Dáil Éireann díospóireacht -
Wednesday, 29 May 1940

Vol. 80 No. 10

In Committee on Finance. - Additional Financial Motions by the Minister for Finance.

Mr. O Ceallaigh

I move Supplementary Financial Resolution No. 1— Income-Tax:—

(1) That Section 21 of the Finance Act, 1920, shall be amended by the addition at the end of the said section of the following sub-section, that is to say:—

(5) Where, for any year of assessment, two or more individuals are or would, but for the provisions of this sub-section, be entitled under this section to relief in respect of the same child, the following provisions shall have effect, that is to say:—

(a) Only one deduction under this section shall be allowed in respect of such child;

(b) where such child is maintained by one parent only, that parent only shall be entitled to claim such deduction;

(c) where such child is maintained jointly by both parents, each parent shall be entitled to claim such part of such deduction as is proportionate to the amount expended by him or her on the maintenance of such child;

(d) in ascertaining for the purposes of this sub-section whether a parent maintains a child and, if so, to what extent, any payment made by such parent for or towards the maintenance of such child which such parent is entitled to deduct in computing his or her total income for the purposes of the Income Tax Acts shall be deemed not to be a payment for or towards the maintenance of such child.

(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

These Financial Resolutions are not what might be described as of major importance. They arise out of the decisions in the courts—courts in Great Britain. With regard to Financial Resolution No. 1, the question of allowances for children on assessment of income-tax, it might happen, as it happened in England where the parents are separated, that both parents would claim allowance in respect of the children. It is to prevent a similar double claim arising here that Resolution No. 1 has been proposed.

Mr. Cosgrave

The Resolution as it stands is divided into four parts. The first part says that there would be only one deduction allowed in respect of such child. That is presumably only one £60. Then it next sets out where the child is maintained by one parent only, that parent only shall be entitled to claim such reduction. Where the child is jointly maintained by both parents each parent shall be entitled say to £30 each. Then we come to paragraph (d) which says that—

"... whether a parent maintains a child and, if so, to what extent, any payment made by such parent for or towards the maintenance of such child which such parent is entitled to deduct in computing his or her total income... shall be deemed not to be a payment for or towards the maintenance of such child".

What happens in that case? Apparently the first part of it would indicate that the parent does maintain the child or pays towards its maintenance and is not to be allowed a deduction in that case. What is the meaning of the sub-section as it stands?

Mr. O Ceallaigh

Sub-paragraph (d) secures that where a parent is entitled to have payments made for or towards the maintenance of a child deducted in arriving at his or her total income, such payments shall not be taken into account for the purpose of determining his or her title to the statutory allowance (or part of such statutory allowance) in respect of the child.

Mr. Cosgrave

It must be my stupidity because I am no wiser now than before.

Mr. O Ceallaigh

It is not the Deputy's stupidity. I took a long time to understand it myself. The Deputy knows these are things one has to study very closely.

General Mulcahy

Would it not be the simplest thing for the Minister to try to give us an example?

Mr. O Ceallaigh

Where the parents are entitled to deduct income-tax from payments made for or towards the maintenance of the child they are not entitled to have such payments allowed. They are not to take it that they are entitled to get this class of allowance without inquiry. That is to say, they are not entitled to take such payments into account in making the proportionate claim to the income-tax authorities.

Mr. Cosgrave

The persons of whom I have the most suspicion above all persons in the world are the Revenue Commissioners and that suspicion is shared in other countries by people similarly placed. They ought to set out what they mean. It certainly is not fair, in my view. I object to giving any citizen of this State a discretion which is not set out clearly in statutory language. For example, they are going to decide who is to get this. They are not the judges. The facts are to decide. It may happen that the other parent would get it, but if one were to probe the minds of the Revenue Commissioners their view would be not to give it to either parent. It appears to me that the sub-section as it stands is open to more than one interpretation. I would be satisfied if the Minister would examine it further at a later stage.

Mr. O Ceallaigh

I give that undertaking, but before I had any intimate association with the Revenue Commissioners or with their business my personal experience was that at any time I went to them I got more advantage than I had hoped for. I got deductions.

Mr. Cosgrave

That is the last time the Minister will ever get deductions.

Mr. O Ceallaigh

I found them more generous in their interpretation of the law than I expected.

Mr. Cosgrave

It is happily the exception which proves the rule.

General Mulcahy

It is suggested here that there are certain payments which can be made by a parent for or towards the maintenance of a child, payments which they are entitled to deduct in computing the total income. If we can get from the Revenue Commissioners, through the Minister, at the time we are dealing with these Resolutions what types of parents they are, it would help us to understand the question better.

Mr. O Ceallaigh

Payments under deed or court order. These are the kind of payments where there is a right to deduct tax on payment.

General Mulcahy

It would be very hard to read that into the section.

Mr. Cosgrave

There is one other point I want to put to the Minister. The Resolution says here: "Where the child is maintained by one parent only." There is no question about that, except to this extent—the father may have the child towards whom the mother will contribute something for maintenance. Will the Minister tell us at the next stage in what way are the Revenue Commissioners in their wisdom to solve that particular question? So far as I can see from the Resolution as drawn, they are going to decide anything and everything in connection with this. If the father has the child and the mother pays towards its maintenance, the father then from one angle maintains the child, but from the other angle it is the mother who pays for its maintenance.

Mr. O Ceallaigh

In paragraph (c) it is stated:

"Each parent shall be entitled to claim such part of such deduction as is proportionate to the amount expended by him or her on the maintenance of such child."

Mr. Cosgrave

Of course, there is a difference in this case. We will assume, for example, that the mother was paying £100 towards the maintenance of the child. She was entitled to claim an allowance of £60 in respect of that. The father, however, explained that he was expending £180 on the maintenance of the child. That is the sort of problem I should like to have solved.

Mr. O Ceallaigh

That is the type of work which the Revenue Commissioners are there to do.

Mr. Linehan

Assuming, for the sake of argument, that the father was bound by deed or court order to support the child, but was not doing so, that for some reason or other it could not be effectively enforced, and the mother was maintaining the child. Will the Commissioners, even though she is entitled under deed or court order to get the money, give her the allowance?

Mr. O Ceallaigh

If she is maintaining the child she will get it.

Mr. Linehan

They may say that there is a deed or court order which would entitle her to get the money from somebody else.

Mr. O Ceallaigh

I will say that she would get the allowance in that case if she proved that she was maintaining the child.

Resolution agreed to.