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Wednesday, 13 Jan 2021

Written Answers Nos. 212-236

Value Added Tax

Questions (212, 231)

Jackie Cahill

Question:

212. Deputy Jackie Cahill asked the Minister for Finance his plans to equally apply a standard rate of value added tax to all white candles used in churches to ensure a level playing field and avoid a situation in which some non-cylindrical shaped candles face a competitive disadvantage of being taxed at 23% while other non-cylindrical candles do not have this level of VAT applied; and if he will make a statement on the matter. [44768/20]

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Michael Lowry

Question:

231. Deputy Michael Lowry asked the Minister for Finance the position regarding VAT on church candles (details supplied); and if he will make a statement on the matter. [45137/20]

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Written answers

I propose to take Questions Nos. 212 and 231 together.

I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT. Ireland, in line with the VAT Directive, also maintains several standstill provisions and derogations that allows it to maintain reduced rates, zero rates and exemptions to certain supplies for historical reasons. These standstill provisions and derogations cannot be extended.

In accordance with one such standstill provision, white (including off-white and cream) cylindrical candles and night-lights are zero rated for VAT purposes. Other candles and night-lights, such as those that are decorated, spiralled, tapered or perfumed, are liable to VAT at the standard rate.

I introduced an amendment in Finance Bill 2020 to remove the application of the zero rate of VAT to a category of candles which will consequently provide for the taxation of all candles at the standard rate of VAT, currently 21%. Following discussions at Committee Stage of the Bill and having received numerous representations, I decided on a later date for implementing this change on the basis that this will allow the parties involved to amend their pricing and contracts which would already have been set based on the zero rate of VAT. The proposed amendment will come into effect on the 1 January 2022.

Departmental Contracts

Questions (213)

Louise O'Reilly

Question:

213. Deputy Louise O'Reilly asked the Minister for Finance if his Department or State agencies under the aegis of his Department have awarded contracts to a company (details supplied); if so, the value of such contracts; if the contracts were tendered for; and if he will make a statement on the matter. [44785/20]

View answer

Written answers

My Department has not awarded any contract to ‘Competence Assurance Solutions Ltd, trading as CASin the 5 year time frame from 1 January 2016 to 31 December 2020.

In relation to the seventeen Bodies under the aegis of my Department (listed below), I am informed that none of these bodies have awarded a contract to this company in the time frame concerned.

Comptroller and Auditor General, Central Bank of Ireland, Credit Review Office, Credit Union Advisory Committee, Credit Union Restructuring Board, Disabled Drivers Medical Board of Appeal, Financial Services and Pensions Ombudsman, Home Building Finance Ireland, Investor Compensation Company DAC, Irish Bank Resolution Corporation, Irish Financial Services Appeals Tribunal, Irish Fiscal Advisory Council, National Asset Management Agency, National Treasury Management Agency, Office of the Revenue Commissioners, Strategic Banking Corporation of Ireland, Tax Appeals Commission.

Vehicle Registration Tax

Questions (214, 215, 216)

Pádraig O'Sullivan

Question:

214. Deputy Pádraig O'Sullivan asked the Minister for Finance if his attention has been drawn to the fact that there are six-to-eight week delays in getting an appointment for a car to be assessed for VRT in County Cork; and if he will make a statement on the matter. [44803/20]

View answer

Pádraig O'Sullivan

Question:

215. Deputy Pádraig O'Sullivan asked the Minister for Finance if consideration will be given to granting an extension to current VRT rates until the middle or end of January 2021 until the backlog is cleared; and if he will make a statement on the matter. [44804/20]

View answer

Pádraig O'Sullivan

Question:

216. Deputy Pádraig O'Sullivan asked the Minister for Finance if consideration will be given to identifying an alternative centre in County Cork to deal with the assessment of vehicles for VRT due to the current backlog; and if he will make a statement on the matter. [44805/20]

View answer

Written answers

I propose to take Questions Nos. 214 to 216, inclusive, together.

I am advised by Revenue that because of the interruptions to the operation of National Car Testing (NCT) centres and the continuing need to limit the number of customers attending the centres due to COVID 19 restrictions, there are delays in getting pre-registration inspection appointments.  Revenue is aware that some people that sought appointments earlier in December have been unable to get them before the end of December and are concerned about the implications for the VRT that will apply.

In relation to VRT, while the rates changed on 1 January it is not necessarily the case that the amount of VRT charged on registration in January will be higher than if the vehicle was registered in December.  Where a delay in registration beyond the normal waiting times for a pre-registration appointment results in a higher VRT liability in January, Revenue is prepared to allow the lower charge to apply.  NCT centres will be advised to contact Revenue in such cases.

Revenue monitors the registration service provided by National Car Testing Service (NCTS) Centres on an ongoing basis.  In the context of the safety protocols relating to Covid-19, the capacity of NCTS Centres is restricted and there is less opportunity to increase their level of service than would otherwise be possible.  This has resulted in delays in a number of Centres including the two Cork Centres.  Working hours have been extended in these Centres to address the backlog. At present customers can expect to wait between 6 and 20 working days for a pre-registration appointment; the 20 day wait occurs in two NCTS centres.

The service provider has also increased its pre-inspection service for cars held by authorised motor dealers – details are at the following links: https://www.revenue.ie/en/importing-vehicles-duty-free-allowances/guide-to-vrt/authorised-dealers-and-processes/pre-inspection-by-national-car-testing-service-ncts.aspx and https://www.ncts.ie/1155. The registration service offered to authorised dealers on the Revenue Online Service (ROS) for new cars and cars that have been pre-inspected has remained unchanged since the original restrictions in March and such vehicles may be registered in the normal way before delivery to a customer.

Overall, Revenue is satisfied that the service being provided at present is reasonable in the context of the safety protocols that are necessary in NCTS Centres.

Public Expenditure Data

Questions (217)

Seán Canney

Question:

217. Deputy Seán Canney asked the Minister for Finance the number of capital project contracts final accounts that have exceeded the tender value by more than 20% in each of the years 2010 to 2020; and if he will make a statement on the matter. [44810/20]

View answer

Written answers

My Department has had no capital project contracts that exceeded the tender value by more than 20% in each of the years 2010 to 2020.

Disabled Drivers and Passengers Scheme

Questions (218, 221, 223, 238, 243, 244, 257)

Mattie McGrath

Question:

218. Deputy Mattie McGrath asked the Minister for Finance the status of the disabled drivers and disabled passengers' scheme following the amendment to the Finance Bill 2020; and the date new applicants can apply for the scheme. [44823/20]

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Pádraig MacLochlainn

Question:

221. Deputy Pádraig Mac Lochlainn asked the Minister for Finance the policy or legislative changes he plans to make to the Disabled Drivers Passengers (Tax Concessions) Regulations 1994 and the related primary medical certificates following the Supreme Court ruling of 18 June 2020. [44867/20]

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Pádraig O'Sullivan

Question:

223. Deputy Pádraig O'Sullivan asked the Minister for Finance when changes to the disabled drivers and passengers' scheme will come into effect; and if he will make a statement on the matter. [44972/20]

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David Cullinane

Question:

238. Deputy David Cullinane asked the Minister for Finance when the necessary communications to the Minister for Health and the HSE will be made to allow for the resumption of issuing primary medical certificates; the reason for the delay; and if he will make a statement on the matter. [1226/21]

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Cian O'Callaghan

Question:

243. Deputy Cian O'Callaghan asked the Minister for Finance if his attention has been drawn to the fact that his Department has advised the HSE to pause all applications for the primary medical certificate which have not already been assessed due to a Supreme Court decision; when assessment of these applications will resume; and if he will make a statement on the matter. [1288/21]

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Paul Murphy

Question:

244. Deputy Paul Murphy asked the Minister for Finance when assessments for applications for primary medical certificates will recommence; and if he will make a statement on the matter. [1312/21]

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Denis Naughten

Question:

257. Deputy Denis Naughten asked the Minister for Finance if the provisions in the Finance Act 2020 with regard to primary medical certificates are now being implemented; if medical assessments are being performed by the HSE; the steps he is taking to deal with the backlog of applications; and if he will make a statement on the matter. [1804/21]

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Written answers

I propose to take Questions Nos. 218, 221, 223, 238, 243, 244 and 257 together.

Following approval of the Finance Act 2020, which provides for the medical criteria for the Disabled Drivers Scheme, the HSE has been informed that medical assessments can recommence from 1 January 2021. This is considered to be an interim solution only. A comprehensive review of the scheme, to include a broader review of mobility supports for persons with disabilities, will be conducted this year. On foot of that review new proposals will be brought forward for consideration.

Separately, the ability to hold assessments may be impacted on by, among other things, the public health restrictions in place and the role of the HSE Medical Officers in the roll out of the COVID vaccination programme.

Tax and Social Welfare Codes

Questions (219)

Réada Cronin

Question:

219. Deputy Réada Cronin asked the Minister for Finance the reason persons (details supplied) who are jointly assessed for means by the Department of Social Protection have been refused joint assessment by the Revenue Commissioners for tax and dependant purposes on the basis that they must be either married or in a civil partnership to avail of same; and if he will make a statement on the matter. [44850/20]

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Written answers

In situations where a couple is cohabiting, rather than married or in a civil partnership, each partner is treated for the purposes of income tax as a separate and unconnected individual. Because they are treated separately for tax purposes, credits, tax bands and reliefs cannot be transferred from one partner to the other.

The basis for the current tax treatment of married couples derives from the Supreme Court decision in Murphy vs. Attorney General (1980). This decision was based on Article 41.3.1 of the Constitution where the State pledges to protect the institution of marriage. The decision held that it was contrary to the Constitution for a married couple, both of whom are working, to pay more tax than two single people living together and having the same income.

To the extent that there are differences in the tax treatment of the different categories of couples, such differences arise from the objective of dealing with different types of circumstances while at the same time respecting the constitutional requirements to protect the institution of marriage. Cohabitants do not have the same legal rights and obligations as a married couple or couple in a civil partnership which is why they are not accorded similar tax treatment to couples who have a civil status that is recognised in law. Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of future social and legal policy development in relation to such couples.

I have also been advised by Revenue that, from a practical perspective, it would be very difficult to administer a regime for cohabitants which would be the same as that for married couples or civil partners. Married couples and civil partners have a verifiable official confirmation of their status. It would be difficult, intrusive and time-consuming to confirm declarations by individuals that they were actually cohabiting. It would also be difficult to establish when cohabitation started or ceased.  There would also be legal issues with regard to ‘connected persons’. To counter tax avoidance, ‘connected persons’ are frequently defined throughout the various Tax Acts. The definitions extend to relatives and children of spouses and civil partners. This would be very difficult to prove and enforce in respect of persons connected with a cohabiting couple where the couple has no legal recognition. There may be an advantage in tax legislation for a married couple or civil partners as regards the extended rate band and the ability to transfer credits. However, their legal status has wider consequences from a tax perspective both for themselves and persons connected with them.

The question as to how cohabiting couple are treated for the purposes of social welfare payments is a matter for my colleague, the Minister for Social Protection.

Interest Rates

Questions (220)

Gerald Nash

Question:

220. Deputy Ged Nash asked the Minister for Finance his plans to bring forward proposals to introduce a market wide cap on interest rates charged by licensed moneylenders; if he is considering legislative changes to the operation and regulation of the moneylending sector based on the submissions received in response to the consultation exercise entitled capping the cost of licensed moneylenders and other public matters commenced by his Department in May 2019; and if he will make a statement on the matter. [44859/20]

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Written answers

The Department of Finance undertook a public consultation in 2019 seeking views on capping the cost of licensed moneylenders and other regulatory matters in relation to moneylending. The submissions received, proposed a number of policy changes in relation to the moneylending industry and are broadly in favour of introducing an interest rate restriction.

A number of potential policy proposals have been prepared in light of these submissions and I am currently reviewing a draft report setting out these proposals which I hope to publish in the coming months. Key to this process will be trying to balance improvements for borrowers with the potential for unintended consequences in terms of financial exclusion, if the supply of credit is reduced.

The Central Bank published Regulations on 8 June 2020 to strengthen protections for consumers of licensed moneylending services and to enhance professional standards in the sector. The regulations include a requirement on Moneylenders to include prominent, high cost warnings in all advertisements for moneylending loans with an Annual Percentage Rate (APR) over 23 per cent. The warning must also prompt consumers to consider alternatives. The regulations came into effect on 1 January 2021. However, recognising the financial effects of COVID-19 on consumers, the ‘high-cost warning’ requirement in respect of advertisements for moneylending loans with an APR in excess of 23% came into effect on 1 September 2020.

The Money Advice and Budgeting Service (MABS) is available to anyone experiencing problems with budgeting and debt. Furthermore, I would encourage anyone who is in receipt of a social welfare payment to explore the option of a Personal Micro Credit Scheme Loan. These loans are branded as the ‘It Makes Sense Loan’ and are offered through the credit union network. 108 credit unions and 173 sub-offices (281 locations in total) are now in a position to offer the ‘It Makes Sense Loan’.

Question No. 221 answered with Question No. 218.
Question No. 222 answered with Question No. 203.
Question No. 223 answered with Question No. 218.

Help-To-Buy Scheme

Questions (224)

James Browne

Question:

224. Deputy James Browne asked the Minister for Finance the position regarding the inclusion of second-hand homes within the help-to-buy scheme; and if he will make a statement on the matter. [44976/20]

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Written answers

The Help to Buy incentive (HTB) is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in the legislation. The incentive is scheduled to operate until the end of 2021.

HTB is designed to stimulate the supply of new houses in the housing market and to assist first time buyers in accumulating a deposit for a new home. In order to help further meet these goals, I announced an enhancement to the existing scheme with effect from 23 July last for the remainder of 2020 as part of the July Stimulus Package. The legislation to give effect to this is set out in the Financial Provisions (Covid-19) (No.2) Act 2020. The Finance Act 2020 further extended the period of application of the enhanced levels of support until 31 December 2021.

An increase in the supply of new housing remains a priority aim of Government policy. The HTB scheme is specifically designed to encourage an increase in demand for affordable new build homes in order to encourage the construction of an additional supply of such properties. A move to include second-hand properties within the scope of the relief would not improve the effectiveness of the relief; on the contrary it could serve to dilute the incentive effect of the measure in terms of encouraging additional supply.

There are no plans to extend HTB to second-hand properties.

Third Level Costs

Questions (225)

James O'Connor

Question:

225. Deputy James O'Connor asked the Minister for Finance if he will address the income tax implications of the €250 payment to non-SUSI students (details supplied); and if he will make a statement on the matter. [44977/20]

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Written answers

As the Deputy will appreciate, the operation of support measures for third level students is a matter for the Minister for Further and Higher Education, Research, Innovation and Science.

Generally speaking, all payments to individuals are taxable in the hands of the recipient unless specifically exempted. However, the basis on which the payment is made is a determining factor in the potential tax treatment of same.

Section 192F of the Taxes Consolidation Act 1997 provides an exemption for payments made by an awarding authority to, or in respect of, a student in accordance with a scheme or scheme of grants made by the Minister under the Student Support Act 2011.  Any payments made in accordance with that section, such as a top-up to SUSI payments, should fall within the exemption under s. 192F.

I am advised by Revenue that, in the case of a payment which is not within the scope of s. 192F, it would be taxable. Such payments may include a once-off credit provided by relevant institutions to students which is available for use against institutional services, such as registration fees, or in the case of a direct payment to students, where students have been unable to utilise their “once-off credit” with the institution.

In the case of a refund, tax relief is available for tuition fees paid for full time students, subject to a single disregard amount of €3,000 per family. Revenue advise me that, in the circumstances mentioned by the Deputy, if an amount is refunded against the student contribution towards tuition fees, it may result in the net tax deduction being less. The tax deduction is a proportion of the eligible amount paid. Where the eligible amount paid is less, the tax deduction will less. 

I currently have no plans to seek to change this position.

Tax Exemptions

Questions (226)

Michael Collins

Question:

226. Deputy Michael Collins asked the Minister for Finance if the definitions of art relating to the artists exemption scheme will be reviewed (details supplied); and if he will make a statement on the matter. [45015/20]

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Written answers

Section 195 of the Taxes Consolidation Act 1997 provides for the exemption of certain earnings of writers, composers and artists and allows the Revenue Commissioners to make determinations in respect of artistic works in the following categories only:

- a book or other writing

- a play

- a musical composition

- a painting or other like picture

- a sculpture.

Guidelines were drawn up by the Arts Council and the then Minister for Arts, Heritage and the Gaeltacht, for determining whether a work which falls within the scope of the activities listed in the section is an original and creative work and whether it has, or is generally recognised as having, cultural or artistic merit and consequentially can qualify for the exemption. The exemption does not extend to income arising from other endeavours, including: 

- royalties paid or associated with the performance of music whether by the composer or another artist;

- performance royalties paid or associated from the sale of CDs etc. (song writing royalties are      exempt);

- receipts from live performances;

- arrangements, adaptations or versions of musical compositions which is not of such significance as to  amount to an original composition;

- any writing visual or musical work created for advertising or publicity purposes;

- a book which is primarily used either by students in a course of study or by a person in a trade, business, profession, vocation or branch of learning as an aide to that  trade, business, profession vocation or branch of learning;

- Any work of journalism published in a newspaper, journal, magazine or on the internet.

However, the difficulties faced by certain artists and sections of the arts community arising from the Covid-19 crisis are acknowledged. With this in mind, the Government made additional allocations for the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media in Budget 2021. This was aimed, in part, at facilitating measures to address the significant impacts of the pandemic on the arts and culture sector, including, I understand:

- An additional €50m support for live entertainment.

- Funding for the Arts Council of €130m.

- A €9m increase in funding for Screen Ireland from its initial 2020 allocation to over €30m.

- €8m to provide for the transfer of the National Symphony Orchestra to the National Concert Hall.

Taken together, these measures represents a specific and comprehensive response tailored to the needs of the arts sector.

In the circumstances, I have no plans at present to review the artistic criteria that apply to the artists' tax exemption.

Dog Breeding Industry

Questions (227)

Peadar Tóibín

Question:

227. Deputy Peadar Tóibín asked the Minister for Finance the level of tax that has been paid by puppy breeders, puppy sellers, puppy farms in each of the past five years; and if his Department is pursuing dog selling platforms that are selling in Ireland but registered outside Ireland. [45060/20]

View answer

Written answers

I am advised by Revenue that the amount of tax paid by puppy breeders, puppy sellers and puppy farms is not separately identifiable from tax returns because the pan-European ‘NACE’ classification system (used by Revenue) does not uniquely identify such activities. Also, in many instances, the type of operations mentioned by the Deputy are part of wider activities by taxpayers and are not separately categorised in tax returns.

However, Revenue has confirmed that dog related activities, including those mentioned by the Deputy, are included in its risk intervention programmes. Under these programmes, cases are risk-ranked, drawing on a wide range of data sources including details provided directly by taxpayers and information received from third party sources. The level of risk identified in any case determines the intervention to be undertaken, ranging from assurance checks to tax audits and investigations with a view to criminal prosecution in the most egregious cases.

Revenue also operates a dedicated unit which appraises non-resident online businesses to identify any tax risk and to determine the level of intervention required.

Finally, Revenue has advised me that its Customs teams continue to play a vital role in supporting the DSPCA and animal welfare groups in the detection of illegal puppy exports from Irish Ports and have achieved significant successes in this regard.

Tax Code

Questions (228)

Eoghan Murphy

Question:

228. Deputy Eoghan Murphy asked the Minister for Finance further to Parliamentary Question No. 60 of 9 December 2020, if it is correct that the €3,000 annual gift exemption does not form part of the aggregate lifetime inheritance calculation so it remains that the child of two partners can get €6,000 per year that is not included in that calculation whereas the child of one parent can only get €3,000. [45069/20]

View answer

Written answers

A person may receive a gift up to the value of €3,000 from any person in any calendar year without having to pay Capital Acquisitions Tax. It is correct that gifts within this limit are not taken into account in computing Capital Acquisitions Tax and are not included for aggregation purposes.

This means that a person may take a gift from several people in the same calendar year and the first €3,000 from each disponer is exempt from Capital Acquisitions Tax. The small gifts exemption is not dependent on the relationship between the disponer and the beneficiary. It applies to gifts taken from any person, and is not limited to gifts from a parent to a child.

Question No. 229 answered with Question No. 203.

Covid-19 Pandemic Supports

Questions (230, 240)

Cathal Crowe

Question:

230. Deputy Cathal Crowe asked the Minister for Finance if the criteria for the Covid restrictions support scheme will be expanded to include sports clubs that operate a licensed premises in view of the fact that they are down business due to the various levels of restrictions and will likely continue to go through. [45121/20]

View answer

Joe O'Brien

Question:

240. Deputy Joe O'Brien asked the Minister for Finance if it is possible for sports clubs and leisure centres which operate bars and restaurants on their premises to apply for the Covid restrictions support scheme for those businesses; and if he will make a statement on the matter. [1268/21]

View answer

Written answers

I propose to take Questions Nos. 230 and 240 together.

The CRSS is a targeted support for businesses significantly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the Covid-19 pandemic. The support is available to companies, self-employed individuals and partnerships who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D, from a business premises located in a region subject to restrictions introduced in line with the Living with Covid-19 Plan.

To qualify under the scheme a business must, under specific terms of the Covid restrictions, be required to either prohibit or significantly restrict, customers from accessing their business premises to purchase goods or services, with the result that the business either has to temporarily close or to operate at a significantly reduced level. Details of CRSS were published in Finance Act 2020 and detailed operational guidelines, which are based on the terms and conditions of the scheme as set out in the legislation, have been published on the Revenue website at: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf.

Businesses whose trading profits are exempt from the charge to tax under Case I of Schedule D do not meet the eligibility criteria for CRSS.

A sports club that has been granted a sports body exemption (an approved sports body) is exempt from paying Corporation Tax or Income tax on any income received where the income is used for the purpose of promoting the game or sport. Such income would include income from a bar registered under the Clubs Act 1904 by a sports club. As an approved sports body is not chargeable to tax under Case I of Schedule D in respect of its trading profits, it will not qualify for CRSS. An approved sports body is not exempt from Value Added Tax (VAT) or payroll taxes and may be entitled to financial support under other measures put in place by the Government, including the Employment Wage Subsidy Scheme (EWSS). An approved sports body may also be eligible under the Debt Warehousing Scheme to ‘park’ certain VAT and PAYE (Employer) liabilities and any excess payments received under the Temporary Wage Subsidy Scheme (TWSS).

A sports club that does not have a sports body exemption and which has income, for example from a gym, bar or restaurant trade, subject to tax under Case I of Schedule D may be eligible for CRSS for periods of restrictions where that business meets the qualification criteria for the scheme.

I have no plans to extend the eligibility of the scheme.

Question No. 231 answered with Question No. 212.

Mortgage Lending

Questions (232)

Cian O'Callaghan

Question:

232. Deputy Cian O'Callaghan asked the Minister for Finance if his attention has been drawn to the fact that mortgage providers are refusing loans on the basis that an applicant is on the employment wage subsidy scheme regardless of ability to make repayments; and if he will make a statement on the matter. [45151/20]

View answer

Written answers

Since the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who were on the Employment Wage Subsidy Scheme on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.

However, there are certain consumer protection requirements which govern the provision of mortgage credit.  For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate.

In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders.  Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.

Within this regulatory framework, the decision to grant or refuse an application for mortgage credit remains a commercial matter for the individual lender. Nevertheless, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. If a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.

Mortgage Data

Questions (233)

Niamh Smyth

Question:

233. Deputy Niamh Smyth asked the Minister for Finance if he will review correspondence (details supplied); and if he will make a statement on the matter. [45177/20]

View answer

Written answers

The Help to Buy (HTB) incentive, is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation.

Section 477C Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the HTB scheme. A claimant under the scheme must make an application confirming s/he meets various conditions specified in the section, including that s/he is a first-time purchaser and that he or she has completed a tax return form and is tax compliant for each of the tax years for which a claim is being made.

In particular, the legislation provides that where applicants:

(i) enter into a contract for the purchase of a new house or apartment, or

(ii) make the first draw down of the mortgage in the case of a self-build property,

during the qualifying period of 19 July 2016 to 31 December 2021, they may avail of the HTB scheme, subject to all other conditions being satisfied.

I am advised by Revenue that, based on the details provided, as the first tranche of the mortgage for the self-build property was drawn down before the commencement of the qualifying period 19 July 2016 (i.e. drawn down in May 2016), HTB relief would not be available as the conditions of the scheme are not satisfied. As with all time bound reliefs, there will always be those who just miss out on qualification as is the case unfortunately in the current instance. 

Covid-19 Pandemic Supports

Questions (234)

Niall Collins

Question:

234. Deputy Niall Collins asked the Minister for Finance the status of a matter (details supplied); and if he will make a statement on the matter. [1005/21]

View answer

Written answers

The purpose of the Stay and Spend scheme is to provide targeted support to businesses within the hospitality sector whose operations are likely to be most affected by continued restrictions.

Stay and Spend provides tax relief by means of a tax credit at the rate of 20% on qualifying expenditure of up to €625 per person, or €1,250 for a jointly assessed couple. It commenced on 1 October 2020. The tax credit is worth a maximum of €125, or €250 for a jointly assessed couple.

The scheme is due to operate until 30 April next year but the flexibility exists for me to extend its operation in 2021 beyond that date. However, it is too early as yet to take any decisions in that regard. Much will depend on how matters unfold in the weeks and months ahead. As I have said previously, I will be monitoring the scheme, to see how it’s working and if any changes need to be made. We need to keep policies that are working, and change ones that might not be working as planned, but at all times, ensuring they are affordable.

It is important also to recall that the scheme should not be viewed in isolation from the other measures put in place to support businesses generally and the hospitality sector in particular. The VAT change; the rates waiver; the extension of the wage support scheme until next year and its extension to new or seasonal staff; and other Government measures all play a part in helping the sector cope with the challenges it faces.

Covid-19 Pandemic

Questions (235)

Niall Collins

Question:

235. Deputy Niall Collins asked the Minister for Finance the status of a matter (details supplied); and if he will make a statement on the matter. [1006/21]

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Written answers

On 18 March last the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging COVID-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.

The Deputy may wish to note that borrowers whose payment break ended were given an option to return to full repayments based on the same term of the loan or to extend the term of the loan or to engage further with their bank on suitable arrangements. On 30 November last, the BPFI reported that approximately 49% of SMEs returned to repaying on the existing term whilst 46% returned to repaying on extended term basis and just over 5% returned on reduced repayments.

On the question of whether new payment breaks can be put in place, the Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance.  The BPFI has also reiterated in recent days that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation.

SME-borrowers have regulatory protections via the Central Bank's SME lending regulations. The SME Regulations https://centralbank.ie/news/article/regulations-for-firms-lending-to-smes-from-2016 set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty. The options could include additional flexibility, and this could be a short-term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements.

In addition, Credit Review https://www.creditreview.ie was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.

Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements. The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers.

It should be noted that the Central Credit Register does not produce credit scores; rather the information on a credit report provided by the Central Credit Register is factual in nature and the information is provided to the Central Credit Register by lenders. It contains no guidance, recommendation or prohibition for lenders on what decision they should make on an application for credit or repayment arrangements agreed with borrowers. Subject to complying with applicable law and regulatory requirements, it is a matter for lenders to make their own lending decisions in accordance with their own credit policies and risk appetites.

I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support. 

Question No. 236 answered with Question No. 203.
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