle asked the Minister for Finance the number of retirees who are registered as self-employed with the Revenue Commissioners; and if he will make a statement on the matter. [33241/15]
View answerI am informed by the Revenue Commissioners that they do not require taxpayers to advise them if they are retirees. However if certain assumptions are made regarding the definition of a retiree, it is possible to use the 2013 income tax returns, the latest year for which data are available, to provide the information sought by the Deputy. On the basis that a retiree is assumed to be a taxpayer aged 65 or over on 1 January 2013 and in receipt of trading or professional income, it is estimated that approximately 14,000 self-employed retirees submitted income tax returns in respect of 2013.
265. Deputy Tom Fleming asked the Minister for Finance if he will examine and reduce the employers' pay-related social insurance, PRSI, rate of 10.75% to 8.5% for employees earning up to €400 per week, in the event of an increase in the minimum wage of 50 cent; his plans to widen the PRSI weekly band to alleviate the unbalanced cost attributed to the employer; and if he will make a statement on the matter. [33247/15]
View answerThe Government is considering the recommendations of the Low Pay Commission with regard to the National Minimum Wage, and in this context I will bear in mind the Deputy's proposals for amendments to employer's PRSI in my deliberations for Budget 2016.
In this regard, the Deputy may be aware that the 2013 Forfás report on Costs of Doing Business in Ireland 2012 noted that "Ireland has one of the lowest levels of employer's social welfare contributions. The Irish rate (9.7%) is significantly lower than the OECD average (14.8%) and the euro area average (18.8%)".[1] CSO data confirm that employer social security costs here are the fifth lowest across the EU27.[2]
Furthermore, I recently undertook a public consultation on the role the tax system can play in encouraging entrepreneurship. This consultation forms part of a broader review aimed at assessing the effectiveness of the tax system in terms of starting up and expanding a new business, reviewing the effectiveness of current tax expenditures aimed at entrepreneurs, and examining whether new measures could be introduced to incentivise entrepreneurial activity. I will take this review into account in the context of my preparations for the forthcoming Budget.
[1] Page 24 of report "Cost of Doing Business in Ireland 2012" published by Forfás in April 2013
[2] Pages 35 and 36 of report "Business in Ireland 2011" published by CSO in November 2013
266. Deputy Tom Fleming asked the Minister for Finance if he will reinstate the inheritance threshold of €542,544 which was set for early 2009, given that the threshold of €225,000 is too low; and if he will make a statement on the matter. [33248/15]
View answerPreparations for Budget 2016 and the consequent Finance Bill are ongoing. It would not be appropriate for me to comment on what changes, if any, are being considered to Inheritance Tax or any other tax measure. I have, however, already indicated in response to previous questions that I will be reviewing the Inheritance Tax and Gift Tax (Capital Acquisitions Tax) tax-free thresholds.
267. Deputy Tom Fleming asked the Minister for Finance if he will reduce the value added tax rate on natural no-sugar-added juices, for example, apple, orange, wheat grass, kale, and spinach-based, that is, juices made from 100% product and containing nothing else, from 23% to 0%, in order to make them more affordable and accessible; and if he will make a statement on the matter. [33249/15]
View answerI am advised by the Revenue Commissioners that VAT law in Ireland must comply with the EU VAT Directive and that the majority of food products are already liable at the zero rate of VAT. However, food products can only benefit from the zero rating in accordance with Article 110 of the VAT Directive which permits the retention of the zero rate for "clearly defined social reasons" where the products were liable to VAT at the zero rate on 1 January 1991. Settled case law requires that such exemptions be strictly interpreted and narrowly applied so as not to create or increase divergence of VAT treatment in the EU Member States. As the kinds of products listed in your question were not zero rated in 1991, the standard rate applies and there is no scope to apply the zero rate.
The details attached suggest that non-Irish suppliers of such products may not be applying the correct VAT rate; if the Deputy has such information I suggest that he pass it to the Revenue Commissioners.
268. Deputy Brendan Griffin asked the Minister for Finance the reason a home renovation incentive tax credit for works carried out in 2013 will not be made available to a person (details supplied) in County Kerry in 2014 to offset that person's tax liability; and if he will make a statement on the matter. [33261/15]
View answerThe tax credit under the Home Renovation Incentive scheme can be only be claimed in the year after the qualifying work is carried out and paid for. Qualifying work that was carried out and paid for in the period 25 October 2013 (when the scheme began) to 31 December 2014 is all treated as if it arose in 2014. In that context, the tax credit under the Home Renovation Incentive (HRI) Scheme does not apply until 2015.
I am advised by the Revenue Commissioners that the in the case of the person concerned, while payments arose in 2013 these payments are treated as having been paid in 2014. Accordingly, the earliest year to which the tax credit can be applied is 2015.
269. Deputy Ciarán Lynch asked the Minister for Finance if any concession is made in capital acquisition tax, where a person who is of diminished capacity inherits a property, which had been provided rent-free in circumstances, where in order to meet the tax payment, it would be necessary for the inheritor to sell the property and to become dependent on the State for support; and if he will make a statement on the matter. [33276/15]
View answerI am advised by the Revenue Commissioners that there is no specific relief from liability to Capital Acquisitions Tax (CAT) in relation to properties acquired by way of gift or inheritance by persons of diminished capacity. However, there are general reliefs and exemptions that might be available in the type of situation envisaged.
For the purposes of CAT, the position is that the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary) determines the maximum tax-free threshold known as the "group threshold" below which gift or inheritance tax does not arise.
There are, in all, three separate group tax-free thresholds based on the relationship of the beneficiary to the disponer.
Group A: €225,000 - applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
Group B: €30,150- applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
Group C: €15,075- applies in all other cases.
Any prior gifts or inheritances received by a beneficiary since 5 December 1991 from within the same group threshold are aggregated for the purposes of determining whether any tax is payable on the current benefit. Tax at the rate of 33% is payable on any excess received over the relevant tax-free threshold.
Apart from the tax-free group thresholds available to a beneficiary, there is also a full tax exemption where a dwelling-house is received by way of a gift or inheritance in certain circumstances.
The main conditions attaching to the dwelling-house exemption are that the beneficiary must have lived in the dwelling-house for a minimum of three years prior to the receipt of the gift or inheritance and must not have an interest in any other dwelling-house.
This exemption ensures that what may be the family home for many people will not be the subject of gift or inheritance tax when it is transferred. The exemption is available to any beneficiary who meets the conditions for the exemption, irrespective of whether or not they are related to the disponer, and irrespective of the value of the property being acquired.
Where a person has a CAT liability, he or she has a statutory entitlement to pay this liability by monthly instalments over a period of up to five years. Instalments are subject to the payment of interest at an annual rate of 8%. However, Revenue has discretion to allow payment of CAT by instalments over a longer period of time in exceptional circumstances where the tax cannot be paid without excessive hardship. In cases of hardship, Revenue also has the discretion to allow payment to be postponed for such period and on such terms (including the waiver of interest) as they think fit. Revenue will consider each case on its merits, taking into account both the financial circumstances of the beneficiary and the nature of the inheritance involved.
270. Deputy Mary Mitchell O'Connor asked the Minister for Finance if he will provide an update on the proposed increase in the industry funding levy; and if he will make a statement on the matter. [33281/15]
View answerUnder Sections 32D and 32E of the Central Bank Act 1942, the Central Bank is required to seek my approval for the Regulations prescribing levies and fees to be paid by entities subject to regulation by the Central Bank. However, I have not yet made any decision under Sections 32D and 32E on the 2015 levies that will be applied by the Central Bank.
I am aware that the Central Bank had consulted industry on the proposed 2015 levies which I understand would have in some cases amounted to a significant increase on 2014. The Bank attributed the proposed increase to both a proliferation of legislative regulation/regulatory activity and an increase in staff pension costs arising from Financial Reporting Standard 17 coupled with current low yields on the bond market.
The Central Bank has acknowledged the potential impact that the volatility of pension costs would have on individual levies and, as a consequence, it is considering the possibility of spreading current service pension costs over an extended period, thereby mitigating the impact on the proposed 2015 levies.
It is important to note that a robust regulatory environment benefits the financial services industry by promoting stability, a level playing field and facilitating prudent development and innovation. A well regulated financial services sector also benefits consumers, industry, and the economy at large. The Government's priority is to ensure that the regulator is sufficiently resourced to fulfil its important role and staff costs (including pension costs) are a key component of this effective regulatory regime. This is something that I will be taking into consideration in my deliberations on this matter.
271. Deputy Paul Murphy asked the Minister for Finance in view of the serious consequences when an insurance company does not pay out to mortgage protection policyholders upon death, if he will consider a review of current legislation to protect consumers of mortgage protection life insurance; and if he will make a statement on the matter. [33283/15]
View answerI have been advised by the Central Bank that it expects that life assurers would adhere to the terms and conditions of a life assurance policy and would pay out to the next of kin/estate of the deceased as appropriate.
The Central Bank also advises me that the Consumer Protection Code came into full effect on 1 July 2007 and was revised in January 2012. The Code requires that a regulated entity acts honestly, fairly and professionally in the best interests of its customers. This would include the handling of life assurance claims. In addition, a regulated entity must ensure that all information it provides to a consumer is clear and comprehensible. This includes terms and conditions and other marketing information provided to consumers when they are purchasing financial products.
Although the Central Bank does not investigate individual consumer complaints, it does welcome information from consumers of financial products. Furthermore, individual customers may bring a complaint to the attention of the Financial Services Ombudsman if they are unable to resolve it satisfactorily with their financial services provider.
In this case, if the next of kin has a complaint about the way the insurance claim was handled they have the right to address their complaint to the Financial Services Ombudsman (telephone: +353 1 6620899).
272. Deputy Paul Murphy asked the Minister for Finance if his Department has investigated the increased revenue that would be gained by increasing pay-related social insurance employers payments; and if he will make a statement on the matter. [33284/15]
View answerRevenue raising options, including PRSI, are considered in the context of Budget preparations. However, I would point out that taxes on employment are generally considered more damaging economically than other taxes such as capital taxes, as they increase the costs to employers of creating additional jobs.
Costings in relation to PRSI increases are prepared by the Department of Social Protection. In addition, that Department prepares an annual paper on Pay Related Social Insurance for discussion at the Tax Strategy Group, which meets in advance of the Budget. All of the tax strategy group papers are published on my Department's website annually. The 2014 paper on PRSI is available at the following link: http://www.finance.gov.ie/sites/default/files/14.08%20Pay%20Related%20Social%20Insurance.pdf.
273. Deputy Mick Wallace asked the Minister for Finance if he will reconsider the envisaged tax cuts pledged for budget 2016, given that, according to data from the International Monetary Fund's fiscal monitor, Government expenditure is already one of the lowest in the European Union; if he has concerns about the implications of this proposed tax reduction; and if he will make a statement on the matter. [33285/15]
View answer274. Deputy Mick Wallace asked the Minister for Finance if he is satisfied that his recent pledge of a cut of at least 1% to the universal social charge is a prudent decision for the upcoming budget; if he will reconsider this measure with a view to investing the tax collected in the public services; and if he will make a statement on the matter. [33286/15]
View answerI propose to take Questions Nos. 273 and 274 together.
The Deputy is correct that Ireland's general government expenditure at 39% of GDP in 2014 is lower than the EU-28 average of 46.2%.
While fiscal capacity determines expenditure capacity and GDP is generally taken as the appropriate indicator of fiscal capacity, in view of the exceptional gap between GDP and Gross National Product (GNP) in Ireland, the Irish Fiscal Advisory Council (IFAC) have argued that a more appropriate measure of Irish fiscal capacity is a hybrid measure taking GNP plus 40 per cent of the gap between GDP and GNP. Calculated on this basis, general government expenditure rises to 44.4%. This is marginally below the EU average identified above and in the middle of the distribution of values for all EU countries.
In terms of allocating the fiscal space available between expenditure and revenue, a careful balance must be struck between accommodating current expenditure pressures and encouraging growth in the economy over the medium term to ensure that the economy will be in a position to support future demographic pressures as they arise.
I believe that the right balance can be achieved by allocating the available resources equally between expenditure on public services and tax measures to encourage economic growth. As part of the tax package, I intend to continue to make it more attractive to return to work, to stay in work and to ensure that work rewards individuals adequately. I plan to reduce the tax burden on low and middle income earners in the upcoming budget and subsequent budgets, subject to having the required fiscal space.
275. Deputy Ruth Coppinger asked the Minister for Finance if he has considered putting measures in place in the budget to ensure that developers who have exited the National Asset Management Agency without repaying their debts will not benefit from property-related tax breaks and write-offs in development levies owed to the local authorities; and if he will make a statement on the matter. [33287/15]
View answerNAMA's statutory objectives are clearly defined in the NAMA Act 2009 (NAMA Act). Section 10 of the NAMA Act requires NAMA to obtain the best achievable financial return for the State, deal expeditiously with the assets acquired by it and to protect or otherwise enhance the value of those assets. The Agency seeks to achieve this in every instance and, therefore, when a debtor "exits", NAMA will have determined that NAMA has fulfilled its requirements under Section 10 of the Act in securing the best achievable financial return for the State.
In addition, I wish to advise the Deputy that the use of property-related tax breaks has been significantly curtailed in recent years. Section 17 of the Finance Act 2012 was enacted with the intention of reducing the legacy of property reliefs in line with Government policy to develop a fairer tax code. The provisions of section 17 (now contained in Chapter 4A of Part 12 of the Taxes Consolidation Act 1997) apply to the various accelerated property and area-based capital allowance schemes. With effect from the beginning of 2015 any unused accelerated capital allowances, which are carried forward beyond the tax life of the expenditure on the building or structure to which they relate, are immediately lost. This essentially means that if the tax life has ended at any time up to the end of 2014, then the unused allowances are lost in 2015. On the other hand if the tax life is due to end later than 2014, the allowances are lost after the end of the tax life of the expenditure. Additionally, these measures apply solely to passive investors. Persons who are actively engaged in their respective trades are not affected.
By comparison to older property-related tax breaks, the Living City Initiative was constructed so that it would be available to owner-occupiers and not developers.
Queries with regard to development levies are a matter for the relevant local authorities and my colleague, the Minister for Environment, Community and Local Government, Alan Kelly T.D.
Finally, it is important to note that the tax system cannot target specific taxpayers in the way that the Deputy is suggesting.
277. Deputy Mary Mitchell O'Connor asked the Minister for Finance his plans to extend the home renovation incentive scheme beyond the deadline of 31 December 2015 as it is a welcome financial assistance to homeowners; and if he will make a statement on the matter. [33291/15]
View answer278. Deputy Mary Mitchell O'Connor asked the Minister for Finance his plans to extend the home renovation incentive scheme beyond the deadline of 31 December 2015 and to amend it in order that pensioners can be incorporated to avail of the grant; and if he will make a statement on the matter. [33292/15]
View answerI propose to take Questions Nos. 277 and 278 together.
The Home Renovation Incentive has continued to be very successful, with works on 36,543 properties notified on Revenue s HRI online system, as of 15 September 2015. This represents more than €566 million worth of works involving some 5,975 contractors. The potential total cost to the Exchequer in respect of these properties is approximately €38.26m. The incentive generates employment in the tax compliant construction sector and provides support for homeowners and landlords for building works.
The scheme provides tax relief by way of an income tax credit on the repair, renovation or improvement works on principal private residences or rental property carried out by tax compliant contractors. In addition to providing an income tax relief, the HRI also aims to support tax compliance in the building industry by moving activity out of the shadow economy into the legitimate economy.
Seeing the success of the measure, and to provide some certainty to the sector, I have announced my intention to extend the HRI for a further year, until 31st December 2016. This will allow extra time for homeowners and landlords to make the necessary changes to their properties, and provide additional support to the construction sector for another year.
Finally, with regard to a proposal to amend the scheme, I would point out that this is an income tax relief, not a grant, and therefore individuals who have no income tax liability will not be eligible for this incentive. In order to assist those who are only liable for small amounts of tax, the relief is granted over the two years following the year in which the contractor is paid for the work. Where the credit cannot be used in these two years due to insufficient income tax, then the relief may be carried forward to the following year and each subsequent year until the relief has been used in full.
For individuals who do not have any income tax liability, such individuals may be able to avail of other incentive schemes such as those administered by the Sustainable Energy Authority of Ireland. For example, the SEAI operate cash grants for certain works under the Better Energy Homes Scheme. In addition, they operate the Warmer Homes Scheme, under which work such as attic insulation can be carried out free of charge to qualifying individuals.
279. Deputy Thomas P. Broughan asked the Minister for Finance the amount of tax revenue that would be lost if the capital gains tax rate was lowered to 20%; the amount of additional tax revenue that would be gained if it was restored to 40%; and if he will make a statement on the matter. [33297/15]
View answerI am advised by the Revenue Commissioners that a wide range of statistical information is available on the Commissioners' Statistics webpage: http://www.revenue.ie/en/about/statistics/index.html. In particular, in relation to the Deputy's Question, estimates for changing rate of CGT are included in the Pre-Budget 2016 Ready Reckoner: http://www.revenue.ie/en/about/statistics/ready-reckoner.pdf. While the Ready Reckoner does not show the specific costings requested by the Deputy, the changes can be estimated broadly on a pro-rata (or straight-line) basis with those displayed in the Reckoner.
All estimates shown in the Ready Reckoner are provisional and subject to revision. These estimates are based upon an assumption that there would be no behavioural impact of these changes. In addition, the costs shown from decreases in taxation on assets relating to property are subject to movements in the value of such assets.
280. Deputy Thomas P. Broughan asked the Minister for Finance the likely tax expenditure and cost of a published proposal to lower the rate of capital gains tax to 15% on the sale of their own businesses by start-up entrepreneurs; and if he will make a statement on the matter. [33298/15]
View answerI understand that the Deputy is referring to a proposal under which relevant business owners would be entitled to pay the lower CGT rate of 15% on the first €5 million of chargeable gains.
There are gaps in the data available to the Revenue Commissioners which prevent a definitive costing of this proposal to be provided. Tax returns data available to the Commissioners do not in all cases clearly distinguish between disposals of business assets and non-business assets. Furthermore, it is not clear from the question what businesses would be considered "start-ups" and the Revenue Commissioners have no reliable data to make distinctions between businesses on that basis. Subject to these caveats, it is very tentatively estimated that the cost of introducing a €5m cap and 15% CGT rate for individuals could cost in excess of €100 million in a full year. This assumes that the reduced rate would apply in respect of all quoted and unquoted shares, commercial property disposals by proprietary directors and self-employed individuals and also agricultural land disposals by farmers. This estimate assumes no behavioural impact.
