Richard Boyd Barrett
Question:21. Deputy Richard Boyd Barrett asked the Minister for Finance the rationale for his Department's changes to the single parent tax credit which only allows one parent to receive it. [7903/16]
View answerThursday, 21 April 2016
Questions (21)
Written answers
The One-Parent Family Tax Credit (OPFTC) was replaced with a new Single Person Child Carer Credit (SPCCC) from 1 January 2014. The restructured credit is of the same value as the OPFTC, €1,650 per annum, and also includes the same entitlement to the additional €4,000 extended standard rate band, which increases to €37,800 per annum, the point of entry to the higher rate of income tax. However, the new credit is more targeted in that it is, in the first instance, only available to the principal carer of the child.
I would point out that 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 which allowed, under the OPFTC, multiple claims in respect of the same child was unsustainable.
The SPCCC is allowed in the first instance to an individual, referred to as the primary claimant, who proves that a qualifying child is resident with him or her for the whole or greater part of the year of assessment. This targets the credit towards the parent or care giver that is providing the majority of the child care.
If the primary claimant does not wish to claim the SPCCC (for example if they do not have sufficient taxable income to use it fully), he or she may relinquish it in favour of a secondary claimant, provided the child resides with the secondary claimant for a period of not less than 100 days during the year of claim.
The Deputy may also recall that during Report Stage of Finance Bill 2014, an amendment was tabled proposing to allow for the partial transfer of the SPCCC to the non-principal carer parent, in cases where it is not utilised in full by the principal carer. A review of the proposal was undertaken by my officials in 2015 and published in the Report on Taxation Expenditures available online at: http://budget.gov.ie/Budgets/2016/Documents/Tax_Expenditures_Report_pub.pdf.
This review identified that a transferable credit could only be effectively administered by Revenue with the full co-operation of the primary claimant, as it would require the primary claimant to file a tax return, provide information on the other parent (or secondary claimant) and consent to the release of personal information to the other parent (or secondary claimant).
As the SPCCC currently allows for the credit to be transferred in full to a qualifying secondary claimant with the consent of the primary claimant, I am satisfied that the SPCCC provides for an appropriate level of transferability to secondary claimants, taking into account the various issues identified in the published review. I am also satisfied that the SPCCC is targeting limited resources to where they are most needed.