Written Answers Nos. 461-479
461. Deputy Duncan Smith asked the Minister for Finance if his attention has been drawn to the problems community groups and resident associations are having in opening new accounts in financial institutions to avail of local authority grants (details supplied); the plans in place to solve these problems; and if he will make a statement on the matter. [18178/21]
View answerFirstly, I would like to point out that it would not be appropriate for the Minister for Finance to comment on specific policies in individual credit unions. In addition, the Central Bank as regulator of the credit union sector cannot comment on specific matters in individual credit unions due to confidentiality reasons. The Central Bank has also informed me that they do not contact individual credit unions seeking answers as to why they have decided to discontinue the provision of a particular financial service.
You may wish to note that credit unions in Ireland are regulated and supervised under the Credit Union Act, 1997 and regulations issued by the Central Bank. Credit unions must also comply with other legislation, such as the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (CJA 2010).
The Central Bank has developed and published the Credit Union Handbook to assist credit unions by bringing together in one place the legal and regulatory requirements and guidance that apply to credit unions, arising from their registration as credit unions. Where an individual credit union intends to discontinue a service, the Central Bank expects that the credit union would give reasonable notice to affected members.
It is important to note that it is a commercial decision for a credit union as to whom it decides to provide financial services to. The Central Bank cannot direct a credit union as to what types of commercial decisions it can and cannot take, provided of course that the credit union complies with all applicable legal and regulatory obligations pertaining to its registration. Furthermore, the Central Bank cannot ask a credit union not to comply with its own anti-money laundering/countering the financing of terrorism (AML/CFT) policies and procedures, which the credit union has put in place in order to comply with its obligations under the CJA 2010.
However, credit unions should not discontinue the provision of financial services to entire membership categories without due consideration. In September 2019, the Central Bank published its Anti-Money Laundering and Countering the Financing of Terrorism Guidelines for the Financial Sector (the “Guidelines”). In the Guidelines, the Central Bank clearly set out its expectations of firms (including credit unions) when applying the risk-based approach to their AML/CFT obligations, including that “Firms should be cognisant of the importance and benefits of financial inclusion. A “zero tolerance” approach, or wholesale termination of business relationships with entire categories of customers, without an individual assessment of their risk, is not consistent with the risk-based approach.”
462. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied) regarding rent and mortgage repayments; and if he will make a statement on the matter. [18216/21]
View answerAs Minister for Finance I have no responsibility in regard to rents which are private agreements between landlords and tenants.
However, in regard to protection for businesses with mortgage repayments with banks, on 18 March 2020 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.As Minister for Finance, I have no function in the commercial decisions made by banks these are a matter for individual bank boards. However, 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 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. 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.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.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.
463. Deputy Marc MacSharry asked the Minister for Finance if he will give consideration to the extension of the help-to-buy incentive scheme for first-time buyers to include the purchase of existing dwellings given the shortage of new housing developments and the difficulty in getting planning permission for new builds in rural areas; and if he will make a statement on the matter. [18222/21]
View answer477. Deputy Seán Canney asked the Minister for Finance if he will extend the help to buy scheme to include the refurbishment of old property to upgrade; if not, if the scheme will be reinstated for habitation for first time homeowners; and if he will make a statement on the matter. [18451/21]
View answerI propose to take Questions Nos. 463 and 477 together.
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. It also has as a key aim the encouragement of additional supply of new houses by supporting demand. 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.
In addition to the conditions laid down in section 477C Taxes Consolidation Act 1997 (TCA), including that the property is occupied as the sole or main residence of a first time purchaser, section 477C(2) defines a ‘qualifying residence’. The legislation is very specific as to the definition of a qualifying residence. It must be a new building which was not, at any time, used or suitable for use as a dwelling. If the property was non-residential, but has been converted for residential use, it may qualify for HTB. Renovation or refurbishment of old houses to either upgrade or reinstate them for habitation does not qualify for HTB.
In relation to second-hand properties generally, an increase in the supply of new housing remains a priority aim of Government policy. As mentioned above, 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. I have no plans to extend HTB to second-hand properties.
464. Deputy Pa Daly asked the Minister for Finance the number of drawdowns from the help-to-buy scheme in County Kerry in each of the years 2016 to 2020 and to date in 2021. [18234/21]
View answerThe Help To Buy (HTB) scheme is designed to assist first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home.
HTB has a two main stages: the application stage and the claim stage. Compliant taxpayers who complete a HTB application are provided with an application number and a summary of the maximum relief available to them under the incentive. A mortgage provider, broker, qualifying contractor or solicitor can use this summary to verify the relief available to the applicant, for the purposes of mortgage approval or drawdown, or signing a house purchase contract.
An application will progress to the claim stage where the applicant decides to purchase a property that is eligible for the scheme. Many applications may never progress to the claim stage because the applicant does not purchase a property or purchases a property not eligible for the scheme.
Claims made cannot be approved and paid until the qualifying contractor, or the solicitor acting on behalf of self-builder, has verified the claim. Claims are approved by Revenue in the vast majority of cases but at any given time there will be a number of pending claims awaiting approval.
I am advised by Revenue that annual and monthly statistics on the Help to Buy (HTB) scheme are published on their website. Both reports provide a geographical breakdown of approved HTB claims, including data in relation to County Kerry. This data is summarised below:
|
Year |
Approved claims (Kerry) |
|
2021* |
17 |
|
2020 |
101 |
|
2019 |
83 |
|
2018 |
42 |
|
2017** |
46 |
* Up to end Q1 (latest data available)
** The 2017 figure includes approved retrospective claims made in 2017 in respect of the period 19 July 2016 to end 2016, as provided for in the relevant legislation.
In addition, monthly statistics on the HTB are also available and published at:
https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/htb/htb-monthly.aspx with data up to March 2021 included.
465. Deputy Carol Nolan asked the Minister for Finance if he will address concerns that there is only one major insurer now available to the leisure industry and adventure tourism sector; and if he will make a statement on the matter. [18299/21]
View answerI am very conscious of the difficulties facing some sectors, including those highlighted by the Deputy, with regard to the affordability and availability of insurance cover. However, neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).
Notwithstanding these constraints, the Government has prioritised the reform of the insurance sector in order to improve the cost and availability of this key financial service, including for businesses. The Action Plan for Insurance Reform sets out 66 actions in this regard across several policy areas, including my Department, with 95% due to be completed by the end of 2021. At a recent Government meeting, the Cabinet reflected upon the work of the Cabinet Sub-Group on Insurance Reform, which oversees the implementation of the Action Plan, and to note of the considerable progress made in the first three months of this year. Achievements include:
- The creation of an Office to Promote Competition in the Insurance Market within the Department of Finance.
- The adoption of new Personal Injuries Guidelines by the Judicial Council.
- The launch of a public consultation on proposals to reform the Personal Injuries Assessment Board
The new Personal Injuries Guidelines significantly reduce award levels for many categories of common injuries, particularly those of soft tissue. The Guidelines should help to bring more certainty to claimants and insurers, and as such reinforce the benefits of using the PIAB to settle claims. This in turn should further reduce the costs of claims, particularly legal fees. The new Guidelines will come into effect on 24 April, a number of months ahead of schedule. On foot of this, Minister of State Fleming has held meetings with the main insurers to discuss their response to the new Guidelines, including the need for them to pass on savings from reduced claims award in the form of reduced premiums for consumers. The issues of insurance coverage and the lack of it on certain sectors such as those highlighted by the Deputy was also discussed in these meetings.
The establishment of an Office to Promote Competition in the Insurance Market within my Department, and the publication of its work programme, is also an important development in the context of lack of supply of insurance in certain sectors. Since its establishment, the Office has held meetings with wide range of stakeholders including insurance bodies, civil society and other state regulators on the issues of competition and switching.
In conclusion, securing a more sustainable and competitive market through deepening and widening the supply of insurance in Ireland remains a key policy priority for this Government. In this regard, it is my intention, to work with my Government colleagues to ensure that implementation of the Action Plan can have a positive impact on the affordability and availability of insurance for individuals, businesses, community and voluntary groups across Ireland.
466. Deputy Claire Kerrane asked the Minister for Finance if there is flexibility regarding tax boundaries for pension recipients who are subject to increased tax deductions as a result of recent increases to the payment; if consideration has been given to the impact that increases to pension payments have on moving recipients to a higher tax bracket and resulting in tax deductions which are higher than the social welfare payment; the measures in place to prevent these increased deductions resulting in lower income for pension recipients; and if he will make a statement on the matter. [18315/21]
View answerI understand that this question relates to a person who received an increase in their Living Alone Allowance from the Department of Social Protection (DSP), while their occupational pension and state pension from the DSP are unchanged.
The mechanism used to tax payments from the DSP, where a person has an additional source of income (for example, an occupational pension), is by reducing the person’s annual tax credits and rate band by the annual amount of their DSP income. This ensures that their weekly payment from the DSP is paid gross to the recipient, while their weekly/monthly occupational pension paid by their pension provider will have any tax due on the DSP income and on the occupational pension deducted from it. Increases in weekly DSP payments can result in higher tax deductions from a person’s occupational pension and a reduced weekly/monthly net occupational pension as a result.
I am advised by Revenue that it has extensive data sharing arrangements with the DSP and Revenue is advised of any increased DSP payments. When such information is received, Revenue updates a person’s tax credits and rate band to reflect the increased DSP payments and notifies the person’s occupational pension provider through a revised ‘Revenue Payroll Notification’ (RPN). The person will also be notified of the changes via a revised ‘Tax Credit Certificate’ (TCC).
It is unclear how, over the course of a year following an increase in the weekly amount of a DSP Living Alone Allowance, a person’s combined net income from their occupational and State pensions (including the increased Living Alone Allowance) would be less overall as a result of tax deductions than before they received the increase.
If the Deputy wishes to provide details of the specific individual concerned, Revenue will review the case to ensure that the person is not suffering excessive tax deductions.
467. Deputy Aengus Ó Snodaigh asked the Minister for Finance if there are differences in the approach of capital gains tax vis-à-vis inheritance in the case of an adopted person who leaves behind an estate and others; and if a capital gains tax of 44% is imposed on the estate of an adopted person who has left it to a blood relative or in the case of no blood relative being found that the estate becomes a State asset. [18373/21]
View answerMy officials tried unsuccessfully to seek clarification with you on this PQ. Therefore, the reply is being made on a best efforts basis.
Given that the question is in relation to a death, the Deputy may have intended to query the relevant tax treatment in the circumstances set out for inheritance tax purposes and not capital gains tax. If this is the case, I am informed by Revenue that for such purposes, the relationship between the deceased person (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which capital acquisitions tax (CAT) does not arise.
There are three separate Group thresholds based on the relationship of the beneficiary to the disponer. The Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild, and certain foster children) or minor child of a deceased child of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer. The Group C threshold (currently €16,250) applies in all other cases.
Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on a benefit. Where a person receives gifts or inheritances that are in excess of his or her relevant tax-free threshold, CAT at a rate of 33% applies on the excess benefit. Each beneficiary of an estate must determine his or her own liability to inheritance tax, the estate of the deceased is not liable to inheritance tax in this regard. Estate duty, which was levied on the market value of a deceased person’s estate, was abolished by Finance Act 1975.
Under the Status of Children Act 1987, an adopted child is deemed to be the child of the adopting parent and not the child of any other person, and all other relationships are to be determined accordingly. For inheritance tax purposes therefore, the relationship of a child that has been adopted under the Adoption Act 2010, or under an intercountry adoption effected outside of the State and recognised under the 2010 Act, to their natural parents and natural relatives ceases to exist, with one exception. Further to an amendment in Finance Act 2001, an adopted child can avail of the Group A threshold in respect of a gift or inheritance taken from his or her natural parents or adoptive parents. In all other cases an adopted child assumes the same relationships to their adoptive parents and relations as the natural children of those adoptive parents.
Where an adopted child is a disponer and the beneficiary of an inheritance is a natural relative, that relative is deemed to have a relationship of a stranger in blood to the adopted child and therefore must avail of the Group C threshold.
If an adopted disponer dies intestate, then the estate of that person is administered in accordance with a hierarchy of succession set out in the Succession Act 1965 which is determined by reference to the class of relationship borne to the deceased person. Under this Act adopted persons cease to bear any relationship to their natural parents or relatives. Where no successors can be identified, the State is the ultimate beneficiary of an estate. Each beneficiary receiving a benefit from the intestate adopted disponer must establish his or her inheritance tax liability in the usual way.
In recognition of the specific reference to capital gains tax (CGT) in the Deputy’s question, for completeness, the CGT consequences of a death may be summarised as follows:
In general, CGT is chargeable on any gain arising on the disposal of an asset at the rate of 33%, with the first €1,270 of chargeable gains of an individual in any year being exempt from CGT. However, the transfer of an asset on the death of a person is not treated as a disposal for CGT purposes. The beneficiary of the deceased person is deemed to have acquired the asset at its market value on the date of death. That value will represent the base cost of the asset for any subsequent disposal of that asset by the beneficiary, in respect of which a CGT liability may arise. The adoptive status of the disponer or beneficiary does not impact this principle of CGT.
468. Deputy Pádraig O'Sullivan asked the Minister for Finance if the operation of the stay and spend incentive will be reviewed and extended beyond April 2021; and if he will make a statement on the matter. [18433/21]
View answerThe purpose of the Stay and Spend Tax Credit scheme was to provide targeted support to businesses within the hospitality sector whose operations are likely to be most affected by continued restrictions on public health grounds.
The scheme was developed at a time when there appeared to be a steady downward trend in infection rates and there was an expectation that the re-opening of the economy could be sustained uninterrupted. Unfortunately, this has not been the case and, with the exception of some short periods, public health restrictions have had the effect of impeding the operation of the incentive as originally envisaged.
The Stay and Spend scheme is scheduled to terminate at the end of this month. While I am very mindful of the significant difficulties that remain to be faced by the hospitality sector, I have made the point previously that the broad interests of taxpayers also need to be taken into account and that these may not be best served by extending the scheme over the summer months in circumstances where we will all be staying at home and hopefully holidaying in Ireland. This is particularly the case when other very significant support measures will remain in place. Taking these factors into account, it may be more appropriate to take stock again in a number of month's time and assess if the position needs to be reconsidered at that point.
It may be useful to summarise the significant supports that remain available to support businesses generally, including the hospitality sector:
- In recognition of the unprecedented challenges facing the Hospitality and Tourism sector, the VAT rate was reduced from 13.5% to 9% from 1 November 2020. This is a temporary but important measure to provide support to the sector, where many businesses remain closed for now and those that are open are operating at significantly reduced capacity. It will apply until 31 December 2021. It should be noted that this VAT rate reduction came after the introduction of the Stay and Spend Tax Credit and reflects the fact that the latter was not intended to be the sole sector-specific support for hospitality.
- In addition, the Employment Wage Subsidy Scheme (EWSS) continues to be a key component of the Government’s response to the COVID-19 crisis to support viable firms and encourage employment in the hospitality and tourism sector and beyond. I have been clear that there will be no cliff-edge to the EWSS and, as announced by Government last month, the scheme is being extended in its enhanced form to the end of June 2021.
- The Covid Restrictions Support Scheme (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.
- Finally, businesses may also be eligible under the Debt Warehousing Scheme to ‘park’ certain VAT and PAYE (Employer) liabilities, excess payments received under the Temporary Wage Subsidy Scheme (TWSS), outstanding balances of self-assessed Income Tax for 2019 and Preliminary Tax for 2020.
469. Deputy Pádraig O'Sullivan asked the Minister for Finance the action being taken to deliver a strong and vibrant credit union sector; and if he will make a statement on the matter. [18437/21]
View answerThe Government welcomes the important work credit unions are doing to support communities throughout Ireland at this difficult time and recognises the key role that credit unions play in the delivery of financial services in local communities across Ireland. The Minister of State in my Department, Sean Fleming TD, has credit unions as part of his remit.
The Government regularly engages with the sector to discuss its current and future plans. I met all of the credit union representative bodies in September 2020, the third such meeting during 2020. In addition, Minister of State Fleming met two of the main representative bodies in January 2021 and again in March 2021. Minister of State Fleming has also met with a number of individual credit unions and groups of credit unions since his appointment in July 2020.
There are a number of commitments set out in Programme for Government, including a review of the policy framework in which credit unions operate. As part of the review, the Department has held extensive engagement with the credit union representative bodies since September 2020 to seek feedback on their key priorities for the sector. In addition, the Department is taking into account work already completed by the Credit Union Advisory Committee (CUAC). The review is now at an advanced stage.
In terms of delivery of a strong and vibrant credit union sector and supporting and enabling the sector to grow, the following are some recent developments in relation to lending and investment regulations, SME lending, access to finance for retrofit, current accounts and investment in Approved Housing Bodies (AHBs).
Review of Lending and Investment Regulations
The Central Bank has in recent years completed reviews of both the lending and investment frameworks to ensure that credit unions operate under a framework that is both tailored and proportionate, to reflect the unique nature of the sector, and to provide flexibility for credit unions who have ambitions to grow.
Following introduction of the new lending regulations on 1 January 2020, credit unions now have a combined capacity to provide up to approximately €1.1 billion in SME and mortgage loans, with further additional lending capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As at December 2020, credit unions had a combined mortgage and SME loan book of circa €344 million, an increase of 12% year-on-year.
The revised investment regulations took effect on 1 March 2018. Under these regulations, credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including accounts in authorised credit institutions, certain bank and corporate bonds, sovereign bonds and investments in Tier 3 Approved Housing Bodies (AHBs) to provide social housing.
SME Lending
I very much welcome the recent announcements that nineteen credit unions, supported by ILCU, CUDA and Metamo, have been approved by the Department of Enterprise, Trade and Employment for participation in the Covid-19 Credit Guarantee Scheme. With their local knowledge, credit unions are ideally placed to support the recovery and providing loans to local businesses is a key element of the recovery. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book.
Access to Finance for Retrofit
As you will be aware, the Government significantly increased the funding available to support retrofit in Budget 2021. My officials have been engaging with the Department of Environment, Climate and Communication, the Department of Public Expenditure and Reform, and the Sustainable Energy Authority of Ireland to support increased credit union participation in green retrofit loan schemes.
Current Accounts
The Deputy may also wish to note that under the additional services regime set out in the 2016 regulations credit unions can seek approval from the Central Bank to offer additional services such as current accounts and debit cards. 51 credit unions, representing circa 50% of sector assets, currently have approval to provide Member Personal Current Account Service (MPCAS).
Investment in Approved Housing Bodies
Since 1 May 2018 it has been possible for credit unions to invest in Approved Housing Bodies through a regulated vehicle. I understand that a number projects are being progressed by the sector at present, which may lead to investment in AHBs.
470. Deputy Pádraig O'Sullivan asked the Minister for Finance his plans to enable credit unions to become involved in financing housing projects; and if he will make a statement on the matter. [18438/21]
View answerIn answering the Deputy's question, I am referring to the sector's involvement in social housing projects.
Following a review of the investment framework for credit unions in 2017, the Central Bank introduced amending investment and liquidity regulations for credit unions. Since 1 March 2018, credit unions have been permitted to invest in regulated investment vehicles where the underlying investments are investments in Tier 3 Approved Housing Bodies (AHBs) for the provision of social housing. The regulations require that investments by credit unions in Tier 3 AHBs must be made through a regulated investment vehicle. The maximum permitted investment amount per credit union is 50% of a credit union's regulatory reserves where a credit union has total assets of at least €100 million and 25% of a credit unions regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in Tier 3 AHBs of close to €700 million.
As such, the Government and the Central Bank have fulfilled their role and it is now up to both the credit union and social housing sectors themselves to progress and develop any specific funding mechanisms. I understand three groups are currently seeking to establish Special Purpose Vehicles (SPVs) to allow investment into Tier 3 AHBs, including the two credit union representative bodies (the Irish League of Credit Unions and the Credit Union Development Association).
It should be noted that the Department of Housing, Planning, Community and Local Government is the department with primary responsibility for the formulation and implementation of policy, and for the preparation of legislation, in relation to housing.
471. Deputy Pádraig O'Sullivan asked the Minister for Finance the tax reliefs or concessions available to support persons working from home; and if he will make a statement on the matter. [18439/21]
View answerWhere e-workers incur certain extra expenditure in the performance of their duties of employment remotely or from home, such as additional heating and electricity costs, there is a Revenue administrative practice in place that allows an employer to make payments up to €3.20 per day to such employees, subject to certain conditions, without deducting PAYE, PRSI, or USC. Revenue have confirmed that PAYE workers using their primary residence as a workplace during Covid-19 restrictions qualify as e-workers for the purposes of this practice.
This administrative practice has been in place for some time and the choice of whether to make the payment of €3.20 is at the discretion of the employer. The value of relief allowed under the Irish system is already considered sufficient to cover any legitimate additional costs incurred by workers. The level of support allowed also compares favourably internationally: at €3.20 per day up to €16 per week or €832 per annum may be paid tax free. By contrast, the weekly rate in the UK is just £6 per week or a maximum of £312 per annum.
Revenue also advise that the provision of equipment, such as computers, printers, scanners and office furniture by the employer to enable the employee work from home will not attract a Benefit-In-Kind charge, where the equipment is provided primarily for business use. The provision of a telephone line, broadband and such facilities for business use will also not give rise to a Benefit-in-Kind charge, where private use of the connection is incidental.
Where an employer does not pay €3.20 per day to an e-worker, employees retain their statutory right to claim a deduction under section 114 of the Taxes Consolidation Act (TCA) 1997 in respect of actual vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment. PAYE employees are entitled to claim costs such as additional light and heat in respect of the number of days spent working from home, apportioned on the basis of business and private use.
As I announced on Budget day, in addition to these existing measures, Revenue have agreed to allow broadband to qualify for this relief. This apportionment is based on the number of days the person spent working from home in year with 30% of the apportioned value accepted by Revenue as related to work in the home.
PAYE workers can claim e-working expenses by completing an Income Tax return at year end. Revenue advise that the simplest way for taxpayers to claim their e-working expenses and any other tax credit entitlements is by logging into the myAccount facility on the Revenue website.
Revenue have published detailed guidance on e-working arrangements in their Tax and Duty manual TDM 05-02-13 e-Working and Tax which may be viewed at the following link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-13.pdf
Finally, the national remote working strategy: Making Remote Work, commits the Tax Strategy Group to reviewing the current tax arrangements for remote working in respect of both employees and employers. The Tax Strategy Group will take account of the economic, financial and organisational implications arising from the experience of remote working during the pandemic, and assess the merits of further enhancements for consideration in the context of Budget 2022.
472. Deputy Pádraig O'Sullivan asked the Minister for Finance the status of the programme for Government commitment on a senior executive accountability regime to deliver heightened accountability with the banking system; and if he will make a statement on the matter. [18442/21]
View answer480. Deputy Ged Nash asked the Minister for Finance the status of the legislative timeline for the senior executive accountability regime, SEAR, legislation; the details on the precise licensed and regulated sectors within the financial services industry to which the regime will ultimately apply; and if he will make a statement on the matter. [18525/21]
View answerI propose to take Questions Nos. 472 and 480 together.
As the Deputy is aware, the Programme for Government includes a commitment to introduce a Senior Executive Accountability Regime (SEAR). SEAR will drive positive changes in terms of culture, greater delegation of responsibilities, and enhanced accountability while simplifying the taking of sanctions against individuals who fail in their financial sector roles.
My officials are engaging with the Attorney General's Office in advance of submitting draft heads of Bill to Government so as to ensure that the correct balance is struck between appropriate additional powers for the Central Bank and the protection of individuals' constitutional rights.
My officials continue to consult regularly with the Central Bank throughout this process.
As work on the various aspects of the legislation is advanced, I will consider how the SEAR will be rolled out across the various sectors of the financial services industry. I expect that the most significant financial sectors will be encompassed by the legislation.
It is my intention that the heads of Bill will be drafted and presented to Government, pending the approval of the Attorney General, prior to the summer recess. Once the Heads have been published, there will be an opportunity for them to be considered as part of the pre-legislative scrutiny process.
473. Deputy Pádraig O'Sullivan asked the Minister for Finance if he has engaged with mortgage lenders regarding mortgage applicants being able to drawdown their mortgage loans due to their inability to secure mortgage protection insurance on health grounds in the context of Covid-19; and if he will make a statement on the matter. [18443/21]
View answerWhen a person applies for a mortgage loan to buy a home, the person will generally be required to take out mortgage protection insurance. In most cases, a lender is legally required under section 126 of the Consumer Credit Act 1995 to make sure that a mortgage applicant has mortgage protection insurance in place before granting a mortgage loan. This is an important statutory provision which is designed to protect the borrower's dependants and their home should the borrower die before the mortgage has been repaid. However, the Act also recognises that in certain cases such protection is not necessary or would be inappropriate and it provides for a number of limited exemptions to this statutory obligation such as where the borrower belongs to a class of persons which would not be acceptable to a life insurer, or would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally. In such circumstances, there is no statutory requirement on a mortgage lender to arrange for mortgage protection insurance.
Nevertheless, it may also be the case that, in circumstances where there is no specific statutory obligation on a mortgage lender to arrange for mortgage protection insurance in association with a housing loan, an individual mortgage lender may, as a matter of its own commercial policy, still require a mortgage borrower to put in place such an insurance policy as a condition for obtaining mortgage credit. That would be a commercial decision as opposed to a statutory requirement for an individual mortgage lender and it is not possible for me to instruct lenders on their commercial lending policies or their commercial decisions on any individual mortgage application, including the insurance and other security they require either in respect of the borrower or the secured property in relation to a mortgage loan. While I cannot involve myself in the commercial decisions lenders may make in respect of mortgage applications I have recently written to Banking and Payments Federation Ireland for their views and any information they can provide in relation to this particular issue.
The Deputy should also note that if a person is not satisfied with the way a regulated mortgage provider has dealt with them in relation to an application for a mortgage, or they believe that the regulated entity is not following the requirements of the Central Bank’s codes and regulations or other financial services law, including the requirement for the regulated entity to act with due skill, care and diligence in the best interest of its customers, the consumer can also complain directly to the regulated entity and, if they are not satisfied with the response from the regulated entity, the response to their complaint from the regulated entity is required to include details for the borrower on how to refer their complaint to the Financial Services and Pensions Ombudsman.
474. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will extend access to the Covid restrictions support scheme for businesses and persons that do not operate in rateable premises but still face considerable overheads as part of their operating costs, such as travel counsellors, those working in the arts and on-track bookmakers; and if he will make a statement on the matter. [18445/21]
View answer493. Deputy Marc MacSharry asked the Minister for Finance if he will review the provisions of the Covid restrictions support scheme as it applies to self-employed travel counsellors who are currently ineligible for the scheme (details supplied); and if he will make a statement on the matter. [19022/21]
View answer513. Deputy Brendan Griffin asked the Minister for Finance if an application (details supplied) for the Covid restrictions support scheme will be reviewed; and if he will make a statement on the matter. [19714/21]
View answerI propose to take Questions Nos. 474, 493 and 513 together.
The Covid Restrictions Support Scheme (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. Details of the CRSS are set out 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.
To qualify under the scheme, a business must carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D. The trade must be carried on from a business premises that is located in a region subject to restrictions introduced in line with the Government’s ‘Living with Covid-19 Plan’, with the result that the business is required to prohibit or significantly restrict customers from accessing its business premises.
To make a claim under the CRSS, a business must be able to demonstrate that, because of the Covid restrictions, the turnover of the business in the period for which the restrictions are in operation, and for which a claim is made, will be no more than 25% of an amount equal to the average weekly turnover of the business in 2019 (or average weekly turnover in 2020 in the case of a new business) multiplied by the number of weeks in the period for which a claim is made.
For the purposes of the CRSS, a business premises is defined as the building or similar fixed physical structure in which a business activity is ordinarily carried on. It does not require that the premises is a rateable premises. Mobile premises, or premises which are not permanently fixed in place, do not meet the definition of business premises.
A business that does not ordinarily operate from a fixed business premises, as in the case of an on-track bookmaker, or certain businesses in the arts sector, will not meet the eligibility criteria.
It is not sufficient that the trade of a business has been impacted because of a reduction in customer demand as a consequence of Covid-19. It is not sufficient that the business supplies goods or services to another business that is required to temporarily close, or significantly reduce, its activity as is the case with drinks wholesalers. The scheme only applies where, as a direct result of the specific terms of the Government restrictions, the business is required to either prohibit or significantly restrict access to its business premises. Each business must satisfy the eligibility criteria in their own right.
A self-employed travel agent providing services from a home office, which is not customer-facing, will not meet the eligibility criteria.
The design and operation of the CRSS is centred around the concept of the “business premises”. The CRSS is paid in respect of the period for which the business is to prohibit, or significantly restrict, members of the public from having access to the business premises in which the relevant business activity is carried on.
I understand that self-employed travel counsellors may qualify for the COVID Pandemic Unemployment Payment (PUP) payment and that such travel agents providing services from a home office, which is not customer-facing, are likely to have significantly less overheads compared to a travel agent with a customer facing business. The CRSS payment is intended to enable businesses required to close or significantly restrict access to their premises, to meet their normal fixed costs such as rent, public liability insurance, utilities and so on associated with the premises.
The vast majority of businesses in Ireland are affected by Covid but the CRSS is intended to be a targeted scheme, and was specifically designed to provide additional support to the businesses who have had to close temporarily or significantly restrict access to their premises as a direct result of public health Regulations. It was never meant to be a general support measure for the entire economy.
There are no plans to change the eligibility criteria for the CRSS. The CRSS is targeted at businesses who are forced to restrict access to their premises on foot of health regulations. It is a part of the broad spectrum of Government supports being provided to assist businesses impacted by COVID-19 which include the PUP and the Employment Wage Subsidy Scheme (EWSS). Businesses may also be eligible to warehouse VAT and PAYE (Employer) debts and also excess payments received by employers under the Temporary Wage Subsidy Scheme. The Small Business Assistance Scheme for COVID (SBASC) and Tourism Business Continuity scheme have also been established in order to support those businesses most at risk, with significant cost to the exchequer. Other schemes which have been established include the Live Performance Support Scheme (LPSS) and the Music Entertainment Business Assistance Scheme (MEBAS, both of which are targeted at supporting the commercial live performance sector.
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with my Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects.
475. Deputy Pádraig O'Sullivan asked the Minister for Finance if he has considered reducing the tax liability of those whose income was supported by the temporary wage subsidy scheme; and if he will make a statement on the matter. [18447/21]
View answerThe Temporary Wage Subsidy (TWSS) was in place between 26 March and 31 August 2020 and was introduced as an emergency income support for employees of vulnerable firms whose businesses had been negatively impacted by COVID restrictions and whose turnover had reduced by at least 25% during Q2 while the strictest public health measures were in place. The support was paid via the employer so as to maintain employment links between the employee and employer insofar as was possible and, to that end, the rate of Employers' PRSI was also significantly reduced to 0.5%. The level of income given to each individual employee was based on previous wages received in January and February 2020. Over 66,500 employers received a subsidy under the TWSS with payments worth just under €2.9 billion paid out to a total of 664,000 workers.
The subsidy was based on net pay and tax was not collected in real-time through the PAYE system while the scheme was in operation, and instead would be collected after an end of year review, if any such liability arose. This decision was taken in order to maximise the amount of financial support that was provided to recipients at a time when it was considered that they needed such support most, when the TWSS was first announced and expected to only be in place for 12 weeks.
Net pay was the chosen benchmark for the TWSS as the priority was to preserve take-home income of workers insofar as was possible, noting that similar rates of income supports based on previous pay levels were also being provided for those on the Pandemic Unemployment Payment (PUP) administered by the Department of Social Protection.
When the TWSS was extended for a further 10 weeks until the end of August 2020, Revenue took steps to minimise the amount of income tax and USC due, if any, on TWSS payments at the end of the year. This was done by placing all recipients of the TWSS or PUP on the ‘week 1 basis ’ of taxation for the remainder of the year so as to “preserve” unused tax credits that can then be used to offset any income tax or USC liabilities that arise at year end.
The Government has been consistent as regards the TWSS’s liability to tax from the outset of the payment and, in my view, having regard to considerations of equitable treatment of taxpayers, a case for any action along the lines mentioned by the Deputy does not arise.
Payments made under the TWSS were regarded as income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In equity, therefore, payments under the TWSS are subject to income tax and Universal Social Charge (USC). While income tax and the USC on most income is deducted in real-time as and when the person is paid, the TWSS payments were not taxed in real-time and were instead liable to income tax and USC at the end of 2020.
I have been advised by Revenue that it clarified the tax treatment of the TWSS at employee level in the guidance material on the TWSS that it has published on its website since the commencement of the Scheme. Furthermore, Revenue actively engaged in facilitating webinars with the Employer Bodies, Accountancy Firms and Tax Practitioners to explain and clarify any issues for employers as regards the TWSS. For the information of the Deputy, Revenue’s material on Frequently Asked Questions on the TWSS can be found at:
https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf.
Although the final calculation of the end of year liability for each person is dependent on their personal circumstances based on data that Revenue released in January, it is noted that almost half of those in receipt of the PUP or TWSS have no outstanding liability to discharge (in fact over a third are due a refund).
In the case of the remaining taxpayer units with an outstanding liability, the data indicates that amounts to be collected are modest in scale, with 44% owing less than €500 and 72% having a liability of less than €1,000. If paid over the 4 year period beginning in 2022, the majority of those cases will owe less than €5 per week, with nearly half paying less than €2.50 per week. These figures represent a preliminary liability and may be further reduced by additional tax credits or reliefs such as health expenses.
Revenue has also given assurances that if any income tax and USC liabilities remain following the allocation of unused credits, it will work with its customers to collect the outstanding liabilities and a number of flexible arrangements may be entered into, including the collection without interest over an extended period of time for 4 years beginning in 2022. It is also understood that Revenue are facilitating employers who wish to pay the tax liabilities of their employees where such income tax and USC liabilities arise from the scheme.
Revenue made a Preliminary End of Year Statement available to all employees from 15 January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Social Protection, as well as their tax credit entitlements. For the tax year 2020, the Statement also includes information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement provides employees with a preliminary calculation of the income tax and USC position for 2020 and indicates whether their tax position is balanced, underpaid or overpaid for the year.
Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees have an opportunity to complete their income tax return for 2020, declaring any additional income and claiming any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.
When a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.
The Preliminary End of Year Statement sets out a provisional tax position for 2020, based on information available on Revenue records, including any Temporary Wage Subsidy Scheme (TWSS) payments reported by the individual’s employer. Revenue published provisional statistics in relation to the preliminary end of year tax position for all PAYE taxpayers for the year 2020, on 14 January 2021 which is available to view on Revenue’s website:
https://www.revenue.ie/en/corporate/documents/statistics/registrations/paye-preliminary-eoy-statements.pdf.
I might conclude by noting that Revenue are facilitating employers who wish to pay the tax liabilities of their employees where such income tax and USC liabilities arise from the scheme. Any employers who are in a position to discharge such liabilities on behalf of their workers are encouraged to do so, but it is also acknowledged that, as with the decision around whether to avail of the TWSS in the first place, the question of whether an employer pays the income tax owed by employees in respect of the TWSS is a matter between the employer and the relevant employees.
476. Deputy Pádraig O'Sullivan asked the Minister for Finance if consideration will be given to extending the 9% VAT rate for tourism and hospitality beyond December 2021 until the end of 2022; if so, the estimated cost of same; and if he will make a statement on the matter. [18448/21]
View answerFuture tax changes are generally taken in the context of the Budget. Deputies will be aware that my officials prepare a series of papers containing tax options for the Tax Strategy Group to be considered in the context of the budgetary process, alongside a wide range of submissions from various stakeholders and lobby groups.
Revenue provides a “Ready Reckoner” to facilitate the estimation of the yield or cost of potential changes to the tax code. This information is available at link: https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf and includes (on page 28) the estimated cost of changes or extensions to the 9% rate of VAT for a full year. These estimates are liable to change due to ongoing impacts of the COVID-19 pandemic.
478. Deputy Anne Rabbitte asked the Minister for Finance if there is a way for a person (details supplied) to be supported on a scheme; if not, the alternative supports in such cases; and if he will make a statement on the matter. [18515/21]
View answerA number of supports are available to businesses and individuals whose income continue to be impacted by the restrictions that are in place to deal with the public health emergency brought on by Covid-19.
Employment Wage Subsidy Scheme
The Employment Wage Subsidy Scheme (EWSS) was legislated for under the Financial Provisions (Covid-19) (No. 2) Act 2020 and provides a flat-rate subsidy to qualifying employers, based on the number of qualifying employees on the payroll.
For every qualifying employee paid a weekly gross amount between:
- €151.50 and €202.99, the subsidy is €203,
- €203 and €299.99, the subsidy is €250,
- €300 and €399.99, the subsidy is €300, or
- €400 and €1,462, the subsidy is €350.
No subsidy is available for employees paid a weekly gross amount less than €151.50 or more than €1,462.
The EWSS is administered by Revenue on a 'self-assessment' basis. The eligibility criteria for EWSS requires that in addition to having tax clearance for the duration of the scheme, an employer must be able to demonstrate that their business is expected to experience a 30% reduction in turnover or orders between 1 January to 30 June 2021 for 2021 paydates, looking at the period as a whole rather than on a monthly basis; and this disruption is caused by COVID-19.
Proprietary directors are defined as directors who can control, either directly or indirectly, more than 15% of the share capital of a company. Revenue issued a press release on 31 August 2020 confirming that the EWSS can be claimed in respect of proprietary directors from 1 September 2020, subject to the following conditions:
- the employer meets the eligibility criteria for the EWSS,
- the proprietary director is on the payroll of the eligible employer, and
- the proprietary director has been paid wages which were reported to Revenue on the payroll of the eligible employer at any stage between 1 July 2019 and 30 June 2020.
The eligibility criteria for proprietary directors were legislated for in the Finance Act 2020 and unless these criteria apply to the person concerned, Revenue has no discretion regarding the rules and must apply the legislation as enacted.
Covid Restrictions Support Scheme (CRSS)
The CRSS was provided for in section 11 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.
To qualify under the scheme, a business must carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D. The trade must be carried on from a business premises that is located in a region subject to restrictions introduced in line with the Government’s ‘Living with Covid-19 Plan’, with the result that the business is required to prohibit or considerably restrict customers from accessing its business premises.
To make a claim under the CRSS, a business must be able to demonstrate that, because of the Covid restrictions, the turnover of the business in the period for which the restrictions are in operation, and for which a claim is made, will be no more than 25% of an amount equal to the average weekly turnover of the business in 2019 (or average weekly turnover in 2020 in the case of a new business) multiplied by the number of weeks in the period for which a claim is made.
The CRSS is being extended to 30 June 2021 and a business which is subject to Covid restrictions and meets the other eligibility criteria will be able to claim support under the scheme. A claim for the CRSS is required to be made no later than eight weeks from the date on which the claim period, to which the claim relates, begins.
Other supports
Following consultations with the Department of Social Protection, I am informed that this person may be eligible for the Covid-19 Pandemic Unemployment Payment (PUP) subject to satisfying the relevant criteria. Criteria for the Covid-PUP in the circumstances of this case are that he/she must be aged between 18 and 66 years old, currently living in the Republic of Ireland, was in insurable (i.e. paid PRSI) employment or insurable self-employment and if in insurable self-employment his/her trading income has ceased or reduced to €960 over a rolling 8 week period due to the public health crisis caused by COVID-19. If these criteria are met, he/she should apply for PUP on www.mywelfare.ie.
Finally, I would draw attention to the comprehensive package of other business and employer supports that have been made available since the July Stimulus Plan and Budget 2021 which may be relevant to this business - the Credit Guarantee Scheme, the SBCI Working Capital Scheme, Sustaining Enterprise Fund, and the Covid-19 Business Loans Scheme. Comprehensive information regarding the range of supports available to help businesses impacted by the Covid-19 pandemic is available at https://enterprise.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/.
The Government remains fully committed to supporting businesses and employers insofar as is possible at this time.
479. Deputy Ged Nash asked the Minister for Finance his views on the recent Parliamentary Budget Office analytical model for public debt sustainability analysis (details supplied); and if he will make a statement on the matter. [18524/21]
View answerI welcome the analysis conducted by the Parliamentary Budget Office (PBO) on public debt sustainability. This work provides a strong commentary on the impact of the Covid-19 pandemic on debt levels and the potential implications for the medium and long-term sustainability of the public finances in Ireland.
The analysis reinforces aspects of my own Department’s Annual Report on Public Debt in Ireland 2020, which was published in January. A key take-away from this report was that the public finances are well placed to absorb the large increase in public debt created by the Covid-19 crisis. The stock of public debt in Ireland is high but remains sustainable and is predicted to remain manageable. Indeed, forecasts from the 2021 Stability Programme Update, published last week, suggest the debt-income ratio will begin to reduce from next year.
From a broader perspective, it is important to recognise that there is no one factor that determines the sustainability of public finances but that this is down to a number of elements. Firstly, while public debt has increased, the prudent management of the public finances in the pre-pandemic period means that this rise in public indebtedness can be absorbed, and economic growth in the coming years is expected to help reduce the debt-income ratio.
In addition, as the Deputy will be aware, borrowing costs have remained exceptionally low: additional debt has been financed at rates close to zero. In other words, favourable financing conditions mean that the sustainability of the public finances has not been undermined by the pandemic.
There are also several structural features of Irish public debt that remain favourable. In particular, Irish debt has a relatively long maturity profile. As outlined in the analysis from the PBO, given that the bulk of Irish debt is at fixed rates, the probability of an interest rate shock having a near-term impact on debt sustainability is low.
Nevertheless, it will be important to slow, and eventually halt, the pace at which debt is accumulated. Reducing the fiscal deficit in a gradual, orderly manner that takes into account the need to continue providing some counter-cyclical support to the economy, will slow the pace of debt accumulation. Once the health crisis abates and restrictions on mobility and economic activity are lifted, we will see a measured phasing out of the temporary supports put in place to lessen the impact of the pandemic.
As economic recovery gains momentum, a cyclical improvement in the public finances should then support elimination of the deficit over time. On this basis, the baseline scenario is that the fiscal accounts can be returned to broad balance by the mid-part of this decade.
