Michael McGrath
Ceist:177. Deputy Michael McGrath asked the Minister for Finance his plans to simplify the capital structure of Allied Irish Banks; and if he will make a statement on the matter. [44100/14]
Amharc ar fhreagraBanks Recapitalisation
Ceisteanna (177)
Freagraí scríofa
The strong performance recorded by AIB in the ECB stress tests and reflected in the bank's recent trading statement represent important milestones and validation that the bank is well capitalised. This will allow my officials to move to the next phase of crafting our plans to return some of the large investments made between 2009 and 2011 to the taxpayer.
In this regard it is critical that we carefully examine all possibilities open to us to ensure that this aggregate investment is protected and enhanced with a view to ultimately generating an optimal return for the State. Any proposed changes to the bank's capital structure will reflect this objective and be subject to the necessary regulatory approvals.
Personal Insolvency Act
Ceisteanna (178)
Michael McGrath
Ceist:178. Deputy Michael McGrath asked the Minister for Finance if the Revenue Commissioner has written off tax owed to it as part of completed personal insolvency arrangements; the number of cases involved; the total amount written off; and if he will make a statement on the matter. [44101/14]
Amharc ar fhreagraFreagraí scríofa
I am advised by Revenue that it is fully committed to being an active participant in personal insolvency solutions providing there is honest and open engagement by the parties involved.
Revenue has confirmed to me that it has received 85 formal requests to participate in the various personal insolvency options to date. Of these, Revenue has agreed to participate in 42 cases, has declined to participate in 34 cases due to insufficient or conflicting information being provided and is currently actively considering the remaining 9 cases.
In regard to the 42 cases where Revenue has agreed to participate, 16 have been approved by the Courts with arrangements now in place for periods up to 6 years. To date €16,000 has been formally written out in these cases with a further €204,000 scheduled for write out once the required legislative requirements and timelines have been adhered to.
Departmental Staff Rehiring
Ceisteanna (179)
Terence Flanagan
Ceist:179. Deputy Terence Flanagan asked the Minister for Finance the number of staff that are drawing down retirement pensions from the public sector or Civil Service and that have been brought back on contract work or temporary contracts to work in his Department; and if he will make a statement on the matter. [44116/14]
Amharc ar fhreagraFreagraí scríofa
I wish to inform the Deputy that there are no staff on the Department's payroll that are drawing down retirement pensions from the public sector or civil service.
Household Charge Collection
Ceisteanna (180)
John Lyons
Ceist:180. Deputy John Lyons asked the Minister for Finance if a family (details supplied) in Dublin 11 will be contacted again by the Revenue Commissioners to discuss an outstanding liability for the household charge for 2012; if a payment plan will be considered in view of their limited means; and if further consideration may be given for discretion in their case in view of their circumstances. [44130/14]
Amharc ar fhreagraFreagraí scríofa
I am advised by Revenue that with effect from 1 July 2013, Section 156 of the Finance (Local Property Tax) Act 2012 (as amended) converted all arrears of Household Charge (HHC) to Local Property Tax (LPT), increased any outstanding liabilities to €200 and made Revenue responsible for their collection. Revenue does not have any discretion in regard to the amount that must be paid and is obliged to administer the law as set down in the legislation.
In regard to the specific case to which the Deputy refers, Revenue has confirmed that direct contact has already been made with one of the property owners by a member of the LPT team. The team member explained the background to the HHC liability to the person and also outlined the various phased payment options that are available to her should she wish to spread the payment out over the remaining weeks of the year.
The team member also advised the person that she qualified for deferral of both HHC and LPT on the basis of their combined income level but she declined the option and confirmed that she preferred to pay the outstanding liability. The team member then assisted the person in setting up her preferred phased payment option through one of the approved payment service providers (PSP's).
Revenue has assured me that the couple's HHC obligations are now being fully met through the phased arrangement, which is operating in the manner that best suits their individual circumstances.
Home Renovation Incentive Scheme Administration
Ceisteanna (181)
Brendan Griffin
Ceist:181. Deputy Brendan Griffin asked the Minister for Finance his views on increasing the amount of home renovation incentive rebate available to a property owner where that property is being renovated and made available to a local authority, or otherwise, as rental accommodation for persons with disabilities; and if he will make a statement on the matter. [44159/14]
Amharc ar fhreagraFreagraí scríofa
As I informed the Deputy in a PQ response on 3 November 2014, the Home Renovation Incentive (HRI) came into operation on 25 October 2013 and will run until 31 December 2015. The incentive provides tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out on a principal private residence. Qualifying expenditure is expenditure subject to the 13.5% VAT rate. The work must cost a minimum of €5,000 (inclusive of VAT) which would attract a credit of €595. Where the cost of the work exceeds €30,000 (exclusive of VAT) a maximum credit of €4,050 will apply. The credit is payable over the two years following the year in which the work is carried out.
The take-up of the HRI has been very successful to date, with just under 9,300 homes registered on the online system, representing almost €190 million worth of works involving some 3,000 contractors. It is clear that the incentive is generating employment in the tax compliant construction sector and increasing sales in building supplies, hardware and related businesses.
In the context of Budget 2015, I did consider increasing the amount of relief provided, but I decided that it would be better to extend the HRI to the owners of rental properties who are liable to income tax. This will support legitimate operators in the rental and construction sectors and help to upgrade the quality of private rental stock, particularly at the lower end. This change has taken effect since Budget night and will run until the end of 2015.
Irish Water Funding
Ceisteanna (182)
Michael McGrath
Ceist:182. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 218 of 11 November 2014 the nature of the convertible debt instrument that will be issued by Irish Water; if this will be sold to a private investor or investor; if in certain circumstances this will allow a private investor to convert the instrument into an equity holding in Irish Water; and if he will make a statement on the matter. [44168/14]
Amharc ar fhreagraFreagraí scríofa
It is proposed that the Minister for Finance will subscribe for a Convertible Debt Instrument issued by Irish Water in an amount of €54 million. The Convertible Debt Instrument will be redeemable in a term of two years or can at the discretion of the Minister for Finance be converted into shares in Irish Water. These shares would, of course, be held by the Minister for Finance as he is the person subscribing for them. The legal instrument authorising the Convertible Loan note will contain a clause which prevents its future sale to any private concern.
The Water Services Act 2013 provided for the establishment of Irish Water as an independent subsidiary within the Bord Gáis Éireann Group, to be formed and registered under the Companies Acts. Section 5 of the Act provides that the shareholders of Irish Water are Ervia (formerly Bord Gáis Éireann), the Minister for the Environment, Community and Local Government and the Minister for Finance. Section 46 of the Water Services (No. 2) Act 2013 prohibits the shareholders from disposing of their shareholding in Irish Water, which in effect places a statutory prohibition on the privatisation of Irish Water.
The following revised reply was received on 20 November 2014:
It is proposed that the Minister for Finance will subscribe for a Convertible Debt Instrument issued by Irish Water in an amount of €54 million. The Convertible Debt Instrument will be redeemable in a term of two years or can at the discretion of the Minister for Finance be converted into shares in Irish Water. The number of shares concerned would be split equally between the Minister for Finance and the Minister for Environment, Community and Local Government. The legal instrument authorising the Convertible Loan note will contain a clause which prevents its future sale to any private concern.
The Water Services Act 2013 provided for the establishment of Irish Water as an independent subsidiary within the Bord Gáis Éireann Group, to be formed and registered under the Companies Acts. Section 5 of the Act provides that the shareholders of Irish Water are Ervia (formerly Bord Gáis Éireann), the Minister for the Environment, Community and Local Government and the Minister for Finance. Section 46 of the Water Services (No. 2) Act 2013 prohibits the shareholders from disposing of their shareholding in Irish Water, which in effect places a statutory prohibition on the privatisation of Irish Water.
Disabled Drivers and Passengers Scheme
Ceisteanna (183)
Dan Neville
Ceist:183. Deputy Dan Neville asked the Minister for Finance if details are available for the fuel grant scheme in 2015; the conditions of the scheme; and if disabled persons will still be able to claim excise relief on fuel. [44192/14]
Amharc ar fhreagraFreagraí scríofa
In April 2013 the Court of Justice of the European Union ruled that the excise relief element of the Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme is incompatible with the EU Energy Tax Directive. My Department has informed the European Commission of my intention to remove the excise relief element of the Scheme at the end of 2014 and replace it with a fuel grant in 2015. The European Commission has raised no objections.
To give effect to this I signed a statutory instrument in March of this year (S.I. 139 of 2014) with the effect that Regulation 16 of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations (S.I. 353 of 1994) would be revoked as of 1 January 2015. As such, members of the Scheme may claim excise relief on any fuel used up to 31 December 2014.
From 1 January 2015, current and prospective members of the Scheme will be eligible for a fuel grant in respect of fuel used during the year. At this time, I intend to maintain the current practice of paying the sum a year in arrears, so that the first payment of the fuel grant would take place on 1 January 2016.
As I informed the Deputy in July, I have instructed my officials to design the new grant in such a way to provide as seamless a transition as possible between the excise relief on fuel element and the new fuel grant and, as I stated in March, members of the Scheme will not be at a loss in the transition.
Officials from my Department are continuing to engage with other Departments and the Revenue Commissioners in order to put in place the legislative, administrative and financing changes neccessary for the operation of the fuel grant. I intend to notify members of the Scheme of the details of the new fuel grant as soon as all the details are finalised.
Tax Code
Ceisteanna (184)
Lucinda Creighton
Ceist:184. Deputy Lucinda Creighton asked the Minister for Finance the changes he plans to make to the capital acquisitions tax; if he will confirm that he will not amend section 82 of the Act which states that money paid by a parent for support, maintenance or education of a child will not be considered as a gift or inheritance for tax purposes; and if he will confirm that he does not propose to limit the exemption to gift or inheritance tax to children under the age of 18, or under 25 if they remain in full-time education as recently reported. [44197/14]
Amharc ar fhreagraFreagraí scríofa
Capital Acquisitions Tax (CAT) is the overall name for both gift and inheritance tax.
For the purposes of CAT, the position is that the relationship between the person who provides the gift or inheritance (i.e the disponer) and the person who receives the gift or inheritance (i.e the beneficiary) determines the maximum tax-free threshold known as the Group threshold below which gift or inheritance tax does not arise.
There are, in all, three separate Group tax-free thresholds based on the relationship of the beneficiary to the disponer.
Group A: €225,000 - applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
Group B: €30,150 - applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
Group C: €15,075 - applies in all other cases.
Any prior gifts or inheritances received by a child from their parents since 5 December 1991 are aggregated for the purposes of determining whether any tax is payable on the current benefit.
In addition to these tax-free thresholds, a number of exemptions and reliefs from CAT are provided in CAT legislation.
Section 82 exempts certain receipts from Capital Acquisitions Tax.
Under section 82(2), normal and reasonable payments made by a disponer, during his or her lifetime, for the support, maintenance or education of his or her children (including the children of a civil partner), or to a person to whom the disponer stands in loco parentis, or to a dependent relative of the disponer, are exempt from CAT.
The exemption, as it stands, applies to children without any age restriction and the test in relation to what is normal and reasonable is determined by the circumstances of the disponer. There is evidence that the exemption is being used to provide significant sums tax-free to adult children far in advance of the intention of the exemption.
The proposed amendment to section 82(2) in the Finance Bill is intended to ensure, where there is the need to make provision for support, maintenance or education of children, that the exemption is confined to payments made to minor children and to children under the age of 25 years who are in full-time education.
It is appropriate to note that this exemption is additional to the CAT tax-free threshold available to a child (currently €225,000). The tightening of the rules also does not affect the small gift exemption under which anyone can receive gifts of up to €3,000 in any year from any other individual. Adult children can therefore receive up to €6,000 a year from parents without any CAT implications.
Section 82(4) currently provides a similar exemption for normal and reasonable payments made to an orphaned child or to an orphaned child of a civil partner for support, maintenance or education, after the death of their parents, from a trust set up by the parents during their lifetime. However, the legislation currently confines this exemption to minor orphaned children.
The second proposed amendment to this section extends the exemption to orphaned children up to the age of 25 years who are in full-time education, thus ensuring that children of living parents and orphaned children are treated equally for Capital Acquisitions Tax purposes.
I have also introduced an amendment to section 82 at the Committee Stage of the Bill. This amendment expressly ensures that the exemption applies to a child, regardless of age, who is permanently incapacitated by reason of physical or mental infirmity. This amendment addresses many of the concerns raised concerning the amendment to Section 82.
As stated, the purpose of the amendment is to ensure fairness in the application of the Gift Tax rules and to ensure that high net worth individuals do not claim exemption for valuable gifts of capital to their children by reference to the exemption provision in section 82 that is only intended to apply to normal and reasonable payments for the support, maintenance or education of children.
Finally, Revenue has stated categorically that it has no intention of pursuing people over routine, normal expenditure within families. Suggestions have been made in the media that the amendment will result in the Revenue Commissioners attempting to attribute a value to the provision of bed and board by parents to children over 25 who continue to reside with them. This is not the intention of the legislation and this suggestion may have caused needless concern to people. The Revenue Commissioners have already informed the Tax Administration Liaison Committee (which includes members of tax practitioner bodies and the Law Society) that the legislation will not be applied in this way.
As a matter of course, Revenue will issue a detailed public statement to practitioners which will outline how the section will work in practice when the Bill is passed into law.
Bank Debt Restructuring
Ceisteanna (185)
Billy Timmins
Ceist:185. Deputy Billy Timmins asked the Minister for Finance the position regarding the sale of mortgages (details supplied); and if he will make a statement on the matter. [44205/14]
Amharc ar fhreagraFreagraí scríofa
Where the purchaser of a loan book is not a regulated entity in Ireland, the purchaser may voluntarily apply the consumer protection codes when managing the loan books. Of course, voluntary compliance is not enforceable and ultimately it is the aim of this Government to ensure the same protections are available for all consumers whose loans have been sold.
In order to protect consumers whose loans are sold to unregulated entities the Government is committed to bringing forward appropriate legislation and in July and August of this year the Department of Finance ran a public consultation seeking views on this proposed legislation. There have been nineteen submissions received from a range of respondents including the financial services industry, consumer groups, public representatives, individuals and other stakeholders. The submissions are now accessible on the Department's website:
http://www.finance.gov.ie/what-we-do/banking-financial-services/consultations/responses-public-consultation-process-consumer
Officials in my Department have carefully considered the submissions and are working with the Office of the Attorney General to progress this legislation. It is anticipated that it will be published by the end of this year.
Tax Credits
Ceisteanna (186, 187)
Terence Flanagan
Ceist:186. Deputy Terence Flanagan asked the Minister for Finance the changes made in recent budgets for separated persons; his views on their context and fairness; and if he will make a statement on the matter. [44236/14]
Amharc ar fhreagraTerence Flanagan
Ceist:187. Deputy Terence Flanagan asked the Minister for Finance his plans to provide help through a new tax relief for separated fathers who have big costs including maintenance and other expenses; and if he will make a statement on the matter. [44237/14]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 186 and 187 together.
Although not specifically related to separated persons, I assume that the Deputy's question refers to the replacing of the One-Parent Family Tax Credit with the Single Person Child Carer Credit from 1 January 2014. The new credit is more targeted in that it is, in the first instance, only available to the principal carer of the child. Its introduction replaced a system that allowed multiple claims in respect of the same child.
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.
There is no specific tax credit for children in the tax code. Therefore, married or cohabiting couples are unable to avail of any additional credit to assist them in the financial maintenance of their children. In certain cases, such couples may need to maintain two households due to the location of employment, for example.
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). This is because the child is being cared for, in the main, in a family unit which includes two adults. In such circumstances the primary carer cannot relinquish the credit to a secondary carer. For the same reasons it follows that 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.
As regards the potential of this change to interfere with the level of maintenance payments, if such reasoning were to be applied, then any general tax increase, as a result of an adjustment in tax credits, rates or bands could lead to similar situations. Ultimately, maintenance payments are a matter for parents and if necessary, the courts to decide. It is not possible, and indeed would not be appropriate, for the tax code to take account of every possible variable.
Notwithstanding the above, as a result of an amendment which I brought forward at Committee Stage of Finance Bill (No.2) 2013, a principal carer who is entitled to the credit and who does not wish to avail of it can choose to surrender it. A secondary carer may then make a claim for the credit, provided that the qualifying child resides with him or her for not less than 100 days in the tax year. However a principal carer may not relinquish the credit for a number of reasons.
I am satisfied that the tax credit in its current form is working as intended and I have no plans to change it at this time.
As regards tax relief for maintenance payments and other costs incurred by separated fathers, the position is that maintenance payments in respect of children are not taxable in the hands of the children or the receiving spouse. The effect of this is that the payments are treated in the same way as if the taxpayer was providing for the child out of his or her after-tax income. This is in line with the tax treatment of all other parents, where the cost of maintaining their children is not tax deductible.
Mortgage Interest Rates
Ceisteanna (188)
Terence Flanagan
Ceist:188. Deputy Terence Flanagan asked the Minister for Finance if there is sufficient regulation of variable interest rate mortgages; and if he will make a statement on the matter. [44238/14]
Amharc ar fhreagraFreagraí scríofa
At the outset, I must confirm to the Deputy that the lending institutions in Ireland - including those in which the State has a shareholding - are independent commercial entities. I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or in relation to the mortgage interest rates charged. It is a commercial matter for each institution concerned. It is not appropriate for me, as Minister for Finance, to comment on or become involved in the details of the accounts of mortgage holders.
The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997 and the requirement to be notified of penalty or surcharge interest imposed in respect of arrears.
The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution's overall funding.
Personal Debt
Ceisteanna (189)
Terence Flanagan
Ceist:189. Deputy Terence Flanagan asked the Minister for Finance the help there is for homeowners who have large mortgages and who are finding it financially difficult to balance their books; and if he will make a statement on the matter. [44239/14]
Amharc ar fhreagraFreagraí scríofa
The Government has developed a comprehensive cross-Departmental strategy in response to the difficulties posed by excessive personal indebtedness. A number of key measures have been advanced in this regard, including:
1. Significant reforms to personal insolvency legislation and the establishment of the Insolvency Service of Ireland (ISI), to provide more accessible and flexible statutory frameworks for people with unsustainable personal and mortgage debt to address their position;
2. The launch last month of the 'Back on Track' Information Campaign for People in debt by ISI. The Back on Track initiative was developed following research and aims to increase the take-up of the ISI services by people in debt through the elimination of ISI application fees up to end 2015 and the introduction of a payment to Personal Insolvency Practitioners, where a credible insolvency arrangement is rejected by creditors. The ISI has launched a country-wide information campaign to publicise this service;
3. The Money Advice and Budgeting Service, (MABS), offers a free service to consumers facing financial difficulties or who feel they are in danger of facing difficulties;
4. The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) contains important protections for co-operating mortgage holders experiencing genuine difficulty with a mortgage secured on a primary residence and imposes requirements on lenders to:-
- Step 1: Communicate with borrower;
- Step 2: Gather financial information;
- Step 3: Assess the borrowers circumstances; and
- Step 4: Propose a resolution.
If a borrower is not happy with the way that their lender is dealing with them or if they believe they are not complying with the CCMA, the borrower can make a complaint to their lender.
Borrowers can also make an appeal to the lender's Appeals Board if they are not happy with the alternative repayment arrangement offered or if they believe they have been wrongly classified as not co-operating.
If the borrower is not happy with the outcome of the appeal/complaint made to the lender they can refer the matter to the Financial Services Ombudsman (FSO). Further information on how to make a complaint to the FSO is available at www.financialombudsman.ie.
In addition to the above provisions, the Government is implementing a number of initiatives through the Action Plan for Jobs process, which will help people out of unemployment and back into the workforce, which will over time enable them to address their financial difficulties.
I would like to reassure the Deputy that the Government is very much aware of the difficulties facing those householders and individuals in difficulty meeting their mortgage repayments and it has acted decisively through the introduction of the above measures to tackle the issue of personal indebtedness in a comprehensive and practical manner. The Government will continue to keep the issue of personal indebtedness under review through the Cabinet sub-Committee structure.
VAT Payments
Ceisteanna (190)
Michael McGrath
Ceist:190. Deputy Michael McGrath asked the Minister for Finance the amount of VAT owed by a person (details supplied) in County Cork based on returns that have been made; if he will examine if the person was required to be VAT registered; and if he will make a statement on the matter. [44285/14]
Amharc ar fhreagraFreagraí scríofa
I am informed by the Revenue Commissioners that the person in question is currently registered for Value-Added Tax. As VAT is a self-assessment tax, the obligation is always on the taxpayer to self-assess his liability. At this current time, no VAT returns have been filed in respect of any periods after 1 May 2012, and therefore Revenue is not in a position to state the amount of VAT owed by the taxpayer.
All taxpayers are required to register for VAT if their turnover is expected to exceed certain thresholds, which at the current time is €37,500 per annum in respect of the supply of services. Additionally, a taxpayer may elect to register for VAT if their turnover is below this amount.
The taxpayer in question first registered for VAT with effect from 1 October 2005, and on the basis of his returns, Revenue can confirm that he was at that time an accountable person under the VAT Acts and was therefore required to be registered for VAT. He filed VAT returns up to and including the period ending 30 April 2010 and then cancelled his registration number, as he informed Revenue that he had ceased to trade.
In early 2011, he applied to re-register for VAT, but as the expected turnover per the taxpayer was below the threshold figure of €37,500, the application was returned to him and he was advised that he was not obliged to register for VAT, but that if he wished to elect to register, he was entitled to do so. He re-submitted his application form in February 2012 and he was accordingly re-registered with effect from 13 February 2012. He subsequently filed a return for the VAT period 1 January to 30 April 2012, but having not filed any returns since then, Revenue cannot know the extent of his turnover and therefore cannot deduce whether or not he is required by law to be VAT registered.
The taxpayer should contact Ms Karen Drake at 021-6027268 in the Cork Revenue office to discuss his current tax status for VAT, including the issues of registration and outstanding returns.