Dáil Éireann Debate, Tuesday - 26 April 2022
512. Deputy Fergus O'Dowd asked the Minister for Finance if he will respond to proposals raised in correspondence (details supplied) in regard to taxation and the fair deal scheme; and if he will make a statement on the matter. [20386/22]
View answerThe position is that Section 469 of the Taxes Consolidation Act 1997 (TCA 1997) provides for income tax relief where an individual proves that he or she has incurred costs in respect of qualifying health expenses.
It should be noted that only expenses incurred in the provision of ‘health care’ will qualify for tax relief. Health care is defined as the “prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability”. Expenses incurred in relation to the maintenance or treatment of an individual in a nursing home will qualify for income tax relief. This is subject to the requirement that the nursing home is one which provides 24-hour on-site care.
Income tax relief available under section 469 TCA 1997 is due to the individual(s) who incur the relevant expense and is granted by way of a deduction, equal to the expense defrayed, from the individual’s total income. The amount of income on which that individual is subject to income tax is therefore reduced and the relief is provided at his or her ‘marginal rate’ of tax, being either 40% or 20%.
Where an individual receives financial support under the Fair Deal Scheme, such amounts are not eligible for relief. Financial support includes both the payment made by the Health Service Executive (HSE) following an application for support to assist a person in meeting the cost of care services, and money advanced by the HSE by way of loan. Any excess contributions made by the individual towards nursing home fees will however qualify for income tax relief in the usual manner.
Further details in relation to income tax relief for nursing home fees are set out on the Revenue website and in Tax and Duty Manual Part 15-01-12, both of which may be found at the links below:
- Revenue website: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/health-and-age/health-expenses/index.aspx
- Tax and Duty Manual: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-12.pdf.
Tax relief under section 469 TCA 1997 applies in respect of income tax only. Therefore, it does not extend to Universal Social Charge, Local Property Tax (LPT) or any other taxes.
The proposals raised in the details supplied by the Deputy to create a fund from which fair deal expenses up to the taxpayers marginal rate of tax might be reimbursed in circumstances where income tax relief cannot be fully absorbed, would amount to a form of a refundable tax credit. Such proposals would raise broader policy and cost issues in respect of the income tax system which are significantly beyond the question of tax relief for health expenses.
Overall, I am satisfied that income tax relief in respect of health expenses it in its current form is appropriately calibrated and there are no immediate plans to review or amend the relief.
However, in relation to LPT it is worth pointing out that properties vacated by their owners due to illness can be exempt from the charge. This exemption applies to a property which was occupied by a person as his or her sole or main residence and has been vacated by the person for 12 months or more due to long term mental or physical infirmity. An exemption may be available in situations where the property has been empty for less than 12 months, if a doctor is satisfied that the person is unlikely to return to the property. In both cases the LPT legislation currently stipulates that the exemption applies only where the property is not occupied by another person. However, the recently enacted Finance (Local Property Tax) (Amendment) Act 2021, modifies the above exemption so that from 2022 another person can occupy the property without the exemption being lost.
