Written Answers Nos. 272-290
273. Deputy Brendan Griffin asked the Minister for Finance if he will consider an adjustable qualifier to apply to excise duty on units of fuel to provide for a maximum and minimum unit prices as a measure to mitigate against the socio-economic impacts of peaks and troughs in global oil prices; and if he will make a statement on the matter. [7426/22]
View answerIreland’s taxation of fuel is based on European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD prescribes minimum tax rates for fuel with which all Member States must comply. Ireland applies excise duty, in the form of Mineral Oil Tax (MOT), to fuels used for motor or heating purposes.
MOT is comprised of a non-carbon and a carbon component; the carbon component is also referred to as carbon tax. The Deputy will be aware that the 2020 Programme for Government committed to increasing the amount that is charged per tonne of CO2 emissions from fuels to €100 by 2030. I followed through on this commitment by introducing legislation in Finance Act 2020 to provide for a 10-year trajectory for carbon tax increases to reach €100 per tonne of CO2 by 2030. This measure is a key pillar underpinning the Government’s Climate Action Plan to halve emissions by 2030 and reach net zero no later than 2050.
It is important to note that a significant portion of carbon tax revenue is allocated for expenditure on targeted welfare measures and energy efficiency measures, which not only support the most vulnerable households in society but also in the long term, provides support against fuel price impacts by reducing our reliance on fossil fuels.
Of course, the Government is acutely aware of the increase in consumer prices in recent months, especially the increase in fuel and other energy prices and for this reason we designed a package of measures to alleviate the impact of increased energy prices on households.
The package of measures includes:
- an increase in the energy credit to €200 including VAT, estimated to impact just over 2 million households (to be paid in April)
- a lump sum payment of €125 on the fuel allowance will be paid in early March to 390,000 recipients
- to reduce the burden on people returning to the workplace and people using public transport, there will be a temporary reduction in fares of 20% from the end of April to the end of the year. This will impact approximately 800,000 daily users
- the original Sláintecare report proposed a reduction of the Drug Payment Scheme from €144 to €100. The government has decided to reduce this further to €80. This will benefit just over 70,000 families
- the working family payment budget increase announced on Budget Day will be brought forward from 1 June to 1 April
- reduced caps for multiple children on school transport fees to €500 per family post primary and €150 for primary school children
In designing a support package, the Government was conscious of the need to target the main underlying problem – higher energy prices – while operating within the fiscal framework set out in the Summer Economic Statement. The suite of measures was announced last week and strikes the appropriate balance. This package provides support to every household via the electricity credit but also provides specific supports for more vulnerable households through targeted welfare measures.
The Deputy will be aware that tax registered businesses are eligible to apply for a refund on the tax paid for fuels used in the course of business. Additionally, the Diesel Rebate Scheme (DRS) allows qualifying road haulage and transport operators to claim a partial repayment of MOT on their transport fuels when the pump price of diesel goes above €1.23 per litre. The DRS was amended in 2019 to increase the rate of rebate and it continues to be an important support to the road transport sector.
The Deputy’s suggestion of introducing an adjustable qualifier to result in variable MOT rates dependant on market fluctuations would undermine the tax policy initiatives that I have implemented to support delivery of critical emissions reductions strategies, including the allocation of expenditure for the Just Transition. It is also a broad based measure which would not provide targeted support to those households most vulnerable to fuel poverty. I am satisfied that the package of measures announced last week, in addition to the support measures announced in Budget 2022, is the most effective means of reducing the impact of inflationary trends on households.
On a general point regarding the Deputy’s proposal, I am advised by Revenue that administering fluctuating tax rates would be extremely challenging and likely to result in considerable additional administrative burden for taxpayers and for Revenue. The introduction of such complexity and relative uncertainty would be very inconsistent with best practice in tax policy and administration.
For the reasons I have outlined above, I do not intend to implement the measure suggested by the Deputy.
274. Deputy Darren O'Rourke asked the Minister for Finance the amount the excise on motor diesel and petrol raised respectively in each of the years 2019, 2020 and 2021; and if he will make a statement on the matter. [7430/22]
View answerI am advised by Revenue that the receipts from Mineral Oil Tax (MOT) for motor diesel and petrol for the years 2019 and 2020 are published on the Revenue website at link: www.revenue.ie/en/corporate/information-about-revenue/statistics/excise/receipts-volume-and-price/excise-receipts-commodity.aspx.
The provisional receipts for motor diesel and petrol in 2021 are €1,441m and €445m respectively. When analysis of the 2021 receipts is finalised in the coming months, the data will be published at the above link.
275. Deputy Darren O'Rourke asked the Minister for Finance the amount the carbon tax on motor diesel and petrol raised respectively in each of the years 2019, 2020 and 2021; and if he will make a statement on the matter. [7431/22]
View answerMineral Oil Tax is comprised of a carbon and a non-carbon charge; the carbon component is also referred to as carbon tax. I am advised by Revenue that the receipts from the Mineral Oil Tax Carbon Charge (MOTCC) for motor diesel and petrol for the years 2019 and 2020 are published on the Revenue website at the following address:
www.revenue.ie/en/corporate/information-about-revenue/statistics/excise/receipts-volume-and-price/excise-receipts-commodity.aspx
The provisional receipts for motor diesel and petrol in 2021 are €292m and €62m respectively. When analysis of the 2021 receipts is finalised in the coming months, the data will be published on the Revenue website at the address above.
276. Deputy Alan Dillon asked the Minister for Finance if he will conduct a review of the living cities initiative to identify the way that the scheme can be extended further through interrelated plans and including other locations which would offer incentives for property owners to renovate and regenerate vacant and derelict sites; and if he will make a statement on the matter. [7461/22]
View answerThe Living City Initiative (LCI) (provided for in Finance Act 2013 and commenced on 5 May 2015) is a tax incentive aimed at the regeneration of the historic inner cities of Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. The scheme provides income or corporation tax relief for qualifying expenditure incurred in refurbishing/converting qualifying buildings which are located within pre-determined 'Special Regeneration Areas' (SRAs).
During the Committee Stage of the 2021 Finance Bill, I gave a commitment to review the measure in line with the Department's Tax Expenditure Guidelines before its scheduled sunset date at the end of this year.
However, the scheme is a very specific tax incentive, established in compliance with the Department of Finance’s Tax expenditure Guidelines, with the aim of encouraging businesses and home-owners back to the centre of Irish cities in order to preserve historic buildings in special regeneration areas. I do not believe that it is a suitable vehicle for broader application beyond its original policy goal and I have no plans at present to extend the scheme along the lines mentioned by the Deputy.
An extension of Living City would amount to s. 23 type relief. These types of reliefs were, with good reason, ended a over decade ago. Also, a proposal to extend would have the potential for increased Exchequer costs and would give rise to state aid concerns. Ireland’s past experience with tax incentives in this sector strongly suggests the need for a cautionary stance.
277. Deputy Jim O'Callaghan asked the Minister for Finance if the taxation of exchange traded funds is being reviewed; if such funds will continue to be taxed differently than individual stocks; and if he will make a statement on the matter. [7471/22]
View answerThe term “Exchange Traded Fund” or “ETF” is a general investment industry term that refers to a wide range of investments. ETF investments can take many different legal and regulatory forms even where they are established within the same jurisdiction.
An ETF is an investment fund that is traded on a regulated stock exchange. A typical ETF can be compared to a tracker fund in that it will seek to replicate a particular index.
There is no separate taxation regime specifically for ETFs. Being collective investment funds, they generally come within the regimes set out in the Taxes Consolidation Act 1997 for such funds. The domicile of the ETF will generally determine the applicable fund regime, specifically whether the ETF falls within the domestic fund regime or the offshore fund regime.
Where the domestic fund regime applies, a ‘gross roll-up’ applies such that there is no annual tax on income or gains arising to a fund but the fund has responsibility to deduct an exit tax in respect of payments made to certain unit holders in that fund. To prevent indefinite or long-term deferral of this exit tax, a disposal is deemed to occur every 8 years. Where the offshore fund regime applies, the applicable tax treatment depends on the location and nature of the fund.
To assist taxpayers in determining the appropriate tax treatment for investments in ETFs, Revenue has published guidance which is available at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-27/27-01a-03.pdf.
Where an Irish resident individual invests directly in a company by acquiring shares (rather than investing in an ETF), any income payments received (dividends) are subject to income tax at the individual’s marginal rate and gains from the disposal of shares are subject to capital gains tax (CGT).
There are currently no plans to review the taxation of Exchange Traded Funds.
278. Deputy Kathleen Funchion asked the Minister for Finance if his attention has been drawn to the long wait times customers at several of the country’s largest banks have to wait for customer service; if he has addressed the matter with the Central Bank; the actions his officials have taken to address same considering the investment by the State in the banking sector here; and if he will make a statement on the matter. [7486/22]
View answerAs Minister for Finance, I have no role in the operational matters of any bank in the State. This includes banks in which the State has a shareholding. Decisions in this regard are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis.
However, both I and the Central Bank expect that all financial firms act in their customers best interests and treat them fairly, in line with the requirements of the statutory Consumer Protection Code 2012. Firms must take a consumer-focused approach in respect of any decision that affects their customers and to engage clearly, effectively, and in a timely manner with all customers.
In June 2021 the Central Bank wrote to the main retail banks in Ireland to set out its expectations of the importance of considering consumers’ interests in decision-making during this period of unprecedented change in the retail banking sector in Ireland. The Central Bank is closely monitoring banks’ compliance with its expectations through ongoing supervisory engagement and review. This includes the expectation that the quality of service to customers by firms is in line with the firm’s expectations and the firms’ own internal service level standards.
The letter sets out the Central Bank's expectations in relation to a range of issues including:
- Demonstrating a customer-focused culture, ensuring fair treatment of customers and ensuring that customers understand what the changes mean for them.
- Being transparent and clear in communications, communicating effectively and in a timely manner with all affected customers across all channels (e.g. in person, advisory, digital etc.), providing customers with sufficient information and avoiding risks around information overload.
- Providing as much notice as possible on account closures, product/service withdrawals etc.
- Consider specifically the impact of their decisions on vulnerable customers and provide the assistance necessary to reasonably mitigate those impacts and retain access to basic financial services.
Further, in light of the changing landscape for banking in Ireland I have instructed my Department to undertake a broad-ranging review of the retail banking sector. The Retail Banking Review has commenced its work and is currently in its research phase. As part of the Review, a survey of consumers will be undertaken in the coming months to ascertain their experience and perceptions of the retail banking sector in Ireland.
There will also be a public consultation process this year where members of the public can make a submission to the Department of Finance on issues that fall within the Terms of Reference.
279. Deputy Neale Richmond asked the Minister for Finance if he has considered raising the capital gains tax allowance; and if he will make a statement on the matter. [7493/22]
View answerAs with all taxes, Capital Gains Tax (CGT) is subject to ongoing review, which involves the consideration and assessment of the rate of CGT and the relevant reliefs and exemptions.
The current approach to CGT in Ireland is a flat rate of 33% for all gains, together with a range of targeted reliefs. The reliefs include an individual exemption of the first €1,270 of gains in a calendar year, as well as a range of other reliefs including principal private residence relief, retirement relief and revised entrepreneurs relief. More information on the reliefs for CGT are available at www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/what-is-exempt-from-cgt.aspx and www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/index.aspx.
I assume the CGT allowance the Deputy refers to in his question is the annual exemption for individuals in respect of the first €1,270 of chargeable gains in a calendar year that is provided for by Section 601 of TCA 1997.
As the current exemption is available to each individual annually, this is a broad based relief that applies every year regardless of previous use, so any increase in the threshold could potentially result in significant costs to the Exchequer and would require offsetting measures.
I do not currently propose to make any changes to the individual exemption of €1270.
280. Deputy Neasa Hourigan asked the Minister for Finance the status of the retail banking review public consultation process; the start date of the public consultation process; and if he will make a statement on the matter. [7512/22]
View answer281. Deputy Neasa Hourigan asked the Minister for Finance further to Parliamentary Question No. 358 of 19 January 2022, the stakeholders that have been contacted by the retail banking review team; and if he will make a statement on the matter. [7513/22]
View answerI propose to take Questions Nos. 280 and 281 together.
On 23rd November last I announced the Terms of Reference for the Retail Banking Review. On the same date, I wrote to the Chair of the Committee on Finance, Public Expenditure and Reform, and Taoiseach informing him of the review and inviting any contributions the Committee or Members may wish to make in advance of the public consultation process or at any time throughout the course of the Review.
The Retail Banking Review team has commenced its work and it is well advanced in its research phase. In addition, fieldwork for the survey of consumers will begin in mid-February 2022 with results from the survey expected in April 2022
A public consultation process will be launched at a public seminar, which is expected to be held at the end of April. Members of the public and stakeholders will be invited to make submissions on issues that fall within the Terms of Reference of the Review.
Separate to the public consultation, the Review team has already written to a wide range of stakeholders (more than 100 in total) to draw their attention to the Review and to welcome submissions on issues that fall within the Terms of Reference at any time using the dedicated mailbox (bankingreview@finance.gov.ie). A list of these stakeholders is attached.
Retail Banking Review – List of Stakeholders Written To
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List of stakeholders |
List of stakeholders |
List of stakeholders |
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ACS Ireland |
HBAN / DublinBIC |
Macra Na Feirme |
|
Age Action |
Ibec |
Maynooth University |
|
Alone |
ICMSA |
National Competitiveness Council |
|
Ask About Money |
ICSA |
National Federation of Voluntary Service Provider |
|
British Irish Chamber of Commerce |
ILCU |
National Women’s Council of Ireland |
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Business in the Community Ireland (BITC) |
Inclusion Ireland |
National Youth Council |
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Car Rental Council of Ireland |
Incoming Tour Operators Association (ITOA) |
Nevin Institute |
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Chambers Ireland |
Industry Research & Development Group (IRDG) |
NSF |
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Children’s Rights Alliance |
Innovation Value Institute |
One Family |
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Citizen’s Information Board |
INOU |
Pavee Point |
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Coach Tourism and Transport Council of Ireland (CTTC) |
IPAV |
Protestant Aid |
|
Common Purpose Ireland |
Irish Cancer Society |
PwC Ireland |
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Community Platform |
Irish Congress of Trade Unions |
Restaurants Association of Ireland |
|
Construction Industry Federation |
Irish Co-operative Organisation Society |
RGDATA |
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Cork BIC |
Irish Exporters Association |
SAFE Ireland |
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CUDA |
Irish Farmers Association |
SAGE Advocacy |
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CUMA |
Irish Fish Processors and Exporters Association |
Scale Ireland |
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Cyber Ireland |
Irish Green Building Council |
SFA |
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Deloitte Ireland LLP |
Irish Hotel Federation |
Simon Communities of Ireland |
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Design & Crafts Council Ireland (DCCI) |
Irish Local Development Network |
Smart Dublin |
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Irish Mortgage Holders Organisation |
Social Finance Foundation |
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Disability Federation of Ireland |
Irish National Organisation of the Unemployed |
Social Justice Ireland |
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Electronic Money Association |
Irish Postmasters Union |
Society of Chartered Surveyors Ireland |
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Event Industry Association of Ireland |
Irish Road Haulage Association |
South East BIC |
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Event Industry Ireland (EII) |
Irish Rural Link |
TASC |
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EY Ireland |
Irish Senior Citizens Parliament |
TechIreland |
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Family Business Network Ireland |
Irish South and West Fish Producer’s Organisation |
The Environmental Pillar |
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Family Carers Ireland |
Irish Tax Institute |
The Society of St. Vincent de Paul |
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FLAC |
Irish Tourism Industry Confederation (ITIC) |
The Wheel |
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Focus Ireland |
Irish Travel Agents Association |
Threshold |
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Friends of the Earth Ireland |
Irish Venture Capital Association |
Venue Operators and Promoters Forum / Live Nation |
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Friends of the Irish Environment |
Irish Wheelchair Association |
Vincentian Partnership for Social Justice |
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Going for Growth |
ISME |
Vintners’ Federation of Ireland |
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Grow Remote |
KPMG |
West BIC |
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Hardware Association Ireland |
Licensed Vintners Association |
In addition, as part of its work to date, the Review team has engaged with a number of key stakeholders including the FSU, the BPFI, the Central Bank of Ireland, and the Irish Banking Culture Board.
282. Deputy Brendan Griffin asked the Minister for Finance the advice he can provide in relation to a matter (details supplied); and if he will make a statement on the matter. [7527/22]
View answerI am advised by Revenue as follows:
Pandemic Unemployment Payments (PUP) are classified in legislation as income supports and as such are subject to income tax but are exempt from the Universal Social Charge (USC) and Pay Related Social Insurance (PRSI).
The PUP was not taxed in the normal ‘real-time’ manner in 2020, meaning the collection of any tax due was deferred until year end. This approach was adopted to ensure that payments reached recipients as quickly as possible, given the suddenness of the pandemic and in the expectation at the time that the emergency supports would be short-term in nature, which turned out not to be the case due to the continued prevalence of COVID-19.
From 2021, the mechanism to tax the PUP, in common with other Department of Social Protection (DSP) payments, including Jobseekers’ Benefit and Illness Benefit, is to reduce the recipient’s tax credits and rate bands, ensuring as far as possible, that the right amount of tax is collected at the right time thereby preventing arrears building up. Where employees return to work following PUP, they are placed on a Week 1 basis to minimise potential financial hardship and prevent any further underpayments arising in the year.
Where tax liabilities (including PUP) still existed for 2020 after all additional tax credits such as health expenses were applied, the outstanding balance is automatically collected interest free over four years from 1 January 2022 by reducing the employee’s tax credits. For employees that have an overpayment on record for 2021, the amount due is automatically offset to the underpayment for previous years. This is normal practice to ensure the taxpayer’s overall tax position is rectified as soon as possible, allowing restoration of full tax credits.
Revenue has confirmed that taxpayers engaging a tax agent do so at their own discretion and any commission paid is a matter between both parties. Revenue has also confirmed that it provides a comprehensive range of online services for taxpayers to self-manage their tax affairs. These services, which include an online communication channel through the MyEnquiries system, are available 24/7, are easy to use, are fully secure and, in most cases, remove the need to contact Revenue or engage a tax agent.
For taxpayers whose tax affairs are more complex and require direct engagement, Revenue provides a one to one appointment service with the relevant official. These engagements can be carried out remotely by video conferencing if required. Such an appointment can be arranged by contacting Revenue at 01-738 3660 from 09.30 to 13.30 (Monday to Friday).
283. Deputy David Cullinane asked the Minister for Finance if he plans to address the wider issue raised in correspondence from a person (details supplied); and if he will make a statement on the matter. [7556/22]
View answerAs the Deputy is aware, the Central Bank of Ireland has responsibility for the regulation and supervision of regulated financial service providers in terms of consumer protection and prudential requirements.
Through its consumer protection role, the Central Bank sets out requirements in its codes of conduct which detail how regulated firms should deal with and treat their customers. If a customer of a regulated firm is not satisfied with how the regulated firm is dealing with them, 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 they are still not satisfied with the response from the regulated firm to their complaint, the regulated firm is required to include details for the consumer on how to refer their complaint to the Financial Services and Pensions Ombudsman.
From the details supplied in this particular case, it would appear that the issue arising relates to the registration of an interest in the property and the conveyance of property rather than matters relating to the terms or operation of a mortgage credit contract. Policy in relation to conveyancing issues and the related legislation are matters that fall within the remit of my colleague the Minister for Justice.
284. Deputy Cormac Devlin asked the Minister for Finance the duties and VAT that apply to vehicles imported into this jurisdiction and registered in cases in which such vehicles were previously imported into Northern Ireland from Britain; if used cars imported into Northern Ireland from Britain prior to 1 January 2021 were not subject to the need to complete a customs declaration and not liable to customs duty or VAT at import in cases in which the vehicle is registered in this jurisdiction; and if he will make a statement on the matter. [7579/22]
View answerI am advised by Revenue that vehicles imported from Northern Ireland (NI), that were in NI prior to 1 January 2021, when the United Kingdom (UK) left the European Union (EU), are treated as EU goods and no customs formalities are required and VAT on import and Customs duty are not applicable. However, proof of the vehicle’s status in NI prior to 1 January 2021 will be required.
For example:
- A ferry ticket showing the date of arrival in NI, and which clearly identifies the specific vehicle
- A copy of an invoice from a transport company identifying the vehicle and delivery date
- Tax and insurance details indicating use in NI
or
- A copy of the V5C showing the last registered keeper in NI and a date of registration to that keeper prior to 1 January 2021.
I am further advised by Revenue that where a second hand vehicle is imported from GB after 1 January 2021 and the Customs formalities were completed in Northern Ireland, the person wishing to register the vehicle in Ireland should first contact Revenue as there will be a VAT liability that needs to be discharged prior to registering the vehicle for VRT. This measure was introduced as a result of a UK decision to allow the VAT margin scheme to apply to imports of vehicles from GB to NI. A ‘Supplementary Import Declaration – VAT on import’ must be made to Revenue in respect of the VAT margin scheme and qualifying vehicle being imported from NI. Revenue will request verification that the Customs formalities have been completed in NI. Once the VAT, which is charged at the standard rate, is either paid or accounted for (in the case of VAT registered businesses only), Revenue will provide the necessary documentation to the customer for presentation to the NCT centre.
There are two methods of calculating the VAT:
- For vehicles purchased directly from a NI dealer: VAT is charged on the VAT inclusive value shown on the invoice issued by the NI dealer. No additional costs are added for cost of transport and Customs duties because these costs will already be included in the price charged by the NI dealer.
- For vehicles purchased from GB and imported to Ireland via NI by the same person: VAT is charged on the Customs value of the vehicle i.e. the VAT inclusive value shown on the invoice issued by the dealer plus transport costs to the point of importation plus Customs duties paid.
This is a temporary arrangement until the situation regarding VAT at importation is regularised for vehicles imported from GB to NI. This is currently being discussed between the European Commission and the UK Government.
If proof cannot be provided that Customs formalities have been completed in NI for used vehicles where they have been previously imported from GB to NI since 1 January 2021, then an import declaration is required in Ireland. Under the provisions of the EU - UK Trade and Cooperation Agreement, if the imported vehicle is of UK origin, then a preferential tariff rate of 0% Customs duty applies. However, where the vehicle is not of UK origin, Customs duty at a rate of 10% of the value of the vehicle is applicable to the importation. The value of the goods on which VAT is levied at the point of importation is the Customs value of the vehicle. The Customs value consists of the purchase price of the vehicle, plus transport and insurance costs, any handling charges and the Customs duty amount payable on the vehicle. Vehicles are liable to VAT at the standard rate. Finally, Vehicle Registration Tax (VRT) is payable on the open market selling price of the vehicle at registration, with the VRT calculation and collection being undertaken by the NCT centres.
285. Deputy Cormac Devlin asked the Minister for Finance if he will examine the arrangements in relation to structural improvements and enhancements to rental properties in Budget 2023 such as through retrofitting to allow these costs to be offset and treated as expenses rather than via capital allowances; and if he will make a statement on the matter. [7580/22]
View answer286. Deputy Cormac Devlin asked the Minister for Finance if he will examine the current arrangements with regard to improvements to rental properties which are currently capitalised over eight years given inflation rates; if he will consider reducing the time period or introducing categories for items to reflect their average useful life to encourage landlords to improve properties; and if he will make a statement on the matter. [7581/22]
View answerI propose to take Questions Nos. 285 and 286 together.
The tax treatment of structural improvements and enhancements to rental properties is set out in sections 75, 97, 97A, 284 and 285A Taxes Consolidation Act 1997 (TCA).
I am advised by Revenue that guidance as to whether those costs incurred should be treated as expenses or capital allowances when computing taxable profits, is provided in the following Tax and Duty Manuals, available in the “Tax Practitioners” section of the Revenue website:
- Tax and Duty Manual Part 04-08-12 - Capital Allowances and Rented Residential Premises
- Tax and Duty Manual Part 09-02-03 – Plant in leased buildings – Treatment of leasing income and capital allowances
- Tax and Duty Manual Part 09-02-04 - Accelerated wear and tear - Allowances for energy efficient equipment
In general, expenditure on structural improvements and enhancements is considered as capital rather than revenue in nature, and the expenditure would only be allowable if it was integral to the business of letting the premises.
If the expenditure on structural improvements qualifies for capital allowances, it would be claimed over eight years, rather than being allowed as a deduction from rental income in the year the expenditure was incurred.
Accelerated capital allowances for expenditure on certain energy efficient equipment under section 285A TCA, which can be claimed in full in the year of the expenditure, are not available to be set against rental income, because such allowances are only available to taxpayers carrying on a trade.
If the expenditure was found to be capital in nature, but not deemed to qualify for capital allowances, it may qualify as “enhancement expenditure” for Capital Gains Tax purposes and may be deducted when calculating the chargeable gain arising on the disposal of the property, should all relevant conditions be met.
Rental Income
Rental income is chargeable to tax under what is known as Case V of Schedule D. Landlords are entitled to deduct certain expenses from the gross rental income received and are then taxed on the balance, which is the rental profit. Generally, expenses which are capital in nature are not allowable as deductions unless they fall into the category of “plant” for the purposes of section 284 TCA 1997. However, the expense must have been incurred wholly and exclusively for the purposes of the business of letting the property.
Expenses
Section 97 Taxes Consolidation Act 1997 (TCA) provides the principal rules for the computation of profits/gains chargeable under Case V of Schedule D. Allowable expenses include:
- rents paid for property such as ground rents
- insurance premiums against fire and public liability
- maintenance of the property such as cleaning, painting and decorating
- property fees before the property is first rented out, such as management, advertising, legal or accountancy fees
- the cost of any service or goods provided by the landlord that are not repaid by the tenant (such as electricity, central heating, telephone, service charges, water and refuse collection).
- certain mortgage protection policy premiums
- expenses in between renting out the property in certain circumstances
- capital allowances
- repairs, such as rot treatment, mending windows, doors or machines
- certain pre-letting expenses on vacant residential property
- the cost of registering with the Residential Tenancies Board (RTB).
Pre-letting expenditure
Section 97A TCA provides that expenses incurred on a vacant residential premises prior to it being first let after a period of non-occupancy are authorised as a deduction against rental income from that premises. The section applies to expenditure on a premises which has been vacant for at least 12 months and must have been incurred in the 12 months before it is let as a residential premises. The expenditure must be such as would be allowed against rental income if it had been incurred during the period of letting. The deduction allowed is capped at €5,000 per vacant premises. I extended this deduction for a further three years to 31 December 2024 in the Finance Act 2021.
Capital Allowances
Generally, expenditure on a property which is capital in nature is not deductible when computing taxable profits, other than where a landlord has incurred capital expenditure on the provision of “machinery” or “plant” as defined in section 284(1) TCA. Such allowable expenditure is known as capital allowances, or “wear and tear” allowances. There is no exhaustive list as to what can be considered “plant” and the decision as to what constitutes plant remains primarily one of fact. Case law has also set out certain factors which may be considered when determining whether an expense is plant.
Capital allowances are provided for in section 284 TCA. The allowance is given for a chargeable period where at the end of the chargeable period the machinery or plant belongs to the person and is wholly and exclusively in use for trade purposes.
The rate at which wear and tear allowances on machinery and plant are claimed has changed over time. Prior to 2001, the allowances were claimed over seven years (15% of the actual cost per year for six years and 10% in the final year). Finance Act 2001 changed the period to five years at 20% of the actual cost per year. Finance Act 2003 changed the period to eight years, at 12.5 per cent of the actual cost per year.
Capital allowances are available in respect of capital expenditure incurred on fixtures and fittings (furniture, kitchen appliances, etc.) provided by a lessor for the purposes of furnishing rented residential accommodation. The allowances are available only where the expenditure is incurred wholly and exclusively in respect of a house used solely as a dwelling which is, or is to be, let as a furnished house on bona fide commercial terms in the open market.
Retrofitting and deductions
The Government last week approved the National Retrofitting Scheme, which is a package of supports to undertake home energy upgrades, for warmer, healthier and more comfortable homes with lower energy bills. The scheme will be administered by the Sustainable Energy Authority of Ireland (SEAI). Retrofitting a property would involve expenses that should be considered on a case by case basis as to whether they constitute plant for the purposes of claiming capital allowances. What constitutes qualifying plant in one case may not be plant in another, as has been determined in case law. Also, in the event that a grant is received by the person incurring the expenditure, no part of the cost to which the grant relates could be deducted either as an expense or a capital allowance when computing taxable rental profits, as the portion of the cost to which the grant relates would not have been incurred by the claimant.
Accelerated wear and tear allowances for certain energy efficient equipment
Section 285A TCA provides for accelerated capital allowances for expenditure on certain energy-efficient equipment bought for the purposes of the trade. An accelerated wear and tear allowance of 100% of the capital expenditure incurred can be claimed in the year in which the equipment is first provided and used. The incentive runs until 31 December 2023. It applies to certain classes of technology that are listed in the Table to Schedule 4A TCA, which include “heating and electricity provision”, “process and heating, ventilation” and “building energy management systems”. However, accelerated capital allowances are not available against rental income taxable under Case V; they can only be claimed by taxpayers carrying on a trade.
Regarding the specific questions raised by the Deputy, there are no particular plans in place to examine the measures along the lines mentioned by him in relation to the rental sector. Also, consistent with my Departments Tax Expenditure Guidelines, to the extent that a system of direct grant expenditure might be in place to encourage retrofitting it would on the face of it reduce the case for any further incentive measures to be put in place through the tax system.
287. Deputy Cormac Devlin asked the Minister for Finance the number of active employment wage subsidy scheme claims and the amount paid, by month in Dublin during 2020 and to date in 2022, in tabular form; and if he will make a statement on the matter. [7588/22]
View answerThe objective of the Employment Wage Subsidy Scheme (EWSS) is to support 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 Covid-19 crisis. It is an economy-wide scheme that operates across all sectors.
In money terms, the overall support provided to-date (10th February) by EWSS is over €7.4 billion comprising direct subsidy payments of over €6.4 billion and PRSI forgone of over €1 billion to 51,900 employers in respect of over 713,500 employees.
I am advised by Revenue that, in respect of employers with a tax registration address in Dublin, the numbers of employers and qualifying employees for, and the cost of, the Employment Wage Subsidy Scheme (EWSS) are provided in the table below.
|
Month |
EWSS Employers Supported |
EWSS Employees Supported |
EWSS Cost €m |
|
September '20 |
10,500 |
136,200 |
103.6 |
|
October '20 |
11,000 |
130,900 |
150.4 |
|
November '20 |
10,300 |
116,100 |
149.7 |
|
December '20 |
10,500 |
130,800 |
175.2 |
|
January '21 |
11,700 |
144,100 |
170.5 |
|
February '21 |
11,600 |
127,600 |
163.2 |
|
March '21 |
11,500 |
125,100 |
164.2 |
|
April '21 |
11,200 |
121,900 |
170.2 |
|
May '21 |
11,100 |
122,700 |
152.8 |
|
June '21 |
10,700 |
131,800 |
166.2 |
|
July '21 |
9,800 |
126,300 |
172.6 |
|
August '21 |
8,900 |
119,000 |
148.9 |
|
September '21 |
8,500 |
118,100 |
154.1 |
|
October '21 |
8,100 |
114,900 |
147.2 |
|
November '21 |
7,800 |
113,600 |
140.0 |
|
December '21 |
7,500 |
112,700 |
157.3 |
|
January '22 |
7,100 |
104,200 |
125.6 |
|
February ’22* |
28.3 |
||
|
Total |
2,640 |
* Full data for February 2022 are not yet available. The data provided are provisional and subject to change.
288. Deputy Alan Kelly asked the Minister for Finance the number of fuel tanks tested for marked fuel in 2020, 2021 and to date in 2022; and the number of positive tests in each year in tabular form. [7631/22]
View answerI am advised by Revenue that a multifaceted approach is taken to tackling the misuse of fuel. Revenue’s compliance activities in this area include roadside sampling of private and commercial vehicles at checkpoints combined with a risk-based, targeted sampling programme based on supply chain reporting obligations for suppliers and retailers. These activities leverage the benefits of the joint initiative of Revenue and HMRC in April 2015 of introducing a new marker for use in marked fuels.
The number of samples of Marked Gas Oil drawn and the consequential detections of misused fuel for the years 2020 and 2021 and to 31 January for 2022 are set out in the following table:
|
Year |
Samples Drawn |
Misuse Detections |
|
2020 |
7,244 |
264 |
|
2021 |
22,787 |
466 |
|
End January 2022 |
3,673 |
59 |
I am further advised that Revenue conducted a national oil random sampling programme in 2016 to 2019 to assess the extent of fuel laundering. The results for all four years of the sampling programmes are summarised in the report of the 2019 programme published at: www.revenue.ie/en/corporate/documents/research/oil-sampling-programme-2019.pdf.
The results for 2019 provide confirmation of the effectiveness of the various measures introduced by Revenue in recent years to enhance compliance in the fuel trade and among users of diesel. The random sampling programme results do not signify the complete elimination of the illicit trade in fuel; however, they demonstrate that systematic selling of illicit fuel through retail outlets and its use in the transport sector is negligible.
Despite the success in combating the misuse of fuel, I am assured by Revenue that tackling such criminality continues to be a priority. Revenue and An Garda Síochána collaborate closely in acting against cross-border fuel crime and co-operate with their counterparts in Northern Ireland under the framework of the North-South Joint Agency Task Force. This cooperation plays a key role in targeting the organised crime groups who operate across jurisdictions and are responsible for much of this criminal activity.
289. Deputy Brendan Griffin asked the Minister for Finance if tax relief is available on the cost of the renovation of listed or buildings proposed to be listed; and if he will make a statement on the matter. [7669/22]
View answerSection 482 of the Taxes Consolidation Act 1997 allows for a reduction in certain circumstances in the amount of tax payable for an owner or occupier of:
- an approved building, including surrounding garden
- an approved building which is used for tourist accommodation
- an approved garden
- an approved object.
The building, garden or object must be of a substantial scientific, historical, architectural or aesthetic interest, or, in the case of a garden, of horticultural interest, to be approved. This is determined by the Minister for Housing, Local Government and Heritage.
There also must be reasonable public access to the building, garden or object, or the building must be used for tourist accommodation for at least 6 months of the year. Reasonable public access is determined by Revenue. If the approved building is being used as a tourist accommodation facility it must be registered or listed with Fáilte Ireland.
To qualify for relief, any expenses must relate to the repair, maintenance or restoration of an approved building or garden, and the garden or grounds of an ornamental nature occupied or enjoyed with the approved building.
Tax relief up to a total of €6,350 per year may be claimed for:
- the repair maintenance or restoration of an approved object
- the installation, maintenance or replacement of a security alarm system
- the provision of public liability insurance in your approved building or garden.
The relief for qualifying expenses will be limited to the actual cost of the work carried out during the chargeable period. If expenses cannot be claimed in one period they may be carried forward for the following two periods. This can only occur when there is not enough income in a period to claim all the expenses. There is no relief available if a grant, refund or tax relief was received for these expenses elsewhere.
Finally, it is important to note that there is a distinction to be made between an 'approved building' for the purposes of claiming tax relief, and a 'protected structure' listed on a planning authority’s Record of Protected Structures (RPS) under the Planning and Development Act 2000.
290. Deputy Catherine Murphy asked the Minister for Finance if he has engaged with the special liquidators of the Irish Bank Resolution Corporation in respect of the formation of a company (details supplied) in the context of the changes in personnel that will follow at the special liquidators' current company; and if he has made contingency for conflicts of interest or perceived conflicts that may arise. [7673/22]
View answerOfficials from the Department of Finance were notified of the intention of the Special Liquidators to retire as partners of KPMG with effect from April 2023.
The Department is engaging with the Special Liquidators and KPMG and has received strong assurances that there will be full continuity of service from the Special Liquidators and from KPMG to complete the special liquidation of IBRC and to achieve the maximum return for the State.
The Special Liquidators are expected to remain at KPMG until April 2023, and work has already commenced in making arrangements to ensure that the Special Liquidation will continue seamlessly after their departure from KPMG, and that any potential conflicts of interest are considered and appropriately managed.
The Department and I remain focused on the priority outcome from the Special Liquidation of IBRC, which is to maximise the ultimate return to the State and the Department will continue to actively engage with the Special Liquidators and KPMG to ensure that all efforts continue to be made to achieve this objective.
