Dáil Éireann Debate, Tuesday - 6 October 2020
259. Deputy Matt Carthy asked the Minister for Finance his plans to increase the dependent relative tax credit in line with the incapacitated child tax credit as requested by an organisation (details supplied); and if he will make a statement on the matter. [28243/20]
View answer260. Deputy Matt Carthy asked the Minister for Finance if eligibility for the home carer tax credit will be extended to include single working carers; and if he will make a statement on the matter. [28244/20]
View answer261. Deputy Matt Carthy asked the Minister for Finance his plans to allow carers to claim tax relief on the cost of employing a care worker while also claiming the dependent relative incapacitated child tax credit; and if he will make a statement on the matter. [28245/20]
View answerI propose to take Questions Nos. 259 to 261, inclusive, together.
Consistent with the Programme for Government: Our Shared Future, it is not the intention to increase the value of income tax credits or bands in Budget 2021.
However, the Deputy has raised three separate but related issues regarding important measures in the tax code which support caring for people in vulnerable circumstances.
In relation to the suggestion to extend eligibility for the Home Carer Tax Credit to include single workers, I would note that this credit was specifically introduced in Finance Act 2000 in the context of a planned move to full individualisation of the Irish income tax system to ensure a balance was maintained for married one-income families where one spouse works primarily in the home caring for children, the aged or incapacitated persons. The Home Carer Tax Credit is therefore only available to jointly assessed couples in a marriage or civil partnership, and it is not available to single persons as the issues that the credit sought to address do not arise in their circumstances. Instead, the Single Person Child Carer Credit of €1,650 (and an increased rate band of €4,000) is available to single parents (whether widowed, separated, deserted or a single parent) with caring responsibilities for a dependent child who is under 18 years or, if over 18, is an incapacitated child who satisfies the incapacitated child tax credit criteria.
As regards the question of claiming tax relief on the cost of employing a care worker while also claiming the Dependent Relative or Incapacitated Child Tax Credit, the position is that there is no restriction on this and that such tax relief is available at the individual’s marginal rate of tax. However, there is an anti-avoidance provision in the legislation which prohibits claiming dependent relative or incapacitated child tax credits in respect of a person where that person is employed as the carer.
On the proposal to increase the Dependent Relative Tax Credit to the same level as the Incapacitated Child Credit, each of these credits is targeted at different issues and different personal circumstances and as a result are set at different levels:
- The Dependent Relative Tax Credit is a modest tax credit of €70, which can be claimed by an individual who maintains, at his or her own expense, a relative who is unable to maintain himself or herself.
- The Incapacitated Child Tax Credit is a tax credit of €3,300, which can be claimed by a person in respect of a child who is permanently incapacitated either physically or mentally from maintaining himself or herself and had become so before reaching 21 years of age or finishing full-time education. The person must either be the parent of the child, have custody of the child or maintain the child at their own expense.
If the Dependent Relative Tax Credit was increased some 47-fold by €3,230 to €3,300 it is estimated to cost an additional €194m in a full year. The values of the credits have been set at levels that are intended in part to reflect the economic burden that arises from the condition of the person being cared for, as well as the resources available to pay for their care.
Finally, it is noted that these credits apply in addition to other various supports from other parts of Government, including the Department of Social Protection, the Department of Health and the Department of Children, Disability, Equality and Integration, that assist those with caring responsibilities.
