Dáil Éireann Debate, Tuesday - 11 July 2017
141. Deputy Maureen O'Sullivan asked the Minister for Finance his views on tax relief for unmarried fathers based on maintenance support payments made to their children's mother; and his further views on whether it is fair that tax relief is given for payments to former partners and not in respect of children; and if he will make a statement on the matter. [32417/17]
Amharc ar fhreagraIn order to determine the treatment of maintenance payments for taxation purposes it must first be established if the maintenance payments are legally enforceable or if the payments are on a voluntary basis.
Voluntary maintenance paid on the basis of an informal arrangement between former partners would not be legally enforceable. Such payments are not chargeable as income for taxation purposes in the hands of the recipient and the individual making the payments cannot claim a deduction for the amounts paid.
Maintenance which is payable under a legally enforceable maintenance agreement, for example payments under a Deed of Separation, Divorce Settlement or under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, is chargeable as income in the hands of the recipient for tax purposes. The person making the payments is allowed, in computing his or her total income for tax purposes, a deduction for the maintenance payments made in the year of assessment for the benefit of the other spouse, civil partner or qualified cohabitant. Sections 1025 (married persons), 1031J (civil partners) and 1031Q (cohabitants) of the Taxes Consolidation Act 1997 contain the relevant provisions.
Only maintenance payments made for the benefit of the other spouse or civil partner qualify for tax relief. Maintenance payments in respect of children are not taxable in the hands of the children or the receiving partner and the parent making the payments cannot claim a deduction for the amounts paid. This is the case regardless of whether the payments are made voluntarily or under a legally binding maintenance arrangement. 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.
