Help-To-Buy Scheme

Ceisteanna (154)

Pearse Doherty

Ceist:

154. Deputy Pearse Doherty asked the Minister for Finance the estimated impact on the 2019 fiscal space of abolishing the help-to-buy scheme. [21180/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Help to Buy (HTB) has a sunset clause (31/12/2019). Concluding the scheme a year early would not result in additional budgetary resources, rather it would bring forward budgetary resources that have been assigned to 2020.

HTB is a demand led incentive and, as such, it is not possible to give a precise estimate of cost for 2019. However, at the time of Budget 2017, my department estimated that HTB would cost some €40 million in 2019.

The estimated total value of approved HTB claims at end 2017 was in the order of €68.9 million, of which €16.7 million represents retrospective claims (for the period 19 July to 31 December 2016). The cost of the incentive so far in 2018 (to 1 May) has been some €22 million.

Tax Code

Ceisteanna (155, 157)

Pearse Doherty

Ceist:

155. Deputy Pearse Doherty asked the Minister for Finance the expected revenue from ending the capital gains tax exemption from the sale of property held in REITs. [21181/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

157. Deputy Pearse Doherty asked the Minister for Finance the expected revenue from introducing a minimum dividend withholding tax rate of 25% on all dividends paid by REITs. [21183/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 155 and 157 together.

Finance Act 2013 introduced the regime for the operation of Real Estate Investment Trusts (REITs) in Ireland. The function of the REIT framework is not to provide an overall tax exemption but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply on property investment via a corporate vehicle.

Property rental income and gains arising are exempt from tax within the REIT and are taxed at the investor level when distributed. The legislation requires that 85% of all property income profits be distributed annually to shareholders. The REIT is subject to corporation tax on income and gains not arising from the property rental business of the REIT.

I am advised by Revenue that information in respect of potential future capital gains from the sale of property of REITs is unavailable, I am therefore unable to provide an accurate estimate of the potential revenue to be obtained from the ending of the exemption. It is also worth noting that REITs are specifically designed to focus on the long-term holding of income producing property and contain provisions to encourage the re-investment of property sale proceeds in new property rental assets. REITs are not designed to hold development activities, or as a vehicle for short term speculative gains.

With regard to withholding tax on REIT dividends, Deputies will be aware that, in the absence of any other provisions, foreign REIT shareholders in treaty partner countries would not have had any liability to Irish tax on REIT dividends. In order to ensure that tax from foreign investors is retained, a Dividend Withholding Tax (DWT) at the standard rate of tax (20%) was legislated for to specifically apply to REIT dividends. Foreign investors from treaty resident countries may be able to reclaim some part of this DWT if the relevant tax treaty allows for this. The taxation of dividends varies from treaty to treaty, but commonly a source state would retain the right to approximately 15% tax on dividends paid from that state.

Due to this interaction with tax treaty reliefs, and also taking into account the fact that information in respect of potential future annual distributions from REITs to investors is not available, an accurate estimate of the potential revenue from an increase in the withholding tax rate applicable to any such distributions cannot be made.

Tax Code

Question No. 157 answered with Question No. 155.

Question No. 158 answered with Question No. 156.

Ceisteanna (156, 158)

Pearse Doherty

Ceist:

156. Deputy Pearse Doherty asked the Minister for Finance the expected revenue from ending the dividend withholding tax exemption for non-resident IREF shareholders from dividends related to the sale of property held in an IREF for five years. [21182/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

158. Deputy Pearse Doherty asked the Minister for Finance the expected revenue from introducing a minimum dividend withholding tax rate of 25% on all dividends paid by IREFs. [21184/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 156 and 158 together.

The Irish Real Estate Fund (IREF) regime was introduced by Finance Act 2016. In general terms, the regime provides that profits arising to Irish funds from Irish property remain within the charge to Irish tax. An IREF is an investment undertaking where 25 per cent or more of the value of the assets of the undertakings is derived from real estate assets in the State. Where a unit holder receives value from the IREF, an IREF withholding tax of 20% will generally apply. There are a number of exceptions from the operation of this withholding tax such as for pension schemes and charities as they are more generally exempt from tax.

On introduction, the IREF regime provided for an exemption from IREF withholding tax on the distribution of profits that arose from holding Irish land or buildings for more than 5 years. Finance Act 2017 introduced legislation to remove the CGT exemption within the IREF regime from 1 Jan 2019. This amendment was not revenue raising in nature, but designed to ensure that tax provisions did not encourage land hoarding.

The first payment of IREF withholding tax and the filing date for the first return for the majority of these funds is 30 July 2018. At that point, depending on the number of IREFs, it may be possible to identify the quantum of profits from long term land holdings that were distributed during 2017.

However, I am advised by Revenue that information in relation to the potential sale of property held by an IREF or future distributions made by IREFs is not available to enable an accurate estimate of the potential revenue from the changes mentioned by the Deputy.

Question No. 157 answered with Question No. 155.
Question No. 158 answered with Question No. 156.

Universal Social Charge Data

Ceisteanna (159, 163)

Pearse Doherty

Ceist:

159. Deputy Pearse Doherty asked the Minister for Finance the number of individual earners who are subject to USC with an income over €70,044. [21185/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

163. Deputy Pearse Doherty asked the Minister for Finance the number of persons who are exempt from USC from €0 to €13,000, subject to USC by values (details supplied); and the number of persons subject to USC above €250,000. [21189/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 159 and 163 together.

I am advised by Revenue that the available information is in the detailed income distribution statistics published by Revenue for 2015, the most recent year for which complete tax returns data are available, at the link: www.revenue.ie/en/corporate/information-about-revenue/statistics/income-distributions/it-ct-distributions.aspx.

In particular, table “RVA03 Distribution of Universal Social Charge by Range of USC Income, Marital Status, Year and Statistic” gives a breakdown of USC payers in 2015 by ranges of income.

The number of income cases is given by range of USC income on a taxpayer unit basis. Numbers of payers on an individual basis are not currently readily available.

Universal Social Charge Data

Question No. 163 answered with Question No. 159.

Ceisteanna (160, 161, 162)

Pearse Doherty

Ceist:

160. Deputy Pearse Doherty asked the Minister for Finance the number of individual earners who are subject to USC including exempt earners. [21186/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

161. Deputy Pearse Doherty asked the Minister for Finance the number of persons who are exempt from USC. [21187/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

162. Deputy Pearse Doherty asked the Minister for Finance the number of persons who paid USC in 2018 and are expected to pay in 2019. [21188/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 160 to 162, inclusive, together.

I am informed by the Revenue Commissioners that the estimated number of earners subject to USC, the number of earners exempt from USC and the number of earners paying USC in 2018 are available on page 3 of Revenue’s Ready Reckoner, which can be accessed at: www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.

The Ready Reckoner estimates are based on 2018 incomes calculated from actual data for the year 2015, the latest year for which returns are available, adjusted as necessary for income, self-employment and employment trends in the interim. The estimates are provisional and may be revised. Estimates for 2019 will be available later this year.

Question No. 163 answered with Question No. 159.

Knowledge Development Box

Ceisteanna (164)

Pearse Doherty

Ceist:

164. Deputy Pearse Doherty asked the Minister for Finance the estimated cost to date per annum of the knowledge development box; the breakdown by size, that is, SME or larger, of applications to the scheme to date by company; and if he will make a statement on the matter. [21190/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Knowledge Development Box (KDB) applies for accounting periods commencing on or after 1 January 2016. A claimant company has a period of up to 24 months to make a claim for KDB relief.

I am informed by Revenue that a small number of companies (less than 10) with accounting periods ended on or before 31 December 2016 have claimed KDB relief to date. As indicated in Revenue’s recently published report on Corporation Tax (www.revenue.ie/en/corporate/documents/research/ct-analysis-2018.pdf), the tax cost of these claims to-date is in the region of €5 million. Due to taxpayer confidentiality, Revenue cannot comment further on the size or nature of the claimant companies to date.

Given the supporting documentation required, companies have a 24 month time frame available to avail of the KDB and it is anticipated that more companies will make use of this 24 month time frame. As such, KDB claims in respect of the year ended 31 December 2016 may be claimed for the year ended 31 December 2017. Therefore, further claims in respect of the year ended 31 December 2016 may be made up to end September 2018.

Property Tax Data

Ceisteanna (165, 166)

Pearse Doherty

Ceist:

165. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of abolishing the local property tax; and if he will make a statement on the matter. [21191/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

166. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue which could be raised by a tax on second and subsequent homes levied at €400 per property. [21193/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 165 and 166 together.

Local Property Tax (LPT) is forecast to collect €470 million in 2018. These receipts would be lost if LPT was abolished.

In regard to Question 21193/18, I am informed by Revenue that the Ready Reckoner, available at https://revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf, shows the estimated revenue which could be raised by a charge on second and subsequent homes. The Ready Reckoner presents separately the estimated yield from additional charges on either owners of more than one property (which would include Local Authorities as well as commercial landlords) or owners of properties indicated to be Non Principal Primary Residencies (NPPRs). The NPPR category would for the most part be composed of rental properties and holiday homes. While the Ready Reckoner does not show the specific costing requested by the Deputy, the yield from a €100 per property charge is shown in the Ready Reckoner and the yield for a €400 charge can be estimated on a pro-rata or straight line basis.

Tax Reliefs Data

Ceisteanna (167, 168, 171)

Pearse Doherty

Ceist:

167. Deputy Pearse Doherty asked the Minister for Finance the estimated savings made by reducing the maximum tax relief available on private pension contributions by percentage rates (details supplied). [21194/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

168. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by reducing the earnings cap for pension contributions from €115,000 to €70,000, €65,000 and €60,000, respectively. [21195/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

171. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by reducing the earnings cap for pension contributions from €115,000 to €60,000. [21198/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 167, 168 and 171 together.

I am advised by Revenue that the Ready Reckoner available on the Revenue Statistics webpage at: www.revenue.ie/en/corporate/information-about-revenue/statistics/ready-reckoner/index.aspx, on page 11 shows the estimated cost or yield from changing combinations of (i) the maximum tax relief available on private pension contributions or (ii) the ceiling on the annual earnings limit for determining maximum allowable contributions for pension purposes. While not all of the scenarios requested by the Deputy are shown in the Ready Reckoner, the others can be calculated on a straight-line or pro-rata basis from the information provided.

Using this information, the estimated savings made by reducing the maximum tax relief available on private pension contributions are as follows:

Rate

40%*

35%

32%

30%

28%

25%

22%

20%

Estimated Savings €m**

0

87.5

140

175

210

262.5

315

350

*current rate of relief.

**based on pro-rata basis

The estimated savings of reducing the earnings cap for pension contributions are as follows:

Cap Amount

Estimated Savings €m

115,000

0

70,000

110

65,000

128

60,000

147

*current rate of relief.

Tax Code

Ceisteanna (169, 172)

Pearse Doherty

Ceist:

169. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised from reducing the standard fund threshold from €2 million to €1.7 million, €1.5 million and €1.3 million, respectively. [21196/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

172. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised from reducing the standard fund threshold from €2 million to €1.65 million. [21199/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 169 and 172 together.

The Standard Fund Threshold (SFT) is the maximum allowable pension fund on retirement for tax purposes which was introduced in Budget and Finance Act 2006 to prevent over-funding of pensions through tax-relieved arrangements. The threshold was initially set at €5 million, which was subsequently reduced to €2.3 million in 2010 and further reduced in Budget 2014 and Finance (No 2) Act 2013 to €2 million with effect from 1 January 2014.

Information on the numbers and values of individual pension funds or on individual accrued benefits in pension schemes are not generally required to be supplied to either the Revenue Commissioners or to my Department by the administrators of pension schemes and personal pension arrangements. The estimate of the yield expected to arise from the changes to the SFT regime introduced in Budget 2014 and Finance (No 2) Act 2013 referred to above was arrived at following considerable internal work over a period by my Department involving, among other things, data gathering and consultation with private sector sources relating to the specific changes to be made.

There is no readily available underlying data or methodology on which to base reliable estimates of the revenue that would arise from further changes to the SFT of the scale envisaged in the question.

Tax Code

Ceisteanna (170, 173)

Pearse Doherty

Ceist:

170. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by reducing the tax free lump sum limit in circumstances (details supplied). [21197/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

173. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by reducing the tax free lump sum limit from €200,000 to €150,000. [21200/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 170 and 173 together.

I am advised by Revenue that as there is no requirement to include data in tax returns in relation to tax free lumps of less than €200,000 (the current life-time limit on tax-free retirement lump sums), they have not been able to quantify the estimated yield for the Exchequer of the reduction of the tax free lump sum entitlement to the amounts outlined by the Deputy.