Written Answers Nos. 170-183
170. Deputy Catherine Connolly asked the Minister for Transport , further to Parliamentary Question No. 399 of 21 April, the reason the Road Safety Authority has not responded to this question; the action he proposes to take; and if he will make a statement on the matter. [28528/21]
View answerA reply from the Road Safety Authority issued to Deputy Connolly on 22 April 2021. In their response, the Authority set out the details as follows:
It is the case that debit and credit card payments, and Apple Pay and Google Pay are the current acceptable payment types in NDLS offices and that we are unable to accept cash, cheques, postal order or pre-paid card payments. This was introduced as one of the new public health and social distancing measures to tackle the spread of Covid-19 measures. It should be noted that customers over 70 years of age are granted a free licence, so no payment is required.
As with any other service matter, individuals requiring personal assistance to use the NDLS service are welcome to be accompanied by a person who can make a payment on their behalf. The health and safety of our customers is paramount and staff on the ground are trained to manage the safe distancing of customers to ensure this.
171. Deputy Peadar Tóibín asked the Minister for Transport the investment made by his Department and State agencies under its remit, in each year, in cyber security for the past ten years. [28853/21]
View answerMy Department takes the security of its Information Technology systems very seriously. Our technical staff continue to operate and monitor all relevant systems to the highest levels and are closely engaged with experts in the OGCIO and the NCSC to ensure that we follow best practice as it relates to all aspects of Cybersecurity. For operational and security reasons, I cannot disclose details of systems, processes or indeed costs as to present information in this manner in relation to my Department could potentially compromise those efforts or could inadvertently assist criminals to identify potential vulnerabilities in departmental Cybersecurity arrangements.
I have forwarded your question to the agencies under the aegis of my Department for direct response to you. If you do not receive a reply within 10 working days please contact my private office.
172. Deputy Matt Carthy asked the Minister for Finance the reason purchasers of newly completed houses at Loreto Wood, Cavan, County Cavan are unable to avail of the help-to-buy scheme; and if he will make a statement on the matter. [28047/21]
View answer197. Deputy Matt Carthy asked the Minister for Finance if there is a provision for purchasers to avail of the help-to-buy scheme in instances in which the development company has not registered for the scheme; and if he will make a statement on the matter. [28048/21]
View answerI propose to take Questions Nos. 172 and 197 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. The incentive provides 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 the case of a purchase of a new home, the property must be a "qualifying residence" sold by a "qualifying contractor".
Section 477C(1) of the Taxes Consolidation Act 1997 (TCA) defines a qualifying residence as a new building which was not, at any time, used or suitable for use as a dwelling. Renovation or refurbishment of old houses to either upgrade or reinstate them for habitation does not qualify for HTB.
For a vendor to become part of the HTB process, they must first apply to Revenue to register as a qualifying contractor. The requirements that must be satisfied by the contractor are as outlined in section 477C(2) TCA. These include that the contractor must be tax compliant and either a zero rated or 20% rated contractor for the purposes of Relevant Contract Tax (RCT). Revenue Tax and Duty Manual Part 15-01-46 provides further details.
Qualifying contractors are required to verify information provided by the applicant in the HTB process. Where the conditions of the HTB are satisfied and a HTB refund is available, the HTB refund is paid to the qualifying contractor to be offset against the purchase price of the property.
Revenue advise that in order to determine if the properties in question satisfy the definition of a qualifying residence, consideration would have to be given to whether the construction of the properties started before the introduction of the HTB scheme; when the properties were completed, and whether the same contractor started and finished the property. Revenue Tax and Duty Manual Part 15-01-46 outlines further guidance on what would be considered a “new” house. Examples 5, 6 and 7 may be particularly relevant as they outline scenarios where a contractor may have started the construction of the property before the introduction of the HTB scheme. Revenue further advise that to determine if the HTB scheme would be available for the properties at Loreto Wood, Cavan, the full facts and circumstances would need to be considered to determine if the HTB conditions are satisfied.
Details may be sent to Revenue's HTB team to Personal Division at PAYE Services, PO Box 327, PAYE Mail Centre, Churchfield, Cork. If the Deputy requires any further clarification, he may wish to contact Revenue’s Oireachtas helpline at 01-8589999.
173. Deputy Ged Nash asked the Minister for Finance , further to Parliamentary Questions Nos. 235 and 236 of 11 May, the criteria applied in concluding that the Revenue Commissioners programme of investigations with a view to prosecution has achieved a considerable level of success, and is an effective deterrent to tax evasion and fraud. [27485/21]
View answer174. Deputy Ged Nash asked the Minister for Finance , further to Parliamentary Question Nos. 284 to 287, inclusive, of 28 April, the number of convictions that related to income tax, value-added tax, corporation tax, capital gains tax, and capital acquisitions tax or stamp duty, respectively, in each of the years 2011 to 2020. [27486/21]
View answerI propose to take Questions Nos. 173 and 174 together.
I am advised by Revenue that the breakdown of the number of convictions under section 1078 of the Taxes Consolidation Act 1997 by tax head in respect of 2011 to 2020 inclusive, as set out in the following table:
|
Year |
Income Tax |
VAT |
Corporation Tax |
PAYE |
Employer PAYE |
Relevant Contracts Tax |
Capital Gains Tax |
Combination of tax heads |
Totals 1078 convictions |
|
2011 |
1 |
6 |
0 |
0 |
2 |
1 |
0 |
6 |
16 |
|
2012 |
4 |
16 |
0 |
0 |
0 |
0 |
1 |
4 |
25 |
|
2013 |
1 |
2 |
0 |
1 |
0 |
0 |
0 |
6 |
10 |
|
2014 |
7 |
2 |
0 |
1 |
0 |
0 |
0 |
6 |
16 |
|
2015 |
0 |
8 |
0 |
0 |
0 |
0 |
0 |
9 |
17 |
|
2016 |
2 |
5 |
0 |
3 |
0 |
0 |
0 |
1 |
11 |
|
2017 |
1 |
6 |
0 |
0 |
0 |
0 |
0 |
2 |
9 |
|
2018 |
4 |
2 |
2 |
0 |
0 |
0 |
0 |
3 |
11 |
|
2019 |
0 |
4 |
0 |
0 |
0 |
0 |
0 |
4 |
8 |
|
2020 |
1 |
4 |
0 |
0 |
0 |
0 |
0 |
4 |
9 |
The criteria applied in determining the level of success of Revenue's programme of investigations with a view to prosecution include:
- The number and quality of cases referred to, and accepted by, its Prosecutions Admissions Committee for investigation with a view to prosecution;
- The number of cases where Revenue’s Prosecutions Branch can obtain sufficient levels of evidence and proof to warrant referral of the case to the Director of Public Prosecutions for direction;
- The number of cases where the Director of Public Prosecutions issues a direction for prosecution; and
- The number of convictions obtained.
The purpose of deterrence strategies for tax administrations is to dissuade taxpayers from non-compliant behaviour. I am advised by Revenue that taxpayer behaviour determines the nature and extent of its compliance interventions. Revenue's interventions range from non-audit compliance interventions such as assurance checks, aspect queries and profile interviews to audit or investigations. It undertakes criminal investigations where cases of serious tax and duty evasion and fraud are discovered, seeking to apply the full legal sanctions available that reflect the seriousness of the evasion involved. These activities all form part of Revenue’s deterrence strategies.
Overall, the international research literature suggests that deterrence is an important driver for taxpayer behaviour but works differently in different contexts and may best be used as a tool for supporting existing norms in favour of compliance. Revenue's published behavioural insights research confirms the same applies in Ireland and that deterrence strategies (e.g. highlighting possible sanctions) dissuade taxpayers from non-compliant behaviour.
Furthermore, Revenue's regular, large-scale customer surveys seek views of taxpayers on the influence of various sanctions on their compliance behaviour. Surveys of small to medium sized enterprises and chargeable persons (self-employed individuals) confirm that, while most taxpayers view tax compliance as a matter of civic responsibility, the sanctions applied by Revenue in line with the overall legislative framework are important factors in deterring non-compliance.
175. Deputy Ged Nash asked the Minister for Finance the status of the ratification by Ireland of the Council Decisions (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom; and if he will make a statement on the matter. [27488/21]
View answerAs the Deputy will be aware, EU leaders reached agreement in July 2020 on the Multiannual Financial Framework (MFF) and Next Generation EU (NGEU) package totalling €1.82 trillion. This is a good deal for Europe, and is an unprecedented response by the EU to assist with the impact of the Covid crisis. It is a strong signal that the EU is determined to chart the pathway to recovery together and to show that Europe works for its citizens. The support towards climate transition, research and development and digital agendas will be invaluable.
The agreement by leaders also made a number of changes to the current system of Own Resources, which we welcome:
- Simplifying the VAT-based own resource;
- Member States shall retain by way of collection costs 25% of Traditional Own Resources (Customs Duties), increase from 20%;
- Introduction of plastics based contribution based on non-recycled plastic packaging; and
- The legislative basis for borrowing to fund the NGEU recovery instrument.
The Own Resources Decision effectively translates the changes taken by the European Council into legal form and is required to underpin the funding commitments agreed to at Council level. As such, in accordance with Article 12 of Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union, Ireland completed its ratification procedure by way of Government Decision on 11 May 2021. This was communicated to the Secretary General of the Council of the European Union on 12 May 2021, through Ireland’s Permanent Representation to the EU in Brussels. Confirmation of Ireland's ratification of the Own Resources Decision was conveyed to the members of the Oireachtas Joint Committee on EU Affairs and to the Parliamentary Budget Office on 20 May 2021.
I hope that the remaining Member States will also soon finalise their ratification of the Own Resources Decision, which will ensure that much needed NGEU funds can be disbursed to Member States.
176. Deputy Ged Nash asked the Minister for Finance the action Ireland has taken on foot of the European Commission recommendation of 14 July 2020 (C(2020) 4885 final) on making State financial support to undertakings conditional on the absence of links, up to the beneficial owner, to non-co-operative jurisdictions for tax purposes, so-called blacklist jurisdictions, pursuant to point 7 of the recommendation; the information he has already provided to the Commission regarding measures taken to implement the recommendation; and if he will make a statement on the matter. [27489/21]
View answerIreland supports the EU list of non-cooperative tax jurisdictions which has proven to be a powerful tool to encourage countries around the world to implement globally agreed tax reform measures. Last year in Finance Act 2020 I introduced enhanced CFC (Controlled Foreign Company) Rules to apply to businesses in jurisdictions included in the EU list of harmful tax jurisdictions.
Ireland, like most countries, has introduced support schemes and attached various conditions to the eligibility for COVID-19 supports. Across a range of Government Departments a comprehensive package to help businesses and workers during the pandemic has been put in place, including the following operated by the Revenue Commissioners:- COVID-19 Restrictions Support Scheme (CRSS), the Temporary Wage Subsidy Scheme (TWSS), the Employment Wage Subsidy Scheme (EWSS) and debt warehousing of tax liabilities. I am not aware whether any companies receiving public supports in Ireland are registered in jurisdictions that are included on the EU list of non-cooperative tax jurisdictions.
The Covid Restrictions Support Scheme was introduced in Finance Act 2020 to support businesses significantly affected by restrictions introduced to combat the COVID-19 pandemic. The support is available to eligible businesses who carry on a business activity that is impacted by COVID-19 restrictions. The business must have been required to prohibit or considerably restrict customers from accessing their business premises. Generally, this refers to COVID-19 restrictions at Level 3, 4 or 5 as explained in the Government’s Plan for Living with COVID-19. Certain businesses may qualify for the support where lower levels of restrictions are in operation.
The CRSS is available to eligible businesses that carry on a trade or trading activities from a business premises, including companies, sole-traders or self-employed individuals, and partnerships.
To be eligible:
- the profits of the trade or trading activities of the business must be chargeable to Irish tax under Case I of Schedule D,
- the business premises must be located wholly within a geographical region for which Irish Government COVID-19 restrictions are in operation, and
- businesses must possess valid tax clearance to enter the CRSS and continue to maintain tax clearance for the duration of the scheme.
Further details are available on the Revenue website at: www.revenue.ie/en/self-assessment-and-self-employment/crss/qualifying-criteria-for-eligible-businesses.aspx.
The Temporary Wage Subsidy Scheme was legislated for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020. The objective of the TWSS was to keep an employee on his or her employer’s payroll and to provide support to keep the employee’s income at a level close to his or her normal average wage. The TWSS was only available to employers registered in Ireland whose business activities were adversely impacted by the COVID-19 pandemic and applied as regards employees who were on the employer's Irish payroll at 29 February 2020. The scheme applies to businesses (companies, partnerships, individuals) resident for tax purposes in the State and also to non-resident companies that carry on a trade in the State through an Irish branch.
A non-resident company that carries on a trade in the State through an Irish branch is chargeable to Irish corporation tax on trading profits and other income relating to the Irish branch. I am advised by Revenue that aggregate information in relation to wage subsidy payments made to this category of employer – companies that are not tax resident in the State but are trading here through an Irish branch – is not available. However, in accordance with section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020, the names and addresses of all employers to whom a temporary wage subsidy has been paid by Revenue is published on its website and available at: www.revenue.ie/en/employing-people/twss/list-of-employers/index.aspx.
As part of the “July Stimulus” announced on 23 July last, the Government introduced the Employment Wage Subsidy Scheme (EWSS). The EWSS was legislated for under the Financial Provisions (Covid-19) (No. 2) Act 2020 which was signed into law on 1 August 2020. It replaced the Temporary Wage Subsidy Scheme from 1 September 2020. The EWSS delivers an enterprise support to employers based on business eligibility delivering a per-head subsidy on a flat rate basis.
As is the case with the TWSS, the EWSS applies to businesses (companies, partnerships, individuals) resident for tax purposes in the State and also to non-resident companies that carry on a trade in the State through an Irish branch. No aggregate information in relation to companies that are not tax resident in the State but are trading here through an Irish branch is available in relation to the EWSS. However, the names and addresses of all employers to whom the EWSS has been paid by Revenue is periodically published on its website at: www.revenue.ie/en/employing-people/ewss/list-of-employers-who-received-payments-under-the-ewss.aspx. Additionally, and unlike the TWSS, the employer must have a tax clearance certificate to be eligible to join the EWSS and must continue to meet the requirements for tax clearance throughout the scheme.
I am advised by Revenue that the debt warehousing scheme provides for reduced interest on certain tax liabilities which businesses were unable to pay as a result of the Covid-19 crisis, namely VAT, PAYE (Employer), Income Tax and excess TWSS. These supports are only available to Irish taxpayers. For all taxes in the scheme, a taxpayer must continue to file all returns and pay its other tax liabilities. The condition for eligibility for warehousing VAT, PAYE (Employer) and excess TWSS debts is that the business must have been adversely affected by restrictions to combat the spread of Covid-19, such that it cannot pay its liabilities. The condition for eligibility for warehousing Income Tax liabilities is that the individual’s income for 2020 must have been reduced by at least 25% compared to his/her income for 2019, as a result of the impact on his/her income of the Covid-19 restrictions and he or she is therefore unable to pay those liabilities. Further details on the warehousing of tax debts are available from the Revenue website at:
www.revenue.ie/en/corporate/communications/covid19/filing-and-paying.aspx.
I am also aware that the Department for Enterprise, Trade, and Employment provides other supports including the COVID-19 Credit Guarantee Scheme (CCGS) which makes up to €2 billion in lending available for Irish businesses and is the largest guarantee scheme in the history of the State. Its function is to add certainty to businesses that funding is available for working capital and investment purposes. Loans of up to €1 million are available for up to five and a half years at reduced interest rates. Loans under €250,000 do not require collateral or personal guarantees. The Scheme is available to SMEs and small mid-caps (including primary producers) and will run until 31 December 2021 in accordance with the European Commission's State Aid Temporary Framework implemented in response to COVID-19.
177. Deputy Sean Sherlock asked the Minister for Finance if the end date for the employment wage subsidy scheme is set. [27490/21]
View answerTo answer the Deputy's question, no end date for the Employment Wage Subsidy Scheme (EWSS) has been set as yet.
The objective of the EWSS is to support all employment and maintain the link between the employer and employee insofar as is possible. The EWSS has been a key component of the Government’s response to the continued Covid-19 crisis to support viable firms and encourage employment in the midst of these very challenging times. To date, payments of over €3.1 billion and PRSI credit of over €521 million have been granted to 49,200 employers in respect of almost 563,800 workers.
I have been clear that there will be no cliff-edge to the EWSS and, as the Deputy will be aware, it was decided by Government that the scheme would be extended until the end of June 2021. Similarly, the COVID Restrictions Support Scheme (CRSS) was also extended to end June 2021.
Motions seeking the approval of Dáil Éireann for the extension of the CRSS and the EWSS to 30 June 2021 took place on Thursday 22 April, during which I reaffirmed the Government's commitment that there would be no immediate end to the economic supports at the end of June.
With the agreement by Government on the revised plan, COVID-19 Resilience and Recovery 2021: The Path Ahead, a cautious and measured approach will be taken as we lay the foundations for the full recovery of social life, public services and the economy.
As the revised plan is implemented, the EWSS will play an important role in getting people back to work as public health restrictions are eased, thereby reducing the numbers dependent on social welfare payments over time, including the Pandemic Unemployment Payment (PUP).
Consideration is being given to the fact that continued support could be necessary out to the end of 2021 to help maintain viable businesses and employment and to provide businesses with certainty to the maximum extent possible. Decisions on the form of such support will take account of emerging circumstances and economic conditions as they become clearer.
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects.
For those businesses who may need additional support during this period, I would draw attention to the comprehensive package of other business and employer supports that, apart from EWSS and CRSS, have been made available since the July Stimulus Plan and Budget 2021 including the Credit Guarantee Scheme, the SBCI Working Capital Scheme, Sustaining Enterprise Fund, and the Covid-19 Business Loans Scheme.
The Government remains fully committed to supporting businesses and employers insofar as is possible at this time.
178. Deputy Sean Sherlock asked the Minister for Finance the engagement he has had with banks that made mortgage drawdowns conditional if customers were in receipt of the employment wage subsidy scheme. [27491/21]
View answerSince 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 are 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. Also a loan offer may contain a condition that would allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial and contractual decision for the 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 the drawn down of 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.
179. Deputy Bernard J. Durkan asked the Minister for Finance if consideration will be given to deregistering a vehicle (details supplied); and if he will make a statement on the matter. [27517/21]
View answerI am advised by Revenue that vehicles are only de-registered and vehicle registration tax (VRT) repaid in very exceptional circumstances. This includes where the exceptional circumstances occur within seven working days of the date of registration and where the vehicle has not been licensed for use in a public place, i.e. road-tax has not been paid and, that the application for de-registration is received within twenty-one days of the date of registration.
In 2020 Revenue agreed, on an exceptional basis, to de-register the vehicle in question due to the COVID-19 pandemic and its unexpected impact on business. The company re-registered the vehicle in January 2021 despite the general awareness of the ongoing uncertainty and impact of the pandemic on business. It is not possible for Revenue to agree to de-register the vehicle for a second time as it is now road taxed and has mileage accumulated. The request to de-register the vehicle was also received more than 21 days after registration.
It is important that Revenue applies the relevant criteria to any request to de-register a vehicle thereby ensuring the integrity of the vehicle registration system is maintained and assurance is provided to purchasers that an unregistered vehicle is new.
Finally, the derogation referred to is a matter for the Road Safety Authority (RSA).
180. Deputy Brendan Howlin asked the Minister for Finance if he will review the repayment of the employment wage subsidy scheme to a person (details supplied); his views on whether this was a bona fide application that would have serious knock-on effects for apprenticeships if the payment was disallowed; and if he will make a statement on the matter. [27524/21]
View answerThe Financial Provisions (Covid-19) (No. 2) Act 2020 (Act No. 8 of 2020) provides for the introduction of the Employment Wage Subsidy Scheme (EWSS), which is an economy-wide enterprise support that gives a flat rate subsidy to qualifying employers based on the numbers of eligible employees on their payroll and the level of gross pay (to employees). The EWSS replaced the Temporary Wage Subsidy Scheme (TWSS) on 1 September 2020.
The legislation provides that EWSS cannot be claimed in respect of certain connected parties who were not on the employer payroll and paid at any time between 1 July 2019 and 30 June 2020. Connected parties include brothers, sisters, linear ancestors, linear descendants, aunts, uncles, nieces, nephews of any individual and their spouse. This does not mean that employers cannot avail of the EWSS in respect of apprentices that correctly meet the eligibility criteria as set down in the legislation.
I am advised by Revenue that the person in question is not an eligible employee for the EWSS as he is a connected person (to the employer) within the meaning of the legislation and was not on the payroll of the employer at any time in the period from 1 July 2019 to 30 June 2020 and did not receive a payment of wages (emoluments) during this time. Revenue has also confirmed that it is in discussions with the employer regarding repayment of the amounts incorrectly claimed and will work with the business to agree an arrangement that reduces any financial hardship to the greatest extent possible.
181. Deputy Mary Butler asked the Minister for Finance the position regarding the official State recognition of partners who have been long-term co-habiters but are not yet married; the position regarding financial assistance and tax credits available to a person in such a situation upon the death of a partner prior to marriage; his plans to examine the issue further; and if he will make a statement on the matter. [27530/21]
View answerIn 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.
The tax system in Ireland does not treat cohabiting couples the same as married couples or civil partners. Tax legislation provides that cohabiting couples are assessed as single individuals and each cohabiting partner will be entitled to the basic personal tax credit of €1,650.
There are no tax credits or reliefs available to a surviving cohabitant on or following the bereavement of a partner. However, a surviving cohabitant may be entitled to claim the Single Person Child Carer Credit (currently €1,650) if:
1. a qualifying child resides with her or him for the whole or greater part of a year of assessment; and
2. she or he is not jointly assessed for tax as a married person or civil partner, living with her or his spouse or civil partner, or cohabiting with a partner.
A qualifying child is:
- a child who was born in the tax year;
- a child who was under the age of 18 at the start of the tax year;
- a child who was over the age of 18 at the start of the tax year if she or he is either in full-time education or is permanently incapacitated by reason of mental or physical infirmity from maintaining herself or himself; or
- an individual who is over the age of 21 if she or he is permanently incapacitated, having become permanently incapacitated before reaching the age of 21 or whilst in full-time education.
Further information on the Single Person Child Carer Credit can be found on Revenue’s website, available here.
Another tax credit available to co-habiting couples in certain circumstances is the Incapacitated Child Tax Credit, which is currently €3,300. The requirement for relief for this tax credit is that a claimant has custody of and maintains an incapacitated child. The claimant is entitled to the same tax credit in respect of the child as if the child were a child of the claimant. The credit can be claimed by a person in respect of a child who is permanently incapacitated either physically or mentally from maintaining herself or himself and had become so before reaching 21 years of age or finishing full-time education. More information about this credit is available on Revenue's website here.
A further measure of tax relief is also available to cohabitants where a cohabiting relationship ends. To qualify for the particular relief the partners must be “qualified cohabitants”. The Civil Partnership and Certain Rights and Obligations of Cohabitants (CPCROC) Act 2010 defines qualified cohabitants as persons who have been in a committed and loving relationship with another person for a minimum period of 5 years (2 years where they are parents of one or more dependent children), whose relationship has ended due to death or separation and neither of whom was married to and living with another person in 4 of the 5 years immediately before the end of the relationship.
If the relationship ends, and one partner successfully applies for financial redress under section 173 CPCROC Act 2010, tax relief may be available in respect of payments made for the support of a former dependent partner. Relief may only be claimed in respect of legally enforceable arrangements made under section 175 CPCROC Act 2010. The tax treatment is broadly similar to that of separated spouses or former civil partners.
A claim for tax relief for maintenance payments to a former cohabitant is subject to the following conditions:
- the individual making the payments (payer) is not entitled to deduct or retain out of the payment any amount representing income tax on the payment;
- the payer is allowed, in computing her or his total income, a deduction for maintenance payments made in the year of assessment for the benefit of the qualified cohabitant;
- the recipient is taxable under Case IV, Schedule D, in respect of such maintenance payments received; and
- both individuals are taxed as single persons.
Tax relief for maintenance payments will cease if the qualified cohabitant:
- marries or re-marries,
- enters into a recognised foreign marriage,
- enters into a civil partnership (applies on or before 15 November 2015 only), or
- enters into a foreign partnership, which is recognised in Ireland by virtue of section 5 CPCROC Act 2010 (applies on or before 15 May 2016 only).
For the purposes of Capital Acquisitions Tax (CAT), the relationship between the person who provides a gift or inheritance and the person who receives the gift or inheritance determines the lifetime tax-free threshold (the Group Threshold) below which gift and inheritance tax does not arise. 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 her or his relevant tax-free threshold, CAT at a rate of 33% applies on the excess benefit. In the case of a cohabitant who is not related to the disponer, the relevant tax-free threshold is the Group C threshold, which is currently €16,250.
Cohabiting individuals can avail of the ‘dwelling house exemption’ to bequeath their principal private residence, generally the most substantial asset owned by an individual, free from inheritance tax. This relief is available to people who share a home and meet the conditions of the relief and it is not dependent on the relationship between them. Further details are available at: www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions/exemption-for-dwelling-house/index.aspx.
Section 88A Capital Acquisitions Tax Consolidation Act 2003 exempts transfers of property made under court order between qualified cohabitants within the meaning of Part 15 of the CPCROC Act 2010. This is a redress scheme which provides protection in law for long-term cohabiting couples and provides safeguards for an economically dependent cohabitant where a relationship has ended, or on death.
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.
182. Deputy John McGuinness asked the Minister for Finance if a bank (details supplied) held a banking licence prior to 2008; and if so, the date on which a licence was granted to the bank by the Central Bank. [27576/21]
View answerAs the Deputy will be aware, the main activity of IIB Homeloans Ltd. was the assessment, underwriting and management of residential mortgage backed credit facilities to retail customers.
- This entity was regulated as a multi-agency intermediary under the Investment Intermediaries Act, 1995, from 1 July 2001 until 7 June 2005.
- It was regulated as a retail credit firm from 1 June 2008 until 24 October 2008, when it changed its name to KBC Mortgage Bank and was authorised as credit institution, i.e. a licensed bank, under Section 9 of the Central Bank Act 1971.
- In February 2009, KBC Mortgage Bank transferred its business to KBC Bank Ireland plc.
For the time period between the 7 June 2005 (when the Investment Intermediaries Act authorisation status was revoked - (revocations can occur for a number of reasons including voluntarily revocations due to firms no longer carrying out that specific regulated activity or transferring the activity to another entity) - and 1 June 2008 (when authorisation as retail credit firm came into effect), IIB Homeloans did not require an authorisation from the Central Bank of Ireland. Such entities were known as “non-deposit taking lenders” at that time. While they did not require an authorisation, they were subject to the provisions of the Consumer Credit Act 1995, which includes provisions relating to the form and content of agreements, matters arising during the currency of agreements, matters arising on termination of agreements or on default.
183. Deputy Patricia Ryan asked the Minister for Finance if the growth and stability pact prevents the Government from borrowing to build houses; and if he will make a statement on the matter. [27610/21]
View answerThe EU's fiscal rules, as set out in the Stability and Growth Pact (SGP), are an integral part of the EU’s broader economic governance framework. The key components of the fiscal rules are a 3 per cent of GDP threshold for the headline deficit, a 60 per cent debt-to-GDP threshold, a balanced budget after adjusting for the economic cycle (measured by the structural balance) and the expenditure benchmark. The EU's fiscal rules do, therefore, place constraints on Member States' borrowing, both in a single year, through the deficit-limits, and over multiple years, through the debt-rule.
Last year, Ireland recorded a general government deficit of 5.0 per cent of GDP and a debt-to-GDP ratio of 59.5 per cent. However, as the Deputy will be aware, the normal operation of the fiscal rules has been suspended since March 2020, when the so-called General Escape Clause of the SGP was activated. This clause allows Member States to depart from the regular budgetary requirements under the Pact in order to allow them to take all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery. The clause is in place for 2021 and the European Commission are shortly expected to give their view on whether it should be extended to 2022.
It is also important to recognise that under the normal operation of the SGP, the rules themselves do not limit the level of government expenditure. Additional public investment is always possible if it is matched by revenue-raising measures and/or offsetting expenditure adjustments elsewhere. In addition, to avoid penalising spikes in government investment, the framework allows investment to be smoothed over a four year period. This means that only one quarter of the increase in Gross Fixed Capital Formation (GFCF) will impact on compliance under the expenditure benchmark in that year. In this respect, it is important to bear in mind that Ireland has remained compliant with the fiscal rules while housing investment has more than doubled since 2016. Budget 2021 allocated a record level of funding to housing, reflecting the key priority Government is giving to this issue. At €3.1 billion, this is 41 per cent above the previous peak in 2008.
Looking forward to the post-pandemic period, we must recognise that there was evidence of an investment gap across Europe before the onset of the Covid-19 crisis. Prior to the pandemic, public investment remained below pre-financial crisis levels in several Member States. The role of the EU fiscal rules in creating or tackling this investment gap is a complex question but one which I believe we must consider at both a national and European level.
Early last year, the European Commission presented a formal review of the legislation underpinning the SGP, including the launch of a public consultation on the operation of the fiscal rules. Discussions around this review were paused to allow Member States to address the immediate challenges of the pandemic. The Commission have stated their desire to relaunch the public debate on the fiscal framework once the post-pandemic economic recovery takes hold. I believe addressing the investment gap in Europe should be a key part of discussions on the future of the framework.
