Wednesday, 15 Apr 2015

Written Answers Nos. 167 to 178

Tax Code

Ceisteanna (167)

Robert Dowds

Ceist:

167. Deputy Robert Dowds asked the Minister for Finance the position regarding inheritance tax; and if he will make a statement on the matter. [14599/15]

Freagraí scríofa

Minister for Finance

Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.

For the purposes of CAT, 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 life-time tax-free threshold known as the "Group threshold", below which gift or inheritance tax does not arise.

There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.

The Group A tax free threshold of €225,000, applies where the beneficiary is a child (including adopted child, stepchild 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.

The Group B tax free threshold of €30,150, applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.

The Group C tax free threshold €15,075, applies in all other cases.

Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold. These thresholds have been reduced in recent years as part of the effort to restore the public finances as taxes on capital are less harmful from an economic perspective than taxes on employment. For the same reason the rate has gradually risen from 20% in 2008 to its current rate of 33%.

The property market continues to improve with positive developments which had been restricted to the Dublin now manifesting in other areas of the country, though not to the same extent in terms of price rises, and it is recognised that this has a bearing on taxation of the inheritance of property with respect to CAT thresholds.

Capital Acquisitions Tax and various elements thereof, e.g. thresholds and rates, will like all other taxes be kept under review, particularly in the context of preparations for Budget 2016 and the consequent Finance Bill.

Budget Consultation Process

Ceisteanna (168)

Michael McGrath

Ceist:

168. Deputy Michael McGrath asked the Minister for Finance his plans to establish a budget office which would cost alternative budgets prepared by opposition parties; and if he will provide costings for the election proposals of all parties; the work being done to date on this proposal; his plans to have this office in place for the next general election; and if he will make a statement on the matter. [14602/15]

Freagraí scríofa

Minister for Finance

In responses to a recent parliamentary questions, I indicated that the establishment of an independent budgetary office should be considered in depth. 

This Government is very much in favour of initiatives that improve the quality of debate around budgetary priorities and the best allocation of resources. I also pointed out in my previous replies on this matter that it is a complicated matter and the work undertaken by such a body would have to be subject to strict terms of reference. In particular,  care must be taken to ensure that such a body does not supplant the role of Government and the Oireachtas through gaining, for instance, an effective veto power over proposals that it dislikes in purely economic terms. 

My initial thinking is that this office should be an independent statutory body. Its remit would include the provision of costings of alternative budgets on request from Members of the Oireachtas and the costing of election manifestos. Officials from my Department are currently reviewing this proposal which includes an examination of best practice internationally of independent budget offices, as well as other important issues such as resource implications and the legislative requirements. They are liaising with officials in the Department of Public Expenditure and Reform with the objective of preparing options for consideration in the coming months.

Should the Government decide to pursue this, the next step will be to commence work on the legislative requirements to establish such a body. Given the nature and purpose of the body, I would envisage a need for an extensive consultation process.  

While I cannot commit to definitive timeframes given the exploratory nature of this issue, I would think that is unlikely that such an office would be established in advance of the next general election.

Question No. 169 answered with Question No. 148.

Tax Reliefs Application

Ceisteanna (170)

Michael McGrath

Ceist:

170. Deputy Michael McGrath asked the Minister for Finance if it is possible to claim income tax relief in respect of contributions paid by a deceased person, under the Nursing Home Support Scheme; if so, the person who would make the claim on behalf of the deceased person's estate; the procedure that needs to be followed; and if he will make a statement on the matter. [14685/15]

Freagraí scríofa

Minister for Finance

Relief in respect of health expenses is allowed in accordance with the provisions of section 469 of the Taxes Consolidation Act 1997 (TCA).

Any contribution made by an individual in defraying expenses in the nature of maintenance or treatment in a nursing home on behalf of an individual, where that individual has received State support under section 3 of the nursing home support scheme Act 2009, also known as the "Fair Deal Scheme", is treated as health expenses qualifying for relief. This relief is given at the marginal rate of tax but cannot exceed an amount which reduces the income tax liability for the year to nil.

The State support contribution towards the cost of such nursing home expenses under this scheme is not treated as a qualifying expense. Any deferred payment in respect of the financial contribution by the State under the nursing home support scheme defrayed out of the estate of a deceased person by his or her executor or personal representative are deemed to have been defrayed by the deceased person immediately before his or her death and may be claimed under the heading of health expenses against the tax liability of the deceased person.

The personal representative of a deceased person is responsible for settling any outstanding tax matters including any claim to a repayment. He or she is responsible for filing any outstanding tax return with the Revenue Office of the deceased and, in respect of relief for medical expenditure, including nursing home expenses, to submit Form Med 1. A claim for tax relief must be made within 4 years after the end of the tax year to which the claim relates. 

Further information is available from the Revenue website at: http://www.revenue.ie/en/tax/cat/leaflets/it41.html#section2, http://www.revenue.ie/en/tax/it/leaflets/it6.html#content

Proposed Legislation

Ceisteanna (171)

Pearse Doherty

Ceist:

171. Deputy Pearse Doherty asked the Minister for Finance when the Taxation and Certain Other Matters (International Mutual Assistance) Bill will be published; and if he will make a statement on the matter. [14737/15]

Freagraí scríofa

Minister for Finance

The drafting process is well advanced on the Taxation and Certain Other Matters (International Mutual Assistance) Bill and it is intended that it will shortly be sent forward for Pre-Legislative Scrutiny.

Once the Pre-Legislative Scrutiny process has been completed, arrangements will be made to publish the Bill.

EU Regulations

Ceisteanna (172, 177)

Terence Flanagan

Ceist:

172. Deputy Terence Flanagan asked the Minister for Finance if legislation will be introduced in relation to vulture funds (details supplied); and if he will make a statement on the matter. [14756/15]

Clare Daly

Ceist:

177. Deputy Clare Daly asked the Minister for Finance if he will advocate the introduction of legislation in all European Union Member States to prevent vulture funds from claiming more than other lenders in the case of sovereign debt crisis. [14789/15]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 172 and 177 together.

There are no proposals at an EU level to legislate regarding the actions of so called "vulture funds" in the case of sovereign debt crises. Ireland along with all Eurozone members now includes Collective Action Clauses (CAC) in the sovereign bonds it issues. Such clauses provide for a standardised mechanism for the renegotiation of the debt instruments in certain circumstances. The clauses are designed to deal with default in a structured fashion and prevent minority investors "holding out" for a better pay-out than the majority.

Mortgage Arrears Proposals

Ceisteanna (173, 178)

Terence Flanagan

Ceist:

173. Deputy Terence Flanagan asked the Minister for Finance if a review of the Central Bank of Ireland's Code of Conduct on Mortgage Arrears will take place (details supplied); and if he will make a statement on the matter. [14757/15]

Clare Daly

Ceist:

178. Deputy Clare Daly asked the Minister for Finance if he will review the Central Bank of Irelands Code of Conduct on Mortgage Arrears in order to ensure that it is legally binding and procedurally fair to borrowers, and that vulture funds, currently unregulated here, are covered by it. [14790/15]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 173 and 178 together.

The Central Bank's Code of Conduct on Mortgage Arrears applies to entities regulated by the Central Bank and does not apply to unregulated funds. It is my intention to ensure that borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same protections as they had prior to the sale.

The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 will require entities dealing with the consumer to be authorised by the Central Bank and subject to its Codes of Conduct. Dealing with the consumer is credit servicing and the definition of credit servicing is broad. Owners of loan books who deal directly with consumers, that is, who are servicing their own loan books, will be regulated. Otherwise they can have the loan book serviced by a regulated credit servicing firm. The Bill was published in January and second stage of the Bill was taken in the Dáil on 4 February. Since then, my officials have been in contact with the Central Bank and with the Office of the Attorney General to further progress the legislation. The Bill will continue its progress through the legislative process and I look forward to further discussion of the Bill at Committee Stage.

Tax Code

Ceisteanna (174)

Patrick O'Donovan

Ceist:

174. Deputy Patrick O'Donovan asked the Minister for Finance the tax implications in a case were the child of a farmer under the Young Farmer Top-Up Scheme receives entitlements by transfer from the parent; and if he will make a statement on the matter. [14769/15]

Freagraí scríofa

Minister for Finance

I am advised that the Young Farmers scheme is part of the Basic Payments Scheme introduced in 2015 under the new measures agreed in the reform of the Common Agricultural Policy. The Basic Payment Scheme has replaced the Single Payment Scheme and payments under the scheme are liable to Income Tax. The Young Farmers Scheme also provides for an additional payment to any person who commences farming or takes over existing holdings. It is available for a maximum period of 5 years depending on the year of commencement of farming.

The correct tax treatment of transfers between a parent and child can only be determined by reference to the specific terms and conditions agreed between the parties. In the absence of this information it is not possible to give a definitive answer. However, in general, where for example a parent permits a herd number to be held in joint names with a son or daughter this will be treated as a disposal by a parent of his or her entitlements under the Basic Payments Scheme. These entitlements under the Basic Payments Scheme are a chargeable asset for Capital Gains Tax purposes. Accordingly, any chargeable gain arising on the disposal of such entitlements is ordinarily liable to Capital Gains Tax. The first €1,270 of any gain is exempt from Capital Gains Tax. Where the gain exceeds that amount, Capital Gains Tax will only be charged on the amount in excess of €1,270. The current rate of Capital Gains Tax is 33%. There may also be a Gift Tax implication arising on the transfer but there is tax free threshold of €225,000 available on transfers between a parent and son or daughter. In addition, there is an annual €3,000 exemption and should any Capital Gains Tax be payable on the transfer, the Capital Gains Tax paid is available as a credit against any Gift Tax liability arising as both the Capital Gains Tax and Gift Tax liabilities arise on the same event.

Tax Code

Ceisteanna (175)

Patrick O'Donovan

Ceist:

175. Deputy Patrick O'Donovan asked the Minister for Finance the tax implications for a farmer and one of that farmer's children creating a partnership; and if he will make a statement on the matter. [14770/15]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that this is a very broad question, the answer to which would depend upon a number of factors. This being so it is not possible to give a detailed answer to the question without knowing the specifics of the case involved.

The Revenue Commissioners have advised me that the implications for a farmer and one of his or her children entering into a partnership, presumably to jointly carry on the trade of farming would be no different to the implications for any two other people entering into a partnership for the purposes of carrying on any trade or profession.  One of the issues which all partners in a farming partnerships need to consider is whether or not the partnership qualifies for, and whether or not they wish the partnership to be, a 'registered farm partnership'  which can avail of increased stock relief.

Detailed guidance on registered farm partnerships is available on the Teagasc website at:  http://www.teagasc.ie/advisory/farm-partnerships/

Fuel Traders Licences

Ceisteanna (176)

Clare Daly

Ceist:

176. Deputy Clare Daly asked the Minister for Finance with reference to the opening statement on fuel fraud provided to the Joint Committee on Transport and Communications on 3 December 2014, which referred to 130 service stations being closed since 2011 for laundering fuel offences, if he will publish the list of those service stations. [14781/15]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that service stations are obliged to hold an auto fuel trader's licence and/or a marked fuel trader's licence in order to trade in fuel. Traders must apply for a new licence annually and Revenue may refuse to issue a licence or may revoke an existing licence. Revenue began taking action from mid-2011 against service stations that were unlicensed and also against some stations that had failed to adhere to the conditions of their licences. Unlicensed service stations were closed as a result of the seizure of fuel by Revenue or the threat of such seizure. In addition, service stations that had their licences revoked for breaches of licensing conditions were similarly closed as a result of the seizure of fuel or the threat of seizure.  In all, over 130 such closures have taken place  from mid-2011 to date.

The Commissioners inform me that they maintain a register of auto fuel and marked fuel traders' licences on the Revenue website. The registers are updated monthly. A licence is removed from the register where it is no longer in effect, where it has been revoked, or where it has expired and has not been replaced by a new licence. The list of current valid licences can be accessed by the public at the following links to the relevant webpage.

http://www.revenue.ie/en/tax/excise/mineral-oil-traders/licensed-auto-fuel-traders.xls

http://www.revenue.ie/en/tax/excise/mineral-oil-traders/licensed-marked-fuel-traders.xls

I made provision for the publication of revoked licences in Finance Act 2013 and have been informed by the Commissioners that they will shortly publish a list of persons whose licences have been revoked since enactment of the provision and details of the premises concerned. 

Question No. 178 answered with Question No. 173.

Question No. 177 answered with Question No. 172.