Dáil Éireann Debate, Tuesday - 26 July 2022
447. Deputy Holly Cairns asked the Minister for Finance the full range of tax reliefs that a family may claim for children and adult children in full-time third level education; and his plans to increase these tax reliefs in Budget 2023. [41759/22]
View answer448. Deputy Holly Cairns asked the Minister for Finance if he will introduce tax reliefs on loans that individuals or families must take out for full-time third level education courses. [41760/22]
View answerI propose to take Questions Nos. 447 and 448 together.
Section 473A of the Taxes Consolidation Act 1997 (TCA) provides for income tax relief in respect of qualifying fees paid by an individual for one or more approved third level education courses, subject to the conditions set out in that section. Approved courses may include full-time and part-time undergraduate and postgraduate courses provided by approved colleges, universities or institutions of higher education. The relief is granted at the standard rate of income tax (currently 20%) and is available to the individual who incurs the qualifying fees, although they may not be the student who attends the course.
Qualifying fees mean tuition fees, but do not include administration fees or examination fees, student centre or union levies or accommodation costs. The maximum amount which can qualify for relief is €7,000 per course per academic year, and when determining the amount eligible for relief the following amounts must be deducted:
- any portion of tuition fees that are or will be met directly or indirectly by grant, scholarship, employer contribution or other similar means; and
- the first €3,000 paid in respect of a full-time course or €1,500 paid in respect of a part-time course.
Those who pay tuition fees in instalments can claim tax relief in the year in which either the academic year commenced, or the instalment is paid.
Relief may be claimed in respect of more than one student, however in such cases the amount eligible for relief is equal to the total fees paid by the individual (subject to the €7,000 cap per course) less €3,000. The general effect of this is that all claimants will get full tax relief on the tuition fees, less the student contribution, for each of the second or more students in respect of whom they incur qualifying fees.
A full list of approved colleges and courses beginning in the 2022 academic year can be found on Revenue’s website at: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/tuition-fees-paid-for-third-level-education/approved-colleges-and-courses.aspx.
Full details of the relief, including the conditions that apply, are set out on the Revenue website at www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/tuition-fees-paid-for-third-level-education/index.aspx.
In addition to the above, there are also exemptions from tax that apply to payments received by students including, for example, grant payments made to students in higher education under Student Universal Support Ireland (SUSI). Also, income arising from a scholarship is exempt from income tax, USC and PRSI, where the conditions for relief in section 193 TCA are met. Further details in relation to the scholarship exemption can be found on Revenue’s website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-26.pdf.
The Rent-a-Room scheme, under section 216A TCA, also supports the accommodation needs of third level students and others by providing significant levels of relief to accommodation providers offering rooms for rent within their sole or main residence. The relief is offered, inter alia, to providers of accommodation for full or part-time students, including lettings for an academic year, an academic term or four-day-a-week "digs". An individual cannot avail of Rent-a-Room relief for payments for accommodation in the family home by a child of the individual, or the individual’s spouse or civil partner, regardless of whether the child has claimed tax relief on the rent paid. There is no restriction where rent is paid by other family members, for example, nieces and nephews. Further details on this relief are available from Revenue's website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf
Proposals for tax expenditures, such as the one proposed by the Deputy in respect of loans for the purpose of attending full-time third level education, are dealt with in the context of the annual Budget and Finance Bill process. As the Deputy will appreciate, I must be mindful of the public finances and the many demands on the Exchequer; tax reliefs, no matter how worthwhile in themselves, lead to a narrowing of the tax base. Under my Department's Tax Expenditure Guidelines, tax measures should only be considered in circumstances where there is a demonstrable market failure and where a tax based incentive is more efficient than a direct expenditure intervention.
