Vol. 490 No. 5
167 Mr. G. Reynolds asked the Minister for Finance the reason the Revenue Commissioners categorise two people cohabiting as single persons for tax purposes and the Department of Social, Community and Family Affairs categorise the same persons as married for social welfare purposes; and if he will make a statement on the matter. [10582/98]
There are no special income tax allowances for unmarried couples living together. In this context, tax law follows the general law relating to marriage. The basis on which the married person's tax free allowance, and double rate bands is given derives from the Supreme Court decision in Murphy v the Attorney General, 1980, which held that it was contrary to the Constitution for a married couple to pay more tax than two single people living together.
The tax treatment of unmarried couples who cohabit was unaffected by the Murphy judgment. Each partner is taxed as a single person and each is entitled to the tax free allowances and rate bands appropriate to single persons. Consequently, as each partner is a separate entity for tax purposes, allowances cannot be transferred from one partner to the other.
While the social welfare treatment of married and cohabiting couples is primarily a matter for the Minister for Social, Community and Family Affairs, in the Hyland case in 1989 the Supreme Court held that it was unconstitutional for the relevant social welfare provisions to treat a married couple living together less favourably than an unmarried, cohabiting couple. This judgment has been given effect by treating cohabiting couples in the same way as married couples for social welfare purposes.
I am conscious of the difficulties which can arise for cohabiting couples in certain circumstances. An interdepartmental working group has been set up under the Department of Social, Community and Family Affairs to examine the treatment of married, cohabiting and one parent households under the tax and social welfare codes. This group is due to report by the middle of this year.
