Jim Mitchell
Ceist:47 Mr. J. Mitchell asked the Minister for Finance the current position regarding covenants; if they are still available for tax purposes for the 1995/1996 tax year; and if he will make a statement on the matter. [17093/95]
Written Answers. - Tax Relief on Covenants.
For the tax year 1995-96, tax relief on covenants is available for up to 5 per cent of the covenantor's income provided the recipient of the covenant is over 18. If the recipient of the covenant is incapacitated and 18 or over, then there is no income restriction on the covenantor. Regarding incapacitated children under 18, parents may not covenant to their own incapacitated children but others may do so without restriction.
For the tax year 1996-97 and subsequent years, tax relief on covenants in general will be abolished other than for a small number of cases. The position of the incapacitated will remain as outlined above. In addition tax relief will be allowed on covenants in favour of the elderly, not permanently incapacitated, research and the teaching of the natural sciences and UN recognised human rights organisations, subject to a limit of 5 per cent of the covenantors income.
Full tax relief has been retained until 1998 for a small number of existing covenants between two people who are rearing a child or children between them where the Revenue Commissioners consider that the withdrawal of the relief would cause hardship.