Vol. 559 No. 1
106 Mr. Sargent asked the Minister for Finance if he will review the current system where maintenance payments to a separated or divorced spouse are added to part-time job income for purposes of taxation; and if his attention has been drawn to the hardship this causes many women in particular, who therefore have great difficulty maintaining family life and earning sufficient income. [23764/02]
If maintenance payments are made under a legally enforceable maintenance arrangement, the spouse paying the maintenance must make the payments gross to the other spouse and is entitled to claim a tax deduction for such part of the maintenance payments that is for the benefit of the other spouse. The recipient of the maintenance is liable to tax on the maintenance payments received, and both spouses are taxed as single persons. For income tax purposes, the maintenance payments received in this way would be added to any other taxable income, for example, from part-time employment. Where the receiving spouse has the care of a dependant child – i.e. the child is resident with the parent for the whole or part of the tax year – he or she is entitled, in addition to the basic single credit of €1,520 to a single parents credit of €1,520. The combined value of these credits is equal to the married persons tax credit of €3,040.
Maintenance payments for the benefit of a child do not qualify for tax relief for the person making them and likewise they are not taxable in the hands of the recipient. However, where the couple are separated or divorced but have not remarried, there is provision, provided both parties are resident in the State, for them to jointly elect for the aggregation basis of taxation. In this event, the person paying maintenance will get no deduction for the maintenance payments nor will the recipient be taxable on them.
