Dáil Éireann Debate, Tuesday - 12 July 2022
310. Deputy Paul Donnelly asked the Minister for Finance the estimated cost of raising the threshold for the home care tax credit to bring added peace of mind to families who are bearing the brunt of the additional living costs brought about by inflation. [37144/22]
View answerI am informed by Revenue that the home carer tax credit can be claimed by couples who are married or in a civil partnership and have elected to be jointly assessed to tax, where either spouse or civil partner, the ‘home carer’, cares for one or more dependent persons.
A dependent person includes an individual who, at any time in the year of assessment, is:
- a child in respect of whom the home carer, or his or her spouse or civil partner, is in receipt of child benefit;
- aged 65 years or over; or
- permanently incapacitated by reason of mental or physical infirmity.
The dependent person must normally reside with or in close proximity to the married couple or civil partners for the relevant year of assessment. Only one credit can be claimed by a couple, regardless of the number of people being cared for.
To obtain the full tax credit (€1,600 for the 2022 year of assessment), the home carer’s income for the year must not exceed €7,200 (excluding Carer's Allowance payments made by the Department of Social Protection). In cases where the home carer’s income exceeds €7,200, the tax credit available is reduced by one half of the excess amount earned over this limit. The home carer tax credit will, therefore, not be available for the 2022 year of assessment where the home carer’s income exceeds an upper threshold of €10,400.
It is not possible to claim both the increased Standard Rate Cut-Off Point for dual income couples and the home carer tax credit. Couples may choose whichever option is more beneficial to them, based on their personal circumstances.
To answer the Deputy's specific question regarding the estimated cost of increasing the income threshold for the home carer's tax credit, as there is no data available on additional potential claimants that might qualify under an increased threshold and given that it may be more beneficial in many instances for couples to avail of the additional standard rate band granted to a second earner rather than claim this credit, it is not possible to provide an accurate estimate of the potential cost of changing the threshold values for this credit.
I am however informed by Revenue that the estimated cost of increasing the amount of the home carer tax credit itself can be found in Revenue's Ready Reckoner, available at the following link: www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf (See page 5)
For ease of reference of the Deputy, a €50 increase in the value of the home carer's tax credit (to increase the credit from €1,600 to €1,650) would cost €3m in the first year and €4m in a full year. Amounts other than that shown in the Ready Reckoner may be extrapolated using a straight line or pro-rata calculation.
