Dáil Éireann Debate, Tuesday - 7 October 2014
199. Deputy Michael McGrath asked the Minister for Finance if he will review the situation whereby a parent who is the primary claimant and who has no use for the single person child carer credit has to give their explicit consent for the credit to be transferred to the secondary claimant who meets all the other qualifying criteria; and if he will make a statement on the matter. [38242/14]
Amharc ar fhreagraAs the Deputy is aware, the One-Parent Family Tax Credit (OPFTC) has been replaced with the Single Person Child Carer Credit from 1 January 2014. However, the reformed credit is more targeted in that it is, in the first instance, only available to the primary carer of the child.
Given the difficult fiscal environment, it is essential to review all tax reliefs, credits and incentives in order to ensure that they are properly targeted and if necessary re-focused in order that they can achieve the socio-economic objectives that are set for them.
The Commission on Taxation acknowledged that the previous One Parent Family Tax Credit played a role in supporting and incentivising the labour market participation of single and widowed parents. However, in its recommendations it concluded that the credit should be retained but that it should be allocated to the primary carer only. The restructuring of the credit achieves such an outcome.
The person who cares for the child for most of the year is entitled to the credit in the first instance. Agreement as to who will be the primary carer of a child is a matter for the parents or guardians. However, only the primary carer is entitled to the credit.
In the circumstances where the primary carer cannot utilise the credit for example, because of insufficient taxable income - the primary carer may relinquish the credit and a secondary claimant may claim it. The requirement for a primary claimant to relinquish the credit before a claim from a secondary claimant can be considered is necessary, as in the first instance, only one credit is available in respect of a qualifying child or children. Secondly, the credit is targeted at the primary claimant, and finally, only the primary claimant can gauge whether their income would be of a sufficient amount over the course of a tax year to be able to utilise the credit. An individual may wish to retain the credit in the expectation that they may find employment during the year, for example. In addition, taxpayers are entitled to review their tax affairs over a four year look back period, and depending on circumstances, an individual might wish to retain the credit in order to offset any tax liability that might arise as a result of a review of their income tax liabilities in any of the years concerned.
For information, it should be noted that where a primary carer is married, in a civil partnership or cohabiting they would not be entitled to the new credit (or indeed the former one), on the basis that the relevant child is not, in the main, being cared for by a single person. In such circumstances the primary carer cannot relinquish the credit to a secondary carer. In addition, a secondary carer who is married, in a civil partnership or cohabiting, would not be entitled to the new credit (or indeed the former one) regardless of the marital status of the primary carer.
